KARACHI: Flour prices are on the rise in sync with increasing cost of locally produced wheat, which has also undermined government’s plan to export surplus stocks as the commodity’s price is falling on the world market.

The price of locally produced wheat in US dollars is around $330 per tonne in the open market compared to $180-185 a tonne on the world market. International prices started crawling down from $209 a tonne in December 2014 to $180-185 now.

The 100kg wheat bag price has risen to Rs3,425-3,500 from Rs3,400 two days back, while it was available at Rs3,150-3,200 in wholesale market by the third week of September. A kilogram of wheat costs Rs34-35 in the local market compared to Rs18 in the world market.

Millers pushed up flour price twice in the last 20 days because of rising wheat price coupled with scarcity of grain in the local market, depleting wheat stocks in the mills and non-release of grain by the Sindh government.

To avert any crisis, the provincial government on Thursday reportedly fixed 100kg wheat bag prices for the millers — Rs3,270 for a plastic bag and Rs3,340 for a jute bag.

The Sindh government has around 1.6 million tonnes wheat stocks (700,000 tonnes from last year and 900,000 tonnes from 2014-15 crop).

To discourage wheat imports, the government has already increased import duty on wheat to 40 from 25 per cent besides charging 5pc income tax.

Falling prices on the world market have put Pakistan’s plan to export 1.2m tonnes wheat in hot water, while transport rebate from $45-55 per tonne also failed to lift exports.

After continuous request from flour millers, the government kept on extending the date of surplus wheat for export purposes. The Economic Coordination Committee (ECC) further extended the period till Sept 30, 2015, but the decision could not fetch substantial foreign exchange.

Millers and exporters kept on struggling to export more wheat but their efforts proved futile because of depressed world prices.

The ECC on Jan 20 this year allowed a total of 1.2m tonnes of wheat export to clear surplus domestic stocks arising out of bumper crop.

The Punjab government was allowed to export of 800,000 tonnes at transport rebate of $55 a tonne while Sindh was given the task of 400,000 tonnes at rebate of $45 per tonne.

According to the Pakistan Bureau of Statistics, only 445 tonnes of wheat were exported during July-August this year fetching just $108,000.

The country’s wheat exports plunged to 10,441 tonnes ($3m) in 2014-15 from 20,037 tonnes ($7m) in the preceding fiscal year.

Published in Dawn October 3rd, 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play