Wednesday January 19, 2022

Flour prices up by 94pc since Sept 2018

July 20, 2020

ISLAMABAD: Wheat flour prices jacked up to 94 percent, while sugar prices witnessed 69 percent increase on the open market since the PTI came to power, thus witnessing a record hike in the country's recent history.

A flour bag weighing 20kg was available for Rs640 (ex-mill price) during September 2018 which has now jumped up from Rs1,060 to Rs1,240 per bag on the open market in different parts of the country, while in KP it is touching Rs1,350.

Similarly, sugar prices surprisingly soared by over 69% during this period as prices soared from Rs53 to Rs89 per kilogram on the retail market, while its wholesale trading price went up from Rs47 to Rs76 during that period.

Geo Television Network's programme (ASKK) in its months- long intensive investigation has reviewed official record/files of both regulators, ministries of food security, commerce and industries, Pakistan Flour Mills Association and Pakistan Sugar Mills Association as well as interviewed two dozen government officials, representatives of growers and provincial food departments to assess the factual position directly from the stakeholders.

This hike may reappear in coming weeks too if the government fails to take actions against the responsible hoarders and profiteers, suggested the markets' trend. Wheat flour prices went up to over 53% while sugar prices witnessed an increase of 14% in the open market since first inquiry reports made public by federal government in first week of April this year. Price of a 20-kgs bag shot up from Rs810 to Rs1, 240 and one kilogram sugar witnessed Rs9 increase in one kilogram sugar in the market after April 4, 2020, Geo Television Network's weeks long investigation continued to reveal on authority.

Consumers price of essential items prepared by Pakistan Bureau of Statistics (PBS) reveal that sugar price was Rs90 per 1-kg in Quetta last week while a bag of 20-kgs wheat flour was being sold by the shopkeepers at price of between Rs1240 to Rs1350 in the market in different parts of Pakistan.

Consequentially, millers, profiteers and middlemen extracted tens of billions of rupees as an additional profit from Oct 2018 to June 2020, presuming annual consumption of wheat flour and sugar, revealed Geo Television Network’s investigation where it was difficult to calculate an exact amount of illegal profit but this windfall was seen in addition to normal trade profit in the country. “Middle men, hoarders, profiteers and millers earned some Rs200 billion as an additional profit in this hike of wheat, wheat flour and sugar during these two past years,” a senior government official of ministry of food security confirmed to this correspondent. He, however, did not want to be named.

Some 5 MMT wheat hoarded either by some influential middle men, local 'arhtees', a National Food Security Ministry official feared. Huge quantity of surplus wheat illegally stocked in some rice mills, four sugar mills, 12 spinning mills & stores owned by influential have political connections on provinces’ borders, he further claimed.

To get rid of this price hike, federal government decided to import 3 MMT wheat, a record quantity for the first time in eleven years, in an attempt to quell escalating prices and to replenish its stocks in anticipation of decline in surpluses by end of this year. Economic Coordination Committee (ECC) of the cabinet has already given a go ahead for import of 0.5 MMT wheat, a move happening for the first time since 2009.As per official data Pakistan has been collectively maintaining up to 8.386 MMT surplus wheat since 2009 to 2018.

Government, however, is apparently failing to control wheat price which has gone up to Rs4, 800 to Rs4,900 per 100-kg bag in the open market while its (official) support price remained at Rs3,500 per 100 Kg this year with a nominal 10% increase as compared to market price for 2019, which was fixed at Rs3,250 per 100-kg bag, Geo Television Network's Investigation revealed.

Wheat flour prices alarmingly started soaring up since July last year, as the official record showed that a 20-kgs flour bag was being sold at Rs. 854 in open market during August 2019, Rs908 during January 2020, Rs. 912 during April 2020, Rs972 during first week of June this year and now this 20-Kgs flour bag has crossed upwards of Rs.1, 240. Official statistics also reveal that the provincial food departments have had 20% less stocks as compared to last year, which was 7.8 MMT. Government officials claimed that estimated 2 MMT wheat has been procured by Pakistan Flour Mills Association but it’s (PFMA) chairman Asim Raza said, "They (millers) purchased only 60,000 to 70, 000 metric tons from open market as provincial food departments did not allow them to go for more this year."Government officials, however, admitted that fact that PFMA procured 66% less wheat than the previous market and production trends.

Pakistan would consume 27.47 MMT wheat from April 2020 to April 2021 with ratio of 75, 260 metric tons (84.2 million kilograms) daily, according to official statistics Geo Television Network got exclusively. The country produced 25.457 MMT wheat while total availably of wheat with carry forward stock is 26.059 MMT at the moment this year.

Dr Aslam Gill, former wheat commissioner, said, wheat has now become a political commodity, same as sugar was. "Potential influential people having government backing have been hoarding wheat in huge quantity to control the market. Price hike is not due to any deficiency in the supply chain, rather it is due to millers, middle men’s monopoly, failure of food departments--it is more like now commodities versus government," Dr. Gill said.

"Sugar prices were expected to jump up by 15 to 20 percent (from Rs53 to Rs72 per kilogram) during sugar season 2018-19 due to increase in sales tax and accounting for inflation. But the current hike is quite alarming and not justified at all," observed Agri Forum Pakistan Chairman, Ibrahim Mughal. On the other hand, agricultural inputs (fertilizer, oil, electricity, pesticide, raw materials, seeds, machinery, labour) witnessed record hike of 60% to 70% in prices and costs after the government abolished subsidy thereon, he added.

Previous governments collectively paid over Rs18 billion on account of subsidy and freight reimbursement to sugar manufacturers on export during past five years (2014-15 to 2018-19), as per record exclusively available with Geo News. The Competition Commission of Pakistan in its two latest reports also exclusively available with Geo News revealed, "sudden sky rocketing of the price of sugar in the current year still appears to be an anomaly given that the supply of sugar still appears to be in excess of its demand."

A spokesperson for the ministry of food security said there is an estimated shortfall of 1.411 MMT wheat this year.

The shortfall is going to be mitigated through various means, including permission of importing 1.5 MMT wheat through the private sector.

Telling key reasons for recent record hike in wheat and flour prices, the spokesperson further said, "Low wheat production, prevalence of yellow rust (a fungal disease for the wheat plant), locust threat, higher public sector procurement targets (32% of the production), previous years’ pricing trends and restriction over free movement of wheat within the country. PASSCO also could not achieve the targets because of encroachment over some PASSCO designated areas of wheat procurement by Punjab food department, procurement differential in the local market." Managements of other stakeholders namely PASSCO, food departments of provinces, CCP and USC did not respond to this correspondent despite several reminders sent to them for weeks.