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Country-wide ban on setting up new flour mills
ECC has constituted a committee to review situation and submit report in two weeks

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  5. Support price policy for paddy crop
  6. Ban on setting up new flour mills

From Shamim Ahmed Rizvi, Islamabad
July 12 - 18, 1999

During the past few years flour milling industry spread rapidly and all the provincial food departments came under great pressure for release of wheat above the consumption and requirement of the population. The mushroom growth of flour mills in almost every province has virtually jeopardized the viability of vital agro based industry.

In view of the fact that due to sensitivity of the matter, the flour milling industry is over protected because they get raw material, i.e. wheat, from the public sector godowns at subsidized rate and after grinding and adding reasonable profit margin, the wheat flour is not only sold in the market but also sent to other provinces due to price variation. Presently, the provincial food departments are bearing subsidy in the shape of incidentals borne on indigenous/imported wheat. In addition the Government of Punjab last year decided to further subsidize wheat by Re 1 per kg to the flour mills. This not only created disparity in prices of wheat flour among the provinces but also attracted the traders/millers to sell wheat products to provinces other than Punjab to get maximum profit.

The Punjab government is also facing problems to meet the demand of all the flour mills due to rapid increase in the number of mills. As a result, the grinding hours of wheat are reduced and this situation leads to shortage of Atta (flour) sometimes in some areas.

In Islamabad, there are about 30 flour mills while only one or two mills are sufficient to cater to the needs of the entire population of the city.

It is learnt that Punjab, NWFP and Balochistan food departments fully support the ban on flour mills. Sindh food department has also admitted rapid growth of flour mills in Karachi, Hyderabad, Kotri and Sukkur. They have no objection on the proposal of banning of new flour mills provided the said policy is not applied on the districts of Umer Kot, Mithi, Nowshero Feroze, Khairpur and Larkana because there is no flour mill in Umer Kot and Mithi however, one mill exists each in districts of Nowshero Feroze, Khairpur and Larkana.

In order to streamline the wheat distribution system and to curtail the pressure on public sector stocks, the Ministry of Food, Agriculture and Livestock has asked the Economic Coordination Committee of the Cabinet to direct provincial industries departments to immediately impose ban on establishment of new flour mills or place it on negative list for at least five years. In addition the provincial governments may also be directed to ensure non supply of wheat from the government stocks to non-functioning flour mills.

The Economic Coordination Committee of the Cabinet has constituted a committee to be headed by secretary industries, to review the situation and submit its report to ECC within two weeks suggesting measures to streamline the establishment of flour mills in the private sector. The ECC, however, decided to advise the State Bank of Pakistan to direct the commercial banks not to advance loans for the establishment of new flour mills in future.

DETAILS OF FLOUR MILLS

PROVINCE NUMBER OF MILLS MILLING CAPACITY

Punjab 416(Plus 70 under construction) 56,226/tons daily

Sindh 102(Plus 7 under construction) 18,623/tons daily

NWFP 136(Plus 82 under construction) 22,300/tons daily

Balochistan 32 (Plus 10 under construction) 3,500/tons daily