Early releases to mills depleting Punjab wheat reserves fast

LAHORE: Market insiders on Wednesday pinned the rapid depletion of Punjab’s wheat reserves on unregulated releases of the grain to the flourmills at highly subsidised rates in an already lopsided consumer market.

According to sources, unnecessary early supplies to flourmills have failed to arrest a spike in the prices of wheat and its products as well as plug the shortages.

The huge difference in wheat and its flour prices in other provinces also put a strain on Punjab wheat stocks as local flourmills are reportedly smuggling the highly subsidised grain to parts of the country, where the prices are higher, allegedly under the watch of provincial Food Department.

The price of flour in many cities of Sindh province is said to be double than what is being charged in Punjab province.

Sector officials claimed that the provincial Food Department failed to take effective measures against flourmills involved in smuggling of subsidised wheat to other provinces and beyond.

Federal government and its allies in Sindh province also could not take corrective measures for ending distortion in the market.

Punjab, the biggest producer and consumer, too needs to look into its wheat-handling affairs, a source said.

After the end of the wheat procurement campaign about four months back, Punjab seemed comfortable with its wheat stocks. However, a bad decision to start distributing wheat to flourmills at throwaway price much earlier than the normal yearly practice may prove catastrophic for the consumers.

Instead of September-October, Punjab opted to issue grain to mills a couple of months earlier without considering its repercussions. This has resulted in the consumption of over 1.5 million tonnes of wheat before the start of traditional releases to mills. Now, the province is left with only about 3.1 million tonnes, which may also be exhausted by December-January --about four months before the commencement of next wheat harvesting season.

Such a poor management of wheat reserves has raised concerns over the wheat security of the province.

If the government doesn’t import about 1.5-2.0 million tonnes in the next three to four months the food security of the whole country would be at stake, warned market insiders.

Unfortunately, the federal government has yet not made any headway in importing cheap wheat from Russia or elsewhere. The indecisiveness on such a crucial matter of sealing government-to-government (G2G) deal had been a blunder to say the least, said sources.

It may be noted that the Ministry of National Food Security & Research had reportedly informed the ECC (Economic Coordination Committee) of the Cabinet that Russia’s offer was not approved due to higher rates.