WHEAT CRISIS DEEPENED

Some market players had warned early this year (January and February) that whole country, especially Sindh would face a wheat crisis again

By AZAM ALI
Nov 29 - Dec 05, 2004

Wheat crisis has further deepened despite the tall claims of federal and provincial governments resulting a historic surge in the atta pricesah Khan Jamali's government and kept gradually deepening, bringing the atta prices in retail from Rs. 17 to Rs. 21 per kilo in urban areas especially in Karachi.

"How can wheat crisis end until the matter is not taken at the required level on its due priority," said a government officer from the food department with the request of anonymity. He further said that minting money with the connivance of corrupt officials of the food department. "Isn't it a money minting game when crisis deepening even when government has removed the shortfall by importing wheat? another senior officer said in an interrogative sentence.

There are different justification by the mill owners, chakki owners and retailers, while the government has different justifications every day apart from tall claims. Sources said that government could not or did not bring out the hoarded wheat from interior parts of Sindh and Punjab provinces.

Some market players had warned early this year (January and February) that whole country, especially Sindh would face a wheat crisis again in the coming months possibly in Oct and Nov and beyond as no clear roadmap had been drawn, either on the provincial or on the federal level to meet about 1.8 million ton wheat deficit.

The deficit was inevitable because officials in the Sindh government expect a harvest of 2.2 to 2.3 million tons from the current crop. The demand for about 35 million population in the province at per capita consumption of 124 kilograms was estimated around 3.9 million to 4 million tons.

"We rely entirely on wheat supply from Punjab and Passco to meet this deficit in the coming year," a senior official told PAGE. This year both Punjab and Passco let down Sindh in matter of supplying wheat in time, hence, the crisis lingers on till to date.

The supply of wheat from Punjab godowns to Sindh is a multi-million rupee game in which brokers, traders, millers and transporters join hands with some corrupt officials of the food department to rob consumers.

There was no scarcity or shortage of wheat this year in Karachi and Hyderabad but supply of wheat was tightly regulated by brokers, traders and millers in collusion with these officials to ensure that prices of flour and bread go up and everyone of them made huge profits since October last.

Officials hope countrywide harvest of over 20 million tons of wheat in which the bulk almost 18 million tons - will be in Punjab. The government wants to procure officially more than five million tons of wheat in the current season to maintain a buffer stock which means that about 12 to 13 million tons of wheat will go in the open market.

The Sindh government has commenced wheat procurement operations to secure at least 0.6 million tons. It is reported to have obtained a credit margin of Rs7 billion from banks at 1.4 per cent rate early this year.

But it is facing some problems in procurement. The open market prices of wheat in Karachi are far more attractive to the farmers than the officially fixed prices of Rs350 for 40 kilograms at the procurement centres.

Flour millers accuse the provincial government of obstructing the transportation of wheat harvested in the interior to Karachi. "Wheat carriers are made to pay Rs25 to Rs30 on a bag of 100 kilograms on the truck," a flour miller said.

In March this year Mr. Bilal Aslam Sufi, a former Chairman of the Pakistan Flour Mills Association had alleged with some document accusing some officials of 'unprecedented corruption'. His prescription is to wind up the department and liberalize wheat trade.

On the other hand, officials in the Sindh food department contend that a strong lobby of wheat brokers, millers and traders do not want wheat procurement operations to be successful in the province.

"Wheat trade cannot be allowed full liberalization," an official said, and maintained that in developing countries governments had to intervene because "sensitive items like wheat and bread cannot be left at the mercy of market forces." But he conceded limitations of his department, causing a lot of problems for consumers.

Sindh government's strategy was to procure 0.6 million tons of wheat by late April or mid-May and stock it. The strategy was that farmers may retain with them about half a million tons of wheat for self-consumption and bring about a million tons in the open market.

Release of wheat from government stocks was expected to begin from July or August to meet the shortfalls of the flour mills from their wheat purchase from the open market.

The Sindh government expected release of 1.2 to 1.5 million tons of wheat from Punjab and Passco for which the officials were expected to place a demand before the federal government and seek a firm assurance of supply at times when demand is most pressing.

Karachi and Hyderabad with almost half of Sindh's total population of 35 million are located far away from the wheat growing areas. The total demand of wheat in these two densely populated urban areas of Sindh is said to be over 120,000 tons a month. "This has become a favourite hunting ground for the profiteers and hoarders," said a market watcher.