Sky-high: Wheat prices in Punjab hit record highs

Exports to Afghanistan is blamed for surge in prices

LAHORE: As a result of the duty-free export allowance on wheat granted by the government, over 100,000 bags of the grain are being exported to Afghanistan every day.

The impact on domestic consumers has not been pretty, as the price of wheat in many Punjab markets has hit 10-year highs. In Rawalpindi, the price of wheat has gone past Rs1,370 per maund (40kg) while in Lahore, Gujranwala, and other districts the open market price per maund is hovering between Rs1,305 and Rs1,335, with further increases expected.

This additional inflationary hit comes just as the month of Ramazan begins.

Flour prices have also seen steep increases at the consumer level, as in Rawalpindi and Islamabad, a 20kg bag is being sold for Rs800, while in Lahore and other nearby areas, 20kg of wheat is being sold for between Rs755 and Rs760, up from Rs720 to Rs740 a few weeks ago.

The increased demand from Afghanistan is being met through the Torkham, Chaman, Wana and Kalawchi border crossings. According to Afghan traders, buying will shift to wheat from Russia and other Central Asian states after around three months, but in the meantime, more wheat is being demanded from Pakistan. The commodity is selling for as much as $280 (Rs39,614) per ton in the Afghan market or roughly Rs1,584 per maund.

The Pakistani government has not imposed any export duties on flour or wheat being exported to Afghanistan, although the Afghan government is charging import taxes.

There has also been a significant decrease in wheat production in Punjab, which has coupled with exports to significantly increase the prices at mills, leading to unannounced price increases for flour.

Meanwhile, the Punjab Food Department is also struggling to meet its wheat purchase target.

According to sources, unsteady decisionmaking and implementation have become commonplace at the food department. Senior food officials had gotten permission from the Punjab chief minister to enact strict measures to nip the issue in the bud, but they failed to gain the support of the district and local administrations in implementing these measures.



Sources said department officials are directing assistant commissioner on what to do, which is not being taken nicely by commissioners and deputy commissioners, due to which the assistant commissioners are reluctant to implement the directives of the food department. The sources said that food officials should convey their directives through the commissioners and deputy commissioner.

The Punjab Food Department is already understaffed and currently, more than 90 per cent of the staff is deployed on wheat selling centres, and the food authority is also trying to send its staff to inspect open market sale locations, which is stretching them too thin.

In a meeting held on Monday, Food Secretary Naseem Sadiq failed to convince the federal government to ban wheat exports and was instead faced with strong criticism over supply management in the province. The Federal Ministry for Food Security told that due to rains, Punjab has reduced its wheat production target to 18.58 million tons, while the nationwide wheat production target has been reduced from 25.51 to 24.26 million tons.

In public warehouses nationwide 3.71 million tons of wheat are currently being stored, of which Punjab has 1.563 million tons. After including the freshly wheat stock, the country it was noted that the country still has ample wheat reserves to fulfil domestic demand.

Published in The Express Tribune, May 8^th, 2019.