Govt considers easing restrictions onwheat procurement amidst rising prices

LAHORE: As domestic wheat prices continue to rise during the procurement season, authorities are considering easing restrictions on buying wheat from local and global markets to allow the private sector to fulfill their requirements, industry officials said.

The federal government is contemplating this move due to the nosedive in wheat prices on the international market. Despite reports of a bumper crop, wheat prices have skyrocketed in various parts of the country, with some areas experiencing prices over Rs4,800 per 40kg against the minimum support price of Rs3,900 per 40kg in Punjab and Rs4,000 in Sindh province.

The resultant staggering cost of flour has become unbearable for many, especially for those living in Karachi, as it is available in excess of Rs160 per kg. In Lahore, the price of wheat jumped to Rs 4600 per 40 kg on Tuesday in the open market. The price of a 20kg flour bag is going to increase by Rs 200 from today (Wednesday). Increase in maida price has also been recorded from Rs 11500 to 12000 per 80kg bag, which is mainly used for making naan and khumeri roti.

“The government may take some decisions, based on vibes in the global grain market, and an announcement of such steps would help cooling down sentiments in domestic grain markets, providing much-needed relief to the general public,” said a market insider.

As per market watch, milling wheat prices lately said to be nosedived in the international market to pre-Ukraine-Russia war level as well as faring below pre-pandemic levels. According to a local trader, Russian wheat could be imported at $260/tonne, costing just Rs3,250 per 40kg at Karachi port. More importantly, the trend in lower wheat prices is said to prevail for months this year.

Keeping in view this encouraging development, is weighing options to give private sector permission for import of wheat. “A mere announcement of allowing registered importers to import 0.5 to 1.0 million tonnes of wheat will bring relief to masses in the domestic market by pushing grain prices down,” said a source.

Majid Abdullah, a central leader of Progressive Flour Millers claimed that the provincial food departments and the district administration have embarked on a road leading to unnecessary confrontation with the millers.

In order to achieve the wheat procurement target, which was very likely to have been achieved easily with a good crop size in sight, they are creating undue hurdles for the private sector.

“Seizing every truck loaded with wheat and entering flour mills and taking over the mills' declared stocks have created panic in the market,” he claimed. Talking about prospects of import, he said, there is a dip in the international market and it is a high time to open imports. “This will positively impact the local prices, he observed. Wheat import for export of wheat products is another way to lure in millers who want to get out of quota regime,” he said.

Khaleeque Arshad, a veteran progressive flour miller, has also called for allowing wheat imports to control the price of flour in the country. He suggested that farmers have mostly sold their produce, so imports would not affect them. Moreover, flour mills should be allowed to buy wheat to meet their requirements until September-October. Otherwise, the Food Department will have to release wheat prematurely to stabilize the grain market.