KARACHI, Sept 9: Sindh Food Department seems set to raise quotas for wheat supply to flour mills in October but officials having a clean track record say raising the quotas alone would not bring down flour prices.
For the current month, the department has set 90,000 tonnes quotas for these mills of which 40,000 tonnes are for Karachi-based mills and 50,000 tonnes for those located elsewhere in the province.
Sources close to the department say that the department would raise the wheat supply quota to 120,000-125,000 tonnes for October of which 48,000-50,000 tonnes would be for Karachi-based mills and the remaining for those located in the interior of Sindh.
No official word is available on whether the department would actually raise the quota to this level, but at least two officials of the department confirmed that the department was set to raise wheat supplies to the mills.
But they said that a higher supply of wheat to the mills at the officially subsidized rate should be linked to the millers' ability to cut the cost of grinding wheat and sell flour at reduced prices.
"It would be a cruel joke if the wheat supply is increased but the millers continue to sell flour at high prices," commented one senior official who has been involved in overseeing millers' operations.
Average quality flour is selling at Rs15-16 per kg in Karachi as the ex-mill price is around Rs13.50 per kg. Wheat millers have agreed to sell flour at Rs12.50 a kg through selected outlets but they say the cannot sell their entire production at this rate as the officially subsidized wheat being supplied to them is not meeting their full requirements - and they have to buy the commodity at higher rates from the open market as well.
They say they can reduce their ex-mill price for the entire flour production from around Rs13.50 to Rs12.50 if the government increases supply of wheat from the existing 40,000 tonnes to 85,000-125,000 tonnes at the subsidized rate of Rs9.5 per kg. The open market price of wheat is Rs11.80 per kg.
Officials say increasing wheat quota alone would not automatically reduce flour prices adding that the government will have to monitor flour prices more closely and take erring millers to task to ensure that the subsidy provided on wheat reaches to the common man in the shape of reduced flour prices.
"There have been instances in the recent past when the supply quota was raised by 100 per cent but the millers failed to lower flour prices by even 50 paisa per kg," said a senior official of the department.
This and several other officials of the department say that the millers are demanding for a big increase in wheat quota to build up stocks for coming months when wheat would gradually disappear from the open market.
They say that the millers are demanding a big increase in wheat quota also because they want the strategic reserves available with the government to deplete. "So that when there is no wheat in the open market and the strategic reserves with the (food) department is also very low they can dictate prices," said an official.
At present the Sindh Food Department has roughly 86,000 tonnes of wheat in reserves and the quantity may rise if it gets more from the federal pool that itself would widen with the arrival of imported commodity in coming months. Pakistan has so far placed import orders for 442,000 tonnes of wheat that it would start receiving in phases starting from next week.
MEETING: Meanwhile, the Sindh Food Department's Director for Karachi Region, Dr Tanveer Qureshi has convened a meeting of all flour millers at his office on Saturday. Sources in the department say that there is a single point agenda of the meeting i.e., what can be done to lower wheat flour prices in Karachi and elsewhere in the province.
City Nazim Naimatullah Khan told the local press here the other day that the city government can check prices of essential items including wheat flour effectively if its field officers are given magisterial powers, meaning that they should have legal powers to put the shopkeepers overcharging the customers behind the bars.
Two senior officials of the Sindh Food Department contacted by Dawn said they fully agreed with the Nazim adding that checking prices of essential commodities through administrative means seem to be the only solution left with the government. "Making efforts to contain price hike through increased supply alone does not seem to be a practical solution in our case," said another official.