LAHORE, March 7: Flour shortage has gripped main cities of Punjab as private wheat supplies dry up and the food department has failed to maintain liberal supplies because of two-week delay in wheat import due to the tsunami factor.

The millers claim that private suppliers have emptied their stocks during the last few weeks when imported wheat started arriving in the country and the State Bank of Pakistan ordered the return of commodity finance.

Talking to Dawn, Pakistan Flour Mills Association (Punjab Wing) chairman Khaleeq Arshad claimed that private supplies had dried up. The millers are dependent upon the food department for keeping their mills running.

The department, on its part, is busy squeezing supplies instead of liberalizing them. It cut supplies from 20,000 tons to 18,000 tons on Monday. The millers are facing double squeeze. Those mills which were grinding grains round the clock are now running only for eight hours because of wheat shortage.

The government forced stockists to release all their stock through some stringent administrative measures like return of commodity finance and liberal import. Fearing a price slide, stockists released their stocks.

Now, with delay in imports, the market is in a 'tail-spin' during the transitional period - before arrival of full wheat quota. Only increased supplies could retrieve the situation, he maintained.

He did not rule out some market watchers exploiting the situation for profit. The Punjab food department, however, thinks that daily release of 18,000 tons should be sufficient to cater the market if some of the millers do not deliberately squeeze supplies or flour does not find its way to other provinces.

Punjab food director Jawad Rafiq Malik is of the view that the department cannot go beyond 18,000 tons for the time being owing to delay in wheat imports and stock arithmetics.

It has 350,000 tons in its stock and another 300,000 imported wheat will make it to market during the next 33 days - remaining days of the current season. By releasing 18,000 tons a day, the department would be able to maintain strategic balance in demand and supply, he said.

Had all 650,000 tons of wheat been in the hands of the department, it could have increased release to any extent. But, since almost 50 per cent of it was in the pipeline, the department cannot risk generous supplies, and rue the situation later.

Meanwhile, flour shortage on Monday varied in intensity in different parts of major cities like Lahore and Rawalpindi. But, luckily it has still not triggered a price spiral because the shortage has not assumed crisis proportion.

Talking about price, a dealer from Lahore said that the flour market had been wildly volatile for the last many months. It was largely because the government lacked any mechanism to stabilize market at any point of volatility.

It neither had any regulatory regime to check profit-driven private sector nor the district government were equipped to check price hike at the retail level. "It is unfortunate, but this is the market reality," he lamented.