Punjab to disqualify ‘ghost’ mills from official wheat quota

Officials say 270 mills suspected of being largely inactive most of the year

LAHORE: As part of its efforts to bring down wheat prices following a damning FIA inquiry report, the Punjab government will identify ‘ghost’ flour mills and disqualify them from the official wheat quota, a senior provincial minister and food department officials told The Express Tribune.

The decision was reached in high-level food department meeting headed by Punjab’s newly sworn in Food Minister Abdul Aleem Khan. The meeting was convened to discuss measures the province can take to tackle the wheat crisis.

Confirming the development, Aleem explained that the ‘ghost’ mills are fully active only when the government releases the official wheat quota.

“In the dry season, these mills are either completely inactive or reduce wheat grinding to 20 per cent capacity,” he said.

To ascertain which mills are ‘ghost’ mills, government officials will scrutinise the past year’s electricity bills of all flour mills in the province, sources in the food department said. Under the food minister’s instructions, the wheat quota for mills found to be active will be increased and the inactive mills will be disqualified from the quota, they added.

According to food department sources, almost 270 of the 984 flour mills set up in Punjab are suspected to be inactive during the dry season. Once these ‘ghost’ mills have received wheat from the official quota, they either sell it or produce wheat in small quantities, they said.

Interestingly, the food department has decided that only mills that are active members of the Flour Mills Association will be eligible for the official quota, sources said. The number of active members of the association had hovered around 750 for many years but this year, 240 mills were certified as active members after paying membership fees, they said.

Under construction flour mills will be given a few months to become active and receive their quota, but new mills will not be eligible for some time, they added.

Govt mulling smaller wheat purchase

In addition to cracking down on inactive mills, the Punjab government is also seriously considering a proposal to relieve financial pressure by limiting the amount of wheat it purchases, sources revealed. At present, the food department is Rs550 billion in debt due to mark up on loans it had to secure to maintain a four-million-tonne wheat stock every year, they said.

“To mitigate this, the government is considering buying just a million or a million-and-a-half tonnes of wheat next year instead of 4.5 million tonnes,” a government official said. “The rest of the wheat could then be purchased by the mills themselves.”

But while the government may decide to let flour prices and wheat procurement be determined on the basis of supply and demand in the open market, the sources said the food department would introduced a regulatory framework to protect the consumer and ensure food security. Already the department has begun work on amending rules and changing the Food Grain Licensing Act, the sources said.

The Punjab government is also looking to gradually phase out heavy subsidies and banning the transport of wheat out of the province.

Published in The Express Tribune, April 18^th, 2020.