LAHORE, May 18: The average wheat price on Sunday went up to Rs307 per 40kg against the officially declared support price of Rs300.
The price escalation is being attributed to massive private buying and the government’s decision to allow free movement of crop and remain in the market even after achieving its revised target of 2.7 million tons.
According to officials of the food department, they had procured 2.2 million tons of wheat by Sunday. The department started the season with 200,000 tons, which gave it a total of 2.4 million tons in its stores against the target of 2.7 million tons.
The situation had become alarming last week when the people stopped selling their crop to the department because of better prices in the open market, but it has improved with the government taking some administrative measures. It had to ask its licensee, the middleman, to help it buy wheat at few rupees less than the price in open market, they said.
The situation is improving with the passage of time. On Sunday, the department bought another 65,000 tons. It would not drop to zero in the next few days, which means that the department would be able to achieve its revised target of 2.7 million tons in another week or so, they claimed.
About the millers’ not coming to the department for buying wheat this season, the officials said that even if they had come, they could not have been sold much wheat. The millers work for profit and can adjust their buying and selling according to the market behaviour, but the department has a national duty to keep the required quantity of wheat and save the country from social chaos, they said.
About the chances of an increase in flour prices due to wheat price going above the support price level, an official of the Punjab government said that though price fixation had been devolved to district governments in the new set-up, millers would not get a free hand in this regard.
An office-bearer of the Pakistan Flour Mills Association was of the view that market price of wheat could only affect the flour price if it went beyond Rs320 per 40kg. As long it was below that mark, price of flour would not go beyond the stipulated Rs189 per 20kg. Though the wheat price has been as high as Rs315 per 40kg, it is still below the Rs320 mark. On the other hand, the minimum price has not gone below Rs285 per 40kg in any part of the province, he claimed.
Bilal Sufi of the PFMA claimed that millers had procured around 600,000 tons of wheat from the open market. Another 600,000 tons have been bought by other investors. This purchase of 1.2 million tons has stabilised the prices. He predicted a drop in prices when the government would withdraw from the market after meeting its target. However, he added, it would not be a big drop because much of wheat had already been brought to the market and sold.