Flour price rises despite imports
Over the past few days, the price of wheat flour has gone up by around Rs3 to Rs57-58 per kg in Karachi despite the fact that the country has received hundreds of thousands of tons of imported grain in recent months.
“We are facing issues in transporting wheat from (Sindh) government’s warehouses to flour mills in the province,” Pakistan Flour Mills Association (PFMA) Chairman Asim Raza Ahmed said while talking to The Express Tribune. “We could transport only 30% of the released quantity this month due to shortage of cargo transport.” He pointed out that the remaining 70% of the grain was still stored in warehouses.
Earlier, the price in the retail market had dropped to Rs54-55 per kg from current year’s peak of Rs62.
However, Ahmed claimed that the price had remained stable at Rs52 per kg in the retail market for the past seven to eight days in Karachi.
Pakistan Bureau of Statistics (PBS) reported the price of average flour (quality number 2.5) at slightly over Rs60 per kg in Karachi during the week ended November 26 (Thursday).
The government of Sindh has been releasing around 8,000 tons of wheat per day from its buffer stock to flour mills in the province, it has been learnt. The prime objective of provincial governments for maintaining buffer stocks is to keep flour price stable across the nation.
The latest increase in flour price (quality number 2.5) came despite a drop in wheat price by Rs2-2.5 over the past two weeks, a dealer at Karachi’s Jodia Bazaar said.
“In the open market, the prices of locally grown as well as imported wheat have declined by Rs2 to Rs50.25 and Rs47.25 per kg respectively in the past two weeks,” the dealer said. However, the government of Sindh was supplying locally grown wheat at Rs36.875 per kg to the flour mills, it was learnt.
It started supplying the grain from its buffer stock in the middle of October following a substantial delay, revealed independent experts and high-ranking officials in the federal government.
The delayed release of the commodity in the province caused flour prices to spiral upwards.
Chairing a meeting to review prices of essential commodities, Prime Minister Imran Khan observed that there was no shortage of edible items in the country and promised to take steps to ensure stability in prices of commodities, especially flour and wheat.
Ahmed said most of the cargo transport was engaged in delivering the imported grain from Karachi’s ports to Punjab where retailers were selling flour at Rs43 per kg. The Punjab government is giving subsidy on flour worth Rs6.5 billion a month. Retailers in Khyber-Pakhtunkhwa and Balochistan were selling flour at Rs55-56 per kg, Ahmed said.
According to him, the millers were selling flour at a cost that was lower by Rs3-4 than the retail prices in Sindh, Khyber-Pakhtunkhwa and Balochistan, while ex-mill price of the commodity was lower by Rs1.25 per kg compared to the retail price in Punjab. State-owned Trading Corporation of Pakistan (TCP) has been importing the grain on behalf of the government and supplying it to Punjab and then Khyber-Pakhtunkhwa on the directives of the Ministry of National Food Security and Research.
The private sector and the government have so far imported 898,904 tons of wheat in the past four months (July-October) to overcome shortage in the country. Average price of imported wheat stands at Rs40 per kg, according to PBS.
Sindh-based growers said they had recorded a drop of 10-15% in wheat production per acre primarily due to climate change issues last year.
They estimated the total wheat production of the country at 23 million tons in fiscal year 2019-20 compared to government’s target of 26 million tons. Sindh Abadgar Board (SAB) Vice President Syed Mahmood Nawaz Shah said the other day that the import of around 3 million tons of wheat - which was the estimated shortfall in local production - may not aid the government in reducing flour prices.
“The price may start dropping from February-March 2021 when growers in Sindh are scheduled to start cultivating wheat for the new season,” he said.
The government has increased the wheat support price by Rs6.25 to Rs41.50 per kg for the new season, hoping that it will encourage a higher number of growers to plant the commodity over a larger area in the new season.
Published in The Express Tribune, November 29th, 2020.
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