Food dept suggests wheat auction

Flour mill owners term proposal impractical, back cash subsidy

LAHORE:

The caretaker Punjab government, in consultation with the federal authorities, has prepared recommendations for initiating a new system to provide cheap flour to the white collar people while giving cash subsidy for the purpise to the poor under the Benazir Income Support Programme.

According to sources, the food department will stop issuing quota to the mills and auction government wheat in proportion to the population of each district. The reserve price of the government wheat auction will be kept lower than the open market.

Flour mill owners will be eligible to participate in the auction. The mills will be bound to produce 70kg of flour out of 100kg of wheat.

Punjab Food Secretary Mian Zaman Wattoo told The Express Tribune that the department would determine the price of the flour produced from the auctioned government wheat, which might be substantially less than the market rates.

He said the incidental expenses would be borne by the government so that the people could get cheap flour. The sale of flour produced from government wheat will be done through the Price App.

The Pakistan Farmers Association welcomed the targeted cash subsidy, but rejected the wheat auction proposal as unworkable, saying it would benefit a few flour mills and destroy the remaining industry. The food secretary insisted that the official wheat quota was against the Public Procurement Regulatory Authority (PPRA) Rules and flaws in the system had come to light.

He said there had been increasing complaints that some flour mills had been causing loss to the national exchequer by selling the wheat at high prices in the open market instead of producing flour.

He said the government was moving towards targeted subsidy and the distribution of free flour among deserving people under the Ramazan package was a step in this direction.

Now the government has decided that the registered eligible persons will not be given free bags but cash subsidy. The secretary said the Price App had been improved after fixing the flaws encountered during the free flour scheme.

After the Eid holidays, the food department will start the experimental phase of the new system in some major cities, including Lahore, and then a final decision will be taken by September.

Zaman Wattoo said the rules and regulations were being formulated for the government wheat auction, which would be transparent.

He termed baseless a perception that the department would auction the wheat at higher than the purchase price.

The official said the wheat would be auctioned at a much lower price than the market and the government would fix a low retail price of flour before the auction.

He asserted that providing cheap flour to the middle class with wheat auction while giving cash subsidy to the poor would eliminate all the flaws and corruption of the quota system.

Under the new proposals, the provincial government will allow 10 to 15 per cent increase in the pre-allocated wheat auction quota for a district when necessary, while the food director will also have the authority to increase the limit of a district by 5% when necessary.

Digital record of each bag of auctioned wheat flour will be kept.

The secretary said the food directorate checked the ratio of produced flour, while the Punjab Food Authority would check it for safety standards.

Pakistan Flour Mills Association chairman Asim Raza Ahmed said the decision to give targeted cash subsidy to deserving people was very good initiative, because giving bags of flour increased the financial burden while not benefitting much people.

However, he termed impractical the proposal of government wheat auction. He said the government had forcibly bought wheat from the farmers at the official rate, while the flour mills were not allowed to buy it. If a mill bought wheat, the vehicle unloaded at a government centre.

He said the mills currently had 600,000 tonnes wheat stock, while the department has 400,000 tonnes.

He alleged that by auctioning the wheat to a few mills, an attempt was being made to destroy the rest of the industry. The food department releases wheat to keep prices stable. The auction proposal is a case of cartelisation, the mill owners' leader alleged.

He said the food department should immediately stop procurement of wheat so that mills could acquire the commodity.

Published in The Express Tribune, June 24^th, 2023.