Wheat and flour prices have largely witnessed a marginal decline across the country despite stakeholders expecting a massive slump following the import of the essential commodity from Russia in the past month.
Well-informed sources told ProPakistani that average wheat prices across seven major grain markets in Punjab currently range between Rs. 4,475 per 40kg to Rs. 4,495 per 40kg and have mildly floated between Rs. 4,450 per 40kg and Rs. 4,510 per 40kg during last month.
As per data released by the Pakistan Bureau of Statistics, wheat flour prices have experienced a Rs. 200 decline in Karachi and Hyderabad with current prices standing at Rs. 2,920 and Rs. 2,849 respectively.
On the other hand, the impact is smaller in the rest of the country with the same 20kg flour bag in Islamabad, Lahore, Multan, and Faisalabad dropping by only up to Rs. 40 from between Rs. 2,700 to Rs. 2,900 in August to Rs. 2,660 to Rs. 2,890 during last week.
ProPakistani had reported in August that the shortfall is far higher for imports to have any notable impact on the prices especially in cities far away from Karachi. According to the Pakistan Flour Mills Association, Punjab flour mills had 0.6 million tons of wheat in storage, a million tons lower than 1.6 million tons during the same time last year and far less than 2.2 million a year before that.
The government had only allowed the import of 0.9 million tons of wheat from private channels and Karachi has tens of millions of people living hundreds of kilometers away from the agriculture production zones which means most of the imports will be consumed by Karachi and nearby cities.
“Our agriculture markets largely operate more on rumor than on facts and there has been a lot of fuss about a large drop in wheat prices but that is unlikely. Markets can experience marginal ups and downs and at most will drop to Rs. 4,200 per 40kg but not below that.” stated a market consultant while talking to ProPakistani.
He added that prices will actually start rising by the end of November and the beginning of December and with recent conflict erupting in the Middle East causing a hike in oil and wheat prices, it’s unlikely that the drop in dollar price can provide a substantial benefit.
On top of it, the Punjab and Sindh governments have been delaying the release of the wheat quota to the mills. Sindh government may announce the wheat release policy by the middle of next month but there has been no update from Punjab.
According to the sources, while Punjab flour mills have been continuously advocating for the immediate announcement of the wheat release policy, it’s also true that some millers from Sindh are rather fine with the open and free market as they are the primary beneficiaries of cheaper imports that they can sell at higher margins in absence of government wheat quota.
“The government needs to immediately announce the wheat release policy because both importers and hoarders are benefiting due to the current delay. Imported wheat costs around Rs. 3,900 per 40kg but it’s being sold at Rs. 500-600 higher than that,” stated Asim Raza, Central Chairman of Pakistan Flour Mills (PFMA) while talking to ProPakistani
He added that announcing the wheat release policy would ensure a decrease in wheat and flour prices while hoarders would also be forced to sell their stocks in the market. But the most interesting part of this whole story is the media stunts that have been pulled during the last 3-4 months by certain elements regarding the wheat market.
First, in the last week of July, news flashed on nearly all electronic and digital media platforms that the first shipment of privately imported Russian wheat had reached the Karachi port but the first shipment actually reached the port on September 15th, a month and a half later.
Last month, multiple sources reported that the Punjab government had announced the wheat release policy and wheat will be issued to the flour mills from October 15th at Rs. 4,450 but the actual announcement has yet to be made and Punjab flour mills again released a press release a few days ago advocating for it.
Also, big claims had been made about the slump in flour prices which hasn’t panned out completely but the above are not assessments but definite news about the events that can shift the market in either direction or at least can give an image of a shift.
Now, it’s up to the government and the rest of the stakeholders to find out whose interests are aligned in managing the market through media stories but it’s essential to expose the elements spreading playing PR stunts with the national food security.
Moreover, Karachi port authorities had imposed new limited load regulations to reportedly comply with the NHA regulations but goods transporters argue that it can worsen the food security situation as 30 trucks are stuck at Port Qasim and 35-40 trucks, mostly of imported wheat are stuck at Karachi port.
Two ships carrying 55,000 tons of wheat each are anchored at Karachi Port and Port Qasim while 3-4 more are expected to arrive in the coming days as per PFMA Sindh.
Taking about the proposed liberal wheat release policy, Raza added that wheat release has always been liberal with the exception of the last few years when the wheat shortage demanded a quota-based system. But what is this liberal wheat release policy?
The Punjab government has nearly 4 million tons of wheat stock and has asked for a further 0.5 million tons for the government. If approved, it would ensure ample wheat availability which means the government can chalk up the quota-based system. Wheat is not stored equally across the province and transportation has costs so all mills are allowed to openly buy any amount from the regions where wheat is available in surplus.
The policy is also claimed to address the traditional issue of is also expected the address the problem of grain pilferage where large numbers of inoperative and trading flour mills also get a uniform wheat quota which allegedly results in subsidized wheat either being sold in the open market or smuggled to unknown destinations but only time will tell what policies are announced and their true impact.
