Thursday November 30, 2023

Situationer :Plan to give inoperative mills wheat sparks fears of grain pilferage

September 21, 2023

LAHORE: Amid countrywide campaigns against black-marketing, smuggling, profiteering and gas and power theft, Punjab’s move to distribute wheat among inoperative flour mills, involved in trading, has sparked fears of grain pilferage and smuggling to other provinces and countries.

At a time when countrywide campaigns have been launched against power and natural gas theft, sugar hoarding, black-marketing and jacking up of prices, and dollar smuggling and its grey market, the Punjab Food Department is going to distribute billions of rupee worth of public sector wheat among trading flour mills. This step, according to market insiders, is bound to encourage price-hike of wheat and its shortage due to smuggling to other provinces, and Afghanistan and Iran.

The Punjab Food Department lately made up mind after getting convinced about liberal wheat issuance policy for 2023-24 marketing year. The latest planned move of provincial Food Department is being seen as a departure from earlier proposal of releasing wheat to functional flour mills through liberal issuance.

Taking cue from functional flour mills’ demand to release wheat from official warehouses under liberal wheat issuance policy, the high-ups of Food Department were convinced of executing smart grain marketing policy, replacing traditional quota-based grain distribution, plagued by corruption. The department also found it hard to release wheat to flour mills through complicated bidding process.

However, now taking U-turn, it is learnt, the Food Department has decided to start releasing wheat to over 1000 flour mills of the province from October 15, 2023. Most of owners of these flour mills do not run their respective units and instead sell wheat to functional mills or other traders from where it is eventually smuggled to unknown destinations.

Against Rs3,900 wheat support price, the grain issue price has been stated to be Rs4,450 per maund for the upcoming season though, in a move that may end government’s subsidy running into billions of rupees.

The 20-kg flour bag will be sold at Rs2,600 against Rs2,750 rate, prevalent in the open market.

Commenting on the government’s move to execute quota-based wheat release policy for upcoming season, progressive flour millers termed issuance of wheat to inoperative flour mills a symptomatic treatment of the over-crowded flour industry marred by quota menace, corruption by Food Department, trading flour mills and dealers.

Uniform issuance of wheat to all flour mills is based on a wrong policy, they observed. Instead, the only option to weed out the quota-based crunches and allied corruption in present situation is going for liberal releases. Wheat issuance at a high rate with liberal releases without any quota from September onwards will eradicate inoperative flour mills as no one will buy grains from them. Progressive flour millers blamed ruling group of flour milling body for protecting ghost millers involved in black-marketing of grains.

The formula of smart wheat release is simple, a progressive flour miller said. If efficient millers get required wheat quantity from the government, they would not be forced to buy it from inefficient ones to meet their demand and thus trading flour mills would be weeded out automatically. To a question about having enough stock for liberal release policy, progressive flour miller observed that the Food Department has around 4 million tons of wheat coupled with 0.5 million tons of stocks with. Punjab consumes not more than 0.6 million tons per month. So, from October 15 onwards, provincial Food Department will be in a position to distribute wheat under liberal releases mechanism with much ease.

Most importantly, the consumption of wheat will remain the same if grains are sold under liberal policy. The only difference is said to be grinding of all wheat released through liberal policy for consumption against quota-based issuance that always leads to grain pilferage. Hence, the progressive flour millers group strongly recommended the liberal wheat release policy for the current season. The group strongly believes that by adopting liberal release policy, the corruption associated with quota-based wheat release system will die down. Adoption of tested and rotten wheat quota system will feed owners of ghost and inefficient flour mills in addition to promoting corrupt practices by lower formations of the Food Department. Instead, liberal release will promote healthy competition between flour mills that will ultimately bring down atta prices in line with supply and demand based free market mechanism.