KARACHI, Sept 13: Flour price in the local market is quietly crawling up as wheat export from Pakistan is picking up momentum with every passing day following the reports that drought had hit hard the crops of the traditional wheat suppliers of the world — Australia, US and Canada.

Local retailers are now demanding Rs13.50 to Rs14 per kg for the quality ‘chakki’ atta. Prices of popular brand flour bags were increased on August 14, and shopkeepers are now warning a further price rise in coming weeks. Their warnings are based on the reports they get from their flour mill and chakki suppliers.

Market watchers fear wheat supply problems in Pakistan from late winter till spring — December till March — as wheat stocks from 2002 and 2001 crops are depleting fast and millers are refusing to pick up 2000 crop stock.

“Unhindered and unregulated wheat export can create supply problems in coming winter,” Najib Balagamwala, a well-known commodity operator, told Dawn by telephone on Friday. He accepted that wheat prices are going up in the local market and so is the price of flour.

Exporters are on a buying spree of 2002 wheat crop and hence the prices are crawling up, he said. This unhindered wheat export, market watchers fear, will give a lot of room to big sharks to manipulate and create shortages.

Latest report says that there is about 6 million to 6.5 million tons of wheat stock in Pakistan with the government agencies. Quite a substantial quantity is of 1999-2000 crop, and is being considered unfit for human consumption.

Official statistics show that about 200,000 tons of wheat worth over $22 million were exported in last two months — July and August 2002. Traders say that export orders of about 700,000 tons of wheat have been booked and there is no let up in demand from abroad. It may go beyond one million tons in next few weeks.

Pakistani exporters are offering wheat to foreign consumers at about Rs6.40 to Rs6.60 per kg in Pakistani currency as against Rs8.50 to Rs9 a kg in the local market. Real earnings for Pakistani exporters come from Rs3,000 rebate on export of one ton of wheat.

Pakistan enjoyed a wheat bonanza in last more than two years after having remained a wheat deficit and hence an importing country virtually every year since independence.

“A distress import and a forced export of anything always brings profit to the businessmen at the cost of local consumers,” remarked an analyst while referring to wheat import that brought fortune to many traders who are now in export.

Total wheat crop production in Pakistan last season (2001-02) was 18.39 million tons, while there was substantial quantity of carryover stocks from the previous two years crops — 1999-2000 and 2000-01. Local wheat consumption is estimated around 21 million tons.

For the last 18 months there had been plenty of wheat in the government stock and with the private traders. It was mainly because Afghanistan had become unstable and Pakistan’s borders with India are sealed. Traditionally, and something which is conceded officially, Pakistan’s wheat had always been a popular smuggling commodity to Afghanistan and beyond up to Central Asian states and even right into Moscow.

The Punjab food minister in 1997 himself saw Pakistan’s wheat bags in Moscow during a visit and had then disclosed it in a press conference in Lahore. Rajhistan and Gujrat, neighbouring Indian states, are the other places where Pakistani wheat was being smuggled into for the last many years.

An official report on wheat in 1997, quoting top intelligence agencies had conceded that on an average 100 to 150 wheat load trucks go to Afghanistan every day.

It was accepted in the report that Pakistan’s borders with Afghanistan are too porous and cannot be plugged. But after Taliban were forced to quit Kandahar and Kabul, the entire Afghanistan has become unstable.

Warlords have reappeared in various parts of Afghanistan and no one take risk of transportation. So is the case with India where deployment of troops had sealed borders and has brought about suspension of cross-border commodity operations.

Now that both India and Pakistan are in the race of wheat export, traders say that India enjoys certain advantages.

India offers a lot of subsidy on the farm inputs. There is subsidy on electricity for operating tube wells, on fertilizer and seeds. On the contrary there is GST on electricity and on fertilizer in Pakistan, which has pushed up the production cost.