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Pakistan faces wheat flour crisis

A Correspondent
Filed on January 11, 2008

ISLAMABAD The ongoing energy shortages and hoarding of wheat are stated to be the main causes of the present worsening flour crisis in the country.


Poor administration, high prices in international wheat market, role of speculators, payment of subsidy and disruption in supply to the northern parts and interior villages of the country due to rains and snowfall are some other factors which fuelled the crisis.

The price is steadily on the rise, which reached to national average of Rs26 in some parts of the country despite daily supply of 31,000 tonnes of wheat from the government side to te mills.

Consumers start making queues in front of Utility Stores to obtain a flour bag but they return bare-handed due to an acute shortage of wheat flour and selling of subsidised bags to profiteers.

President Pervez Musharraf yesterday directed the concerned authorities to take immediate remedial measures to overcome the shortage of flour and utilities gas, electricity across the country.

A spokesman for the president, Rashid Qureshi said that the president would shortly be presiding over a high level meeting to oversee the short to medium terms measures to be adopted and to discuss future plan to deal with the power and gas shortages in the long run.

Informed sources said that it was believed that some influentials were involved in the hoarding to get maximum benefits from the crisis to use the money in electioneering. They said the government was hesitant in launching a crackdown on individuals fearing that it could create problems for the former ruling party in the general election.

The load shedding has also affected the grinding of wheat in many parts of the country as most of the mills are not fully utilising the capacity due to repeated power failure. Constitutionally, the Punjab government cannot impose ban on inter-provincial movement of wheat but un-officially the supply of wheat/flour to other provinces has been halted very recently, thus increasing the problems further in these provinces.

The federal government though has imposed a 35 per cent regulatory duty on wheat export, the move is considered very late as NWFP and Balochistan have almost disposed off their stock through export to Afghanistan.

On other hand, Punjab government is demanding subsidy from Sindh and NWFP on the allocated stocks lying with the PASCO. Around 75,000 tonnes wheat of NWFP and 0.15 million tonnes wheat of Sindh is lying with the PASCO mainly due to the subsidy issue.

The Punjab government is claiming that it has allocated Rs3 billion as subsidy for wheat and is now reluctant to pass on the benefits to other provinces which had already done away with the system. A source in the commerce ministry said the wheat crisis started when former Prime Minister Shaukat Aziz allowed wheat export on the pretext that the country had a surplus stock of one million tonnes of wheat, which the source said was a wrong estimate.

The export was around 0.5 million tonnes, which immediately pushed upward the prices in domestic market. It was the ministry of agriculture which had proposed to Mr Aziz to allow export of wheat to give a better price to farmers, which benefited only big farmers in Punjab, having considerable influence in the government, bureaucracy and cabinet.

According to some estimates, wheat supply to mills remained much behind the actual requirement, particularly in NWFP and Sindh. The daily requirement of Sindh stood 8,000 tonnes, while only 4,000 tonnes has been released to the mills.

While in the NWFP, the 1,500 tonnes has been released as against the requirement of 6,000 tonnes. On the other hand, the Punjab government is claiming to have been releasing 19,000 tonnes daily as against the requirement of 11,000 tonnes. The wheat supply situation also worsened in the wake of the Eid holidays, assassination of former prime minister Benazir Bhutto followed by violence and strikes.

A source in the customs department said the smuggling of wheat to Afghanistan had started after the imposition of regulatory duty. He said there was no question of smuggling as officially the export was not banned to Afghanistan. He even questioned the official data regarding wheat production, claiming that it had been fudged to show agriculture growth to have high GDP.

The government had already decided to import 1.5 tonnes of wheat from international market. Of these, 0.6 million tonnes has already been imported.

According to the sources, the difference between international and domestic prices had compelled profiteers to locally purchase the wheat. If the commodity was not smuggled to the neighbouring countries, it could yield a hefty profit, they said.





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