Punjab mulls wheat price hike as stocks dwindle

Supply shortages in other provinces putting pressure on breadbasket province to keep prices down

LAHORE: The Punjab food department has prepared five recommendations to present to the government for the determination of sale prices of wheat and flour in the open market. Options presented vary from Rs1,300 per maund (40kg) to Rs1,750 per maund for wheat, with the final amount depending on the subsidy burden the government is willing to take on.

The final decision will be taken by Punjab Chief Minister Usman Buzdar, but there is a strong chance that the price of wheat in the open market will also account for the rise in the prices of electricity and diesel, with prices being set between Rs1,325 and Rs1,350 per maund, while the price of flour in the open market will not be allowed to exceed Rs800 for a 20kg bag.

It is noteworthy that the government appears ready to set the price points for wheat and flour separately. In the past, the price of a bag of flour was directly related to the price of wheat.

According to details, on the directives of the Punjab  CM, the department of food has prepared different recommendations for determining the price of wheat and flour. A summary of these recommendations will first be sent to the cabinet committee, and then to the CM, who will take the final decision.

Last year, the food department, on account of a surplus of wheat, has sold the grain to flour mills at Rs1,300 per maund, which also included the price of jute sacks. This time, apart from raising the price of wheat, the government will also charge for bags separately.

Sources said that the recommendations prepared by the food department include four recommendations from Rs1,300 to Rs1,400 without bags. In the fifth recommendation, which the sources admitted was not politically feasible, the food department has recommended the government that the price of wheat be fixed at Rs1,787 with zero incidental charges. Currently, the food department is bearing incidental charges of almost Rs500 per maund.

Sources said that the Punjab government is facing another headache, as the food department has 4.8 million tons of wheat in storage and it cannot reduce its stock to zero. At least 500,000 to 800,000 tons must be stocked as its strategic reserve.

Of the wheat available with Pakistan Agriculture and Storage Services Corporation (Pasco), 350,000 tons of wheat has to be provided to the Air Force, Azad Kashmir, and Gilgit-Baltistan, while 300,000 tons will be given to the Pakistan Army. After setting aside another 500,000 tons as food security stock, Pasco will only have about 800,000 tons of wheat that can be sold. At this time, there is a shortage of wheat in Sindh, KP and Balochistan.

Sources said that the PTI’s Core Committee Member Jahangir Tareen will preside over an important meeting in this regard in the next few days after which final decisions will be taken. 

Published in The Express Tribune, June 30^th, 2019.

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