LAHORE: The wheat market has been jolted just ahead of the harvesting season, raising fears of a flour price hike amid what industry stakeholders describe as policy missteps by the provincial government.
As the country prepares for the new crop, a supply disruption has emerged in the flour sector. Anticipating early arrivals of wheat, the Punjab government halted the release of grain to flour mills at the official rate of Rs3,000 per 40kg. However, the expected influx has yet to materialise, creating a supply gap in the market.
To maintain operations, flour mills have been compelled to procure wheat from Sindh at significantly higher rates, ranging between Rs3,500 and Rs3,700 per 40kg. The increased procurement cost is likely to translate into higher flour prices for consumers. The situation has sparked concerns over a potential shortage, as privately held wheat stocks in Punjab have not yet entered the market, while releases from official warehouses remain suspended.
The provincial government’s announcement of a procurement price of Rs3,500 for this year’s crop — Rs500 higher than the previous issuance price — did convey positive signals to growers but failed to ease the supply situation. On the back of higher rates for new wheat, flour mills in Punjab are contemplating increasing atta prices by Rs250 per 20kg bag, citing the rise in wheat market rates. This would further burden consumers, who are already grappling with rising food prices.
In fact, a group of millers has announced an increase in flour prices while factoring in the cost of fresh arrivals.
The mismanagement on the part of the provincial government is glaring. Despite knowing that privately held wheat in Punjab has yet to reach the market, the government has failed to arrange sufficient wheat for domestic needs. The decision to halt wheat issuance to flour mills has created a shortage, allowing prices to surge, said market insiders.
The federal government must intervene to ensure that the provincial government’s mismanagement does not hurt consumers.
To reinitiate wheat releases, it is learnt that the provincial government has assured flour millers of arranging 0.3 million tonnes of wheat from PASSCO. Consequently, after a gap of about a week, an official said that issuance to flour millers has now resumed.
Salma Butt, Special Assistant to the Punjab Chief Minister, claimed that there is no shortage of wheat. She asserted that the supply position remains stable, with sufficient stocks to meet demand. Flour mills have around 400,000 tonnes of wheat — enough for 20 days — while the Punjab Food Department has 300,000 tonnes, which are being released “regularly” at Rs3,000 per 40kg.
The government attributes the claims of shortage to speculation and profiteering by one or two flour mills aiming to hike prices. “The current market rates are within a normal and manageable range,” officials said, adding that notified atta prices remain fully justified.
With the new crop harvesting underway, arrivals are increasing daily, and the government is procuring wheat at Rs3,500 per 40kg to protect farmers and ensure reserves.
A member of the Pakistan Flour Mills Association confirmed that wheat supply has been resumed after the gap. He expressed hope that flour prices would remain stable in the days to come.
