LAHORE, Sept 29: Flour will return to pre-Ramazan price of Rs400 per 20 kilogramme (kg) from Saturday next (Oct 4), when the Punjab government ends its Rs1.6 billion Ramazan package and starts supply flour to millers at the newly-fixed cost of Rs690 per 40kg.
An official of the Punjab Food Department, however, made it clear that millers would only increase flour prices after Eid because the department had already supplied subsidised Ramazan flour for the entire month.
The new price, which took effect on Monday (yesterday), would only be passed on to people two days after Ramazan when shops and supply lines reopen. Dispelling the impression that the Punjab government has entirely withdrawn subsidy, he claimed that the new release price contained Rs35 per 40kg subsidy and it would continue for the time being.
He said the department still had 2.2 million tons of stocks and the federal government had promised 1.8 million tons of more wheat. It allocated 500,000 tons and then added another 1.3 million tons to release pressure on the domestic stocks. All this quantity would come from imported wheat.
Of the import quota, the provincial government has already received 11,000 tons and another 70,000 tons have arrived at the Karachi port. Offloading the stocks was delayed because of Eid, as labour and transporters went on holidays, he said. Though the federal government has still not given any cut off date for the arrival of entire 1.8 million tons, the process has begun and would continue in the next four months, he said.
According to State Bank of Pakistan statistics, the private sector still holds 25,000 tons of stocks pledged with the bank. There may be more that has not been accounted for, but it might only be negligible – meaning thereby that pressure on official stocks would only grow in the coming weeks, the official said.
Once the imported wheat arrives, even in other provinces, the overall demand will ease in the country and take pressure of Punjab’s stocks. Till then, the Punjab administration has to be on guards so that stocks do not drain to other parts of the country. The department has been releasing some 14,500 tons daily and will continue doing so till market dynamics change, needing a supply review.
Millers, however, had there own version about the market behaviour and claimed that officials needed to realise that it was not the actual shortage of wheat but a speculative pressure pushed prices in open market. That pressure is built by the health of official stocks and their ability to take pressure or flood market. Both situations affect market differently, and to varying degrees, says a miller from Lahore.
If official stocks are healthy enough to cater to the need of the province, the private sector dares not stocking wheat – and the reverse is also true. It is this speculation, which has nothing to do with actual release that determines wheat prices. The government officials need to work on these lines rather than deflecting attention to non-issues that marginally change market realities, he said.