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Delay hits subsidised flour availability

January 22, 2013

KARACHI, Jan 21: Although the government has increased the wheat flour price by Re1 a kilogram within a week after issuing a notification fixing the official rate, it could not ensure availability of subsidised flour at the 105 weekly bazaars of the city.

In its Jan 8 notification, the government had fixed the ex-mill and retail flour rates as Rs32 and Rs33.50 a kilo, respectively.

However, it quickly announced a higher official rate when flour millers declared that they were selling a 10kg flour bag for Rs330, i.e. Rs33 a kilo, at their establishments across Karachi.

The Sindh government has already allocated a subsidy — costing it around Rs680 million — and raised the monthly quota of wheat for each flour mill from 12,000 to 15,000 bags in order to stabilise flour prices.

Pakistan Flour Mills Association (PFMA) Sindh Zone chief Chaudhry Ansar Jawed says that the low rate of subsidised flour (10 per cent bran extraction or the ‘chakki atta’) fixed by the provincial government is meant for the low-income group that cannot afford a higher rate. He is of the view that for the middle classes, mills produce white or fine flour and offer it at Rs385-Rs400 per 10-kg bag.

According to him, other flour varieties like Bake Parlour and Ashrafi fine flour (22 per cent bran extraction) are branded items whose retail prices vary — between Rs420 and Rs440 per 10-kg bag — in various areas.

“The sale of flour costlier than the subsidised flour is determined on the ‘supply and demand mechanism’ of wheat,” he said in reply to a question.

When asked that how many people he believed could benefit from the government’s initiative of providing subsidised flour to consumers, Mr Jawed could not guess at a percentage but said that the scheme would attract a big number of consumers.

Surprisingly, he observed, branded flour was always available at most outlets located in both low- and middle-income group areas.

He did not have a clear answer when he was asked how could the most deserving consumers with regard to the subsidised flour could be identified or how the sale of subsidised flour to undeserving people could be checked.

‘Rationing may work’

There is a big gap between the prices of all flour varieties and the subsidised flour and this lures retailers into profiteering. The subsidized flour stocks are piled up and small quantities are sold directly to consumers at a higher rate.

It is also observed that hotels, restaurants, bakeries and confectionery makers lifted subsidised flour bags in big numbers from bachat bazaars and the stalls set up by flour mills.

“We will advise the government to fix a limited quantity of flour per person to ensure that subsidised flour reaches every deserving person,” said Mr Jawed.

Regarding the failure on the part of the government and millers to ensure availability of subsidised flour at bachat bazaars, he said the just-ending week had seen a series of business closures and acts of violence that caused great disruption. Hopefully, the stocks would reach the bazaars within the next two-three days, he said.

He said that on a tender issued by Passco in Lahore to provide 100,000 tonnes of wheat to flour mills in Sindh at Rs3,025 per 100-kg bag (after reaching Karachi), 90 per cent of the applicants seeking allocation of wheat appeared to be traders and not millers.

He said Passco had already been advised by his organisation not to encourage traders as millers, otherwise, would not be able to provide flour to consumers at official rates.