Punjab bans sale of govt wheat outside province

Move aimed at stemming supply to Afghanistan

LAHORE: Punjab authorities have decided to halt the sale of government wheat to mills outside of the province in a bid to stabilise flour supply and prices within their jurisdiction.

According to sources, the Punjab Food Department sent a summary, recommending administrative and monitoring measures to prevent the sale of government wheat outside the province to the chief minister on Thursday.

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The move is aimed at stemming the daily flow of thousands of tonnes of government wheat and flour to Afghanistan via Torkham and Chaman border crossings, sources said. “The provincial government is aware that flour prices will continue to rise and create a crisis unless the delivery of wheat and flour to Afghanistan is stopped,” an official told The Express Tribune. “That is why it has decided to take stern measures.”

Sales from private stockpiles will still be allowed but those involved in the transaction will have to provide written proof that the wheat being sold is not sourced from the government, sources added. According to them, all mill owners and wheat and flour merchants in Punjab have already provided details on their private stock to the food department.

“In order to make sure enough wheat is available in the open market, the provincial government has decided to sell its stockpile within this month,” the official said. “Flour mills will be provided a limited quota initially to encourage the sale of private stock. The government will then increase this quota in August,” he added.

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Flour Mills Association leader Asim Raza, however, voiced some reservations. “Afghanistan has been a strong market for our flour. Any ban could result in a big loss for the local wheat and flour industry,” he said. “The authorities should consult us before taking any such decision.”

Once the ban is in place, the provincial government will decide at what price and with how much subsidy the 4.8 million tonnes of wheat available with the food department will be sold to mills within Punjab, sources said.

At present, the food department purchases wheat from farmers for Rs1,300 per mann. The actual price, once the Rs487 per mann spent on taking care of the supply is factored in, becomes Rs1,787 per mann. In order to keep the retail price of a 20kg flour bag at Rs770, the food department would have to forgo the maintenance charge and sell wheat for Rs1,300 per mann. However, this would mean the government would have to bear a burden of Rs42.6 billion on 3.5 million tonnes of wheat.

To reduce the subsidy on 3.5 million tonnes of wheat to Rs33.8 billion, the government would have to sell it for Rs1,400 per mann. However, this would increase the retail price of flour to Rs880 for 20kg bag.

Published in The Express Tribune, July 6^th, 2019.

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