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Fluctuating prices

September 23, 2012


Disruption, due to heavy rains, in supply of food commodities from farms to rural mandis and then to urban marketplaces has widened the rural-urban gap in wholesale and retail prices.

Delays occur in arrival of farm produce in urban centres, owing to the dilapidated condition of the farm-to-market roads.. After the recent monsoon,, trucking charges have gone up by 20 per cent or so, by commodity traders’ accounts. And this is in addition to fuel-prices pass-on.

“We are paying Rs36,000 per truckload of rice coming here from the interior of Sindh now. Before the rains came we were paying Rs30,000,” a local rice dealer told Dawn. “Our problem is we can’t immediately pass on (this 20 per cent higher hauling charges) to wholesalers. The kind of agreement we make with them says we’ll sell rice at a given price (throughout a given period),” he said.

The vagaries of cropping pattern and the commodity market “also act as important determinant in overall demand and supply situation as well as prices.”

Commodity traders say paddy thrashing has started in Badin district of Sindh adding that husking would follow soon and supply of fresh grains of coarse rice would begin before the end of October. “This time, rains have delayed the process. Otherwise we’d have started supplying rice in September.”

This delay in the earliest arrival of coarse rice in Karachi market is inflating its prices. During the week that ended on September 20, (September 21 was declared a public holiday to protest over the blasphemous movie), Irri-6 price gained one rupee per kg in Jodia Bazar to close at Rs3800 per 100kg. On Pakistan Mercantile Exchange Ltd, too, this rice variety gained 70 paisa and closed at Rs3576 per 100kg.

Meanwhile, wheat prices also continued their upward march chiefly due to growing exports. In Jodia Bazar wholesale price of wheat moved up to Rs2950 per 100kg from Rs2900 a week earlier. Since the end of August, wholesale price of wheat has risen by Rs1500 per 100kg in physical trading in Karachi’s main wholesale market.

In August export of more than 53,000 tonnes of wheat was recorded, far higher than that of over 15,000 tonnes in July. “That actually has driven up wheat prices in three weeks of this month,” said a wheat trader, adding that as exports continue through this month as well, “prices would either rise further or, at best, remain firm in coming weeks.”

Higher wheat prices in wholesale markets continue to drive retail prices up.. But of. Late, the retail wheat prices have fluctuated rather too widely, Rs5.50 per kg between various cities, for other reasons as well.

According to data released by Pakistan Bureau of Statistics (PBS), national average retail price of wheat was Rs33 per kg as on September 13 though the commodity was selling as low as Rs27.5 per kg in four out of 17 cities from where data is collected. In one city, the staple food was selling even at Rs27 per kg.

Four cities of the Punjab province where maximum price of wheat was recorded at Rs27.50 were Faisalabad, Sargodha, Multan and Bahawalpur—all major wheat producing areas.

Commodity traders say wheat prices in these cities often remain lower than in other cities of Punjab because many households there follow the old habit of keeping wheat stocks for their annual consumption till the arrival of the new crop in summer. Besides, flour mills operating there also manage to get full quotas of provincially-subsidised wheat. These factors keep demand for wheat from the open market lower than elsewhere in the province.

In contrast, wheat prices remain high in cities where (i) the commodity is not grown or is produced in low quantity (ii) where flour millers can’t get full quotas of subsidised wheat or the authorities don’t accept their claims about milling capacities, and such (iii) the millers have to rely more on the open market to meet their requirements. Karachi is one such city.

The others from amongst the PBS list of 17 cities include Islamabad, Rawalpindi, Gujranwala, Sialkot and Lahore in Punjab; Karachi, Hyderabad and Sukkur in Sindh; Peshawar and Bannu in Khyber Pakhtunkhwa and Quetta and Khuzdar in Balochistan.

Larkana, in Sindh, is the only city out of the 17 selected markets on the PBS list where wheat market is not characterised by the above-listed factors.

Small wonder then that wheat price remains lowest here—as it was on September 13—Rs27 per kg to be precise. —Mohiuddin Aazim