Punjab plans pilot of novel wheat auction to avoid imports

LAHORE: Punjab province has formulated a plan to release wheat to flour mills efficiently through auction under a competitive process with a view to avoiding imports worth millions of dollars.

Instead of uniform release of wheat to the mills, including inefficient units embezzling grains worth billions, government’s proposed e-auction is aimed at ending pilferage for good.

Under the traditional lucrative wheat release to every flour mills as an entitlement, the golden grains of wheat have been reduced to trash, as it promotes malpractice, embezzlement, overpricing and contamination in wheat supply chain. As a result, people have to face shortage, price-hike and buy wheat flour of poor quality throughout the year.

According to an official estimate, influential flour mafia used to siphon off some one-third of highly subsidised wheat issued to mills from government warehouse every year. Instead of grinding grains and subsequent selling of flour at controlled rates, they conveniently sell this cheap wheat in the open market at exorbitant price, which usually is smuggled to other areas. For instance, in a province-wise drive early this year, provincial Food Department sealed several flour mills in Lahore District alone on charges of selling subsidised wheat at double the price in the open market, depriving masses of relatively cheap flour.

“We cannot afford this practice by unrestrainedly draining billions of rupees worth wheat every year, especially with thin supplies due to multiple factors. If we succeed in implementing auction-based wheat release to flour mills under the mechanism made by Public Procurement Regulatory Authority (PPRA), we may not require import of a single wheat grain in marketing year 2023-24”, an official said here Tuesday. We may essentially avoid imports of about one million tons at least, he said.

With purchase of 3.92 million tons in the outgoing procurement season against the assigned target of 3.5 million tons and carryover stock of 0.126 million tons, the Food Department accumulated stock of 4.04 million tons. We can easily fulfil food requirements of Punjab’s population during September 15, 2023-April 15, 2024 period of wheat issuance from government godowns if it is released to qualify mills only following open bidding process, he noted.

Owing to inbuilt merits of the groundbreaking auction system, inefficient mills will evade participation in the auction, as gap in market and auctioned wheat would be minimum due to strict regulation and no excessive demand of grain by other mills. The innovative system of transparent bidding would enable efficient mills to buy as much wheat as they require and then sell flour to target market, official observed.

It is learnt the present set-up at federal, as well as provincial levels, have approved proposal of auction-based wheat release to flour mills with full backing and patronage.

After Eid holidays, official said, cabinet is expected to accord approval to new wheat release mechanism. The Food Department is contemplating a couple of pilots of e-auction or traditional bidding process in August-September, preferably in big cities, initially before its full-fledged launch, he added.

Emphasising importance of bidding, official opined it is prudent approach to utilise available scarce quantity of grain judiciously instead of giving undue leverage to a segment of flour milling industry by doling out cheap wheat. It dismayed ordinary people relying heavily on flour for meeting their food requirements, he said.

He was confident new wheat distribution system would be a win-win situation for the government, efficient flour millers and the masses.

He recalled wheat quota system has become an annoyance both for government and the end-consumers. It has become a source of looting at will, with minting of differential crores of rupees per day by various groups buying wheat at official subsidised rate and selling it at open market rate, he said.

No patriotic person can allow this looting, he said. All flour mills are not involved in this practice, but it’s a fact a lot of money of the nation is being embezzled. Government spends billions of rupees on providing subsidy from tax-money and a considerable chunk of it is wasted every year.

Meanwhile, ruling group of flour mills association has opposed the government’s plan. The sale of wheat on auction will be a bad move on political front. The move would deprive flour mills of quota and promote monopoly of big players, they claimed.