LAHORE, Nov 10: The flour price remained record high in the province on Monday despite all official claims to the contrary.
As the “blame game” between the millers and the government continues, consumers have been bearing the brunt of increase in price, which will further go up once the government announces the support price of wheat.
The wheat support price has not changed for the last five years, but flour price has already spun out of the common man’s reach. Rumours are that the support price will be increased by Rs50 per 40kg as a result of which the flour price will hit Rs500 per 40kg. The current flour price is Rs420 per 40kg.
The millers and the government are blaming each other for this situation.
The government has been claiming from the start of the crisis that the flour price was bound to come down once the food department started releasing wheat, supplementing the private sector. It started releasing 7,000 tons wheat a day on Oct 10, but it failed to break the trend of price rise. Later, it increased the quantity to 11,000 tons and then to 13,230 tons, but the price did not come down from Rs210 per 20kgs.
After failing on that front, it started blaming hoarders and the profit-driven private sector for prolonging the crisis. But, according to independent commentators, the government failed to realize that flour market had gone into tailspin because of its policy. “It could derive some psychological advantage by blaming others, but that would not solve the problem besetting the market.”
Increase in price, according to them, was an obvious result of official policy to involve the private sector in procurement and storage of wheat, especially without any regulatory regime.
The policy caused increase in flour price at two levels. First it attracted profit-driven private sector in procurement, burdening the flour market with profit of private sector. Second it partially withdrew subsidy on wheat and started cascading price by Rs30 per 40kg. It also decided to pass on the transportation cost to the millers.
“Only a naive would have thought that the withdrawal of Rs2 billion subsidy would not increase the price. After all, some one has to pay Rs2 billion that the government has withdrawn,” he said. The government refused to pay and the millers would not because they had the option of burdening the consumers, said the commentators. The millers also blame the government for starting cascading of price and increasing it by Rs30. Its decision to pass on the transportation burden to the millers and failure to give any relief on gunny bags was bound to affect the price.
They also lamented the leak of the report about recommended heavy increase in support price. This further increased speculative pressure on the already volatile wheat market, and took the price of wheat in the private sector to Rs400.
It further increased pressure on the market when it refused to release 13,230 tons of wheat on Friday last —- the day when the millers started a three-day strike against the arrest of millowners in Faisalabad. This further widened the gap between the demand and supply and kept the price high, they said.
The officials concerned accepted partial blame, claiming that hoarders had played havoc with the market. Owing to the expected increase in support price, the private sector was holding wheat with the hope of reaping windfall profit next year. Otherwise, the province had sufficient wheat to see it through the season, but it certainly had no wheat to compete with hoarders and meet the requirements of the country.
The officials said this double pressure had tested the government beyond it limits. “Now the government is left with no choice, but to import wheat to break psychological pressure on its price and deal with the private sector,” they said.