Subsidy on wheat to Stabilize flour prices announced by the Punjab Government
The Punjab governments is going to start releasing subsidized wheat to mills in a bid to stabilize the flour market amid limited grain stocks with public sector departments in the country.
The early release of wheat to flour mills is being seen as a move to quell rising trend of wheat price hike in the open market. Some circles fear that the wheat release plan could fail to stables the flour market in later months if the government could not properly regulate the market. They stressed strict monitoring of wheat grinding by flour mills to ensure its supply into the market accordingly.
The Punjab Food Department and Pakistan Agricultural Storage and Services Corporation (PASSCO) will have only around 1.5 million tons of wheat by March next year before the arrival of fresh grains. Such a low volume of wheat is considered insufficient even to cater for strategic reserves for the whole country. Given the fact that Punjab’s around 0.8 million tons of carryover stock means peanuts as leftover grains usually were of poor quality or even non-existent. That is why one can never see zero or near zero stock stored with the public sector departments, said sources.
More worryingly, both Punjab and PASSCO will have to meet demand of wheat from consumers of Sindh province also as provincial Food Department had failed to buy a single grain from growers this year. On this account, at least one million tons of wheat will illegally flow to Sindh, especially to Karachi and other urban centers from upcountry, claimed a market insider. In such a bleak scenario, we should be ready to see thin supplies of wheat next year from February, March, he warned.
Realizing the gravity of the situation to some extent, Punjab has asked flour mill owners to ensure grinding of wheat issued to them as per quota from the government godowns that can be justified by electricity bills. In this connection, execution of agreement with each and every flour mill for observance of process may be ensured, it stressed.
However, market insiders believe that there should be a strict mechanism in place to regularly check electricity bills of each flour mills in order to ensuring checking pilferage of subsidized wheat being released to flour mills from government departments. Mere policy statement will not do anything good unless proper procedure is followed for its implementation, they emphasized.
Moreover, the price set by Punjab Food Department for various levels of flour market does not provide margins to sellers. It is stated that there should be upper limit of 20kg flour bag to Rs 815 in order to translate the cost of wheat in the overall cost while ensuring proper margins for various sellers.
According to Punjab Wheat Release policy 2019-2020, Food Department has 4.79 million tons of wheat in its godowns and there is demand to commence releasing wheat to flour mill to ensure uninterrupted supply of wheat flour on a fair price. Therefore, in exercise of powers conferred under section 3 of the Punjab Foodstuffs (Control) Act, 1958, the Government of the Punjab is pleased to promulgate the following Wheat Release Policy:
Issuance of wheat to the functional/approved flour mills on the basis of approved roller bodies will start with effect from 19th August, 2019. The issue price of wheat would be Rs. 1375/- per 40 kg (including
The cost of bardana. Flour mills getting wheat from the Food Department will also be entitled to grind their private wheat stocks. Rawalpindi, Gujranwala and Lahore Divisions except Nankana Sahib District will be treated as deficit divisions and wheat will be issued to the flour mills/chakkies as per body quota to be notified by the Director Food Punjab, from time to time.
The Director Food will also fix priority of wheat releases keeping in view the stock position of the districts. The requirement of the flour mills of deficit divisions over and above the prescribed number of bags per body will be met from surplus divisions. However, the surplus stocks of Sargodha division and Okara district will be kept reserved for the flour mills of Rawalpindi, Lahore divisions respectively. Wheat to the defaulter flour mills (which have not deposited their outstanding dues) will not be issued from government stocks. Stocks will be shifted from the surplus regions to the deficit divisions of Lahore, Gujranwala and Rawalpindi. The flour mills shall be bound to sell flour at the maximum ex-mill price of Rs. 786/20 Kg bag and maximum retail price of Rs. 808/20 Kg bag.