PASSCO halts wheat supply over payment issue

Members of flour mills association express concern over worsening situation

LAHORE: After the refusal of the flour mills to pick up what they termed as ‘sub-standard wheat’ from warehouses, the food department of Sindh has stopped wheat supply to the mills from there and the Pakistan Agricultural Storage and Services Corporation’s (PASSCO) stock over the past six days.

Expressing his concern, Member of Pakistan Flour Mills Association Muhammad Naeem Butt told The Express Tribune that the availability and prices of wheat have been affected in Sindh particularly in Karachi. He said a severe shortage of wheat crisis is looming if the supply of wheat to the flour mills is not restored immediately.

The Sindh government has delayed the payment of wheat procurement to the PASSCO and only Rs900 million has been paid so far of the first contract of wheat worth Rs3.67 billion. To secure the supply of 300,000 tonnes of wheat, the government will have to pay an amount of Rs11 billion to the PASSCO.

The flour mills of Sindh have already paid for 150,000 sacks of wheat to the Sindh food department through the State Bank last week.

In a letter addressed to the federal minister for National Food Security, Sindh Flour Mills Association Chairman Khalid Masood has demanded to provide wheat directly to the flour mills of Sindh.

The letter also mentioned the seriousness of the situation that has emerged due to the halt in wheat supply. He said the supply of wheat to the Sindh flour mills has been suspended from November 28.

The mill owners have been told to buy wheat from Khairpur but when they approached the wheat centre in-charge they were told that they do not have any wheat.

He said the flour mills were under severe pressure and there was a concern of food crisis erupting in Karachi. He demanded that PASSCO should directly sell flour to the mills instead of routing it through the Sindh food department.

Out of the 900,000 tonnes of wheat allocated by PASSCO, Sindh has picked up only 49,000 tonnes while Khyber Pakhtunkhwa (K-P) has picked up 73,000 tonnes of wheat, which is very slow compared to the complex market situation.

While talking to The Express Tribune, Food Security Commissioner of the Ministry of National Food Security Imtiaz Ali Gopang said following the directives of Prime Minister Imran Khan, they have managed to provide wheat supply to all provinces timely and there was no delay from their side. He said the Sindh food department had made an agreement of 100,000 tonnes of wheat out of which Sindh collected only 49,000 tonnes of wheat. The agreement of another 3 million tonnes would be finalised in the next few days.

On the other hand, the flour mill owners in Khyber Pakhtunkhwa (K-P) have termed the wheat being supplied by PASSCO as low quality and said this wheat could only be used after using it with the quality wheat purchased from the open market.

Owing to the crisis of government wheat reserves in Sindh and K-P, Prime Minister Imran Khan had approved giving both the provinces 900,000 tonnes of wheat at concessionary prices through the federal ministry of national food security’s subordinate institute of PASSCO. The federal government had also announced to bear 50% subsidy in lieu of incidental charges of wheat.

Under the agreement, the K-P’s department of food is buying wheat from PASSCO but the situation in Sindh is headed towards a crisis. The agreement with PASSCO has been delayed for many days and after this, the supply of wheat to the flour mills is underway at a slow pace.

Khyber-Pakhtunkhwa has picked up 73,000 tonnes of wheat out of 400,000 tonnes, while the Balochistan government has not yet picked up wheat.

The representative of Sindh food department while talking to The Express Tribune said they have halted the supply of wheat temporarily for a few days due to some complains. Complains have been received that some flour mills were selling the government wheat in the open market.

Published in The Express Tribune, December 7^th, 2019.