Feb 04 - 10, 2008

Balochistan is reeling under worst flour crisis and wheat inflation due to hoarding, profiteering and smuggling of the wheat to neighboring Afghanistan via Chaman, a border town in the province. The wheat inflation in the province aggravated by the critical situation erupted in the country after Benazir Bhutto's killing on December 27. The local flour traders could not get supplies from Sindh and Punjab during the critical situation and the people faced an acute shortage of wheat in the province. Since then, the price of wheat has skyrocketed in the province and reached to Rs 400-600 per 20Kg bag of flour, as against Rs260 price earlier fixed by the government.

Balochistan government has also increased the official price of flour from Rs14 to Rs15.50 per kg after consultations with flour mill owners, fixing the open market price at Rs.305. According to the official sources, the step has been taken to ensure a smooth supply of flour in the market. Officials say that the provincial government is trying to overcome the flour crisis and strict action would be taken against profiteers and hoarders. The government has taken measures to curb smuggling of wheat and flour to Afghanistan and Frontier Corps recently seized 180 tons of wheat in the border area. The monthly flour quota for Utility Stores has also been increased from 1,500 to 5,000 tons.

Balochistan's quota of 100,000 tons of imported wheat has also reached the province. A provincial food committee headed by the secretary food has been set up for smooth supply of whet and flour. Provincial food department has a stock for 17 days while mills hold 7,000 tons of wheat. It is hoped that the situation would improve within one month after recent measures taken by the government.

Impact of Hoarding: Earlier, the concerned authorities had failed to do enough for ensuring regular supply of flour to retail outlets and to check the wheat inflation in the province. The people complain that measures taken by the provincial government to overcome the flour crisis in Balochistan have proved ineffective as consumers are still paying a higher price for flour, which is more than what they paid before the crisis. The political circles flay the provincial government for its failure to obtain the wheat quota of Balochistan from the centre and also hold the federal government responsible for the current flour crisis in the province.

Though the situation has much improved in Quetta, yet rest of the province is still hard hit by flour crisis. Last month, the wheat crisis had worsened in Turbat, Pasni, Gwadar, Kalat, Nokandi, Pishin, Kila Saifullah, Dera Murad Jamali, and Panjgur and in other parts of the province. Nokandi presented a worst-case scenario where the people began migrating to Naushki and Quetta due to the extreme wheat shortage in the area. In the coastal areas of the province including Gwadar, the price of flour had shot up to Rs600 for a 20kg bag, as against Rs260 price fixed by the government.

The caretaker Chief Minister had directed the concerned authorities to take stern action against hoarders of wheat and profiteers immediately after the crisis-like situation erupted in the province.

Smuggling: The concerned authorities however failed to do enough for ensuring regular supply of flour to retail outlets and to check the wheat inflation in the province. Federal government has shifted responsibility to the private sector, which has been involved in wheat flour smuggling to neighboring country. According to the official sources, the private sector is not releasing their stocks openly in the market and federal government has asked provinces to find out a mechanism to dig out the hoarded stocks of wheat. It has even asked the provinces to find out from electricity bills of the flourmills that how much they are grinding extra wheat above from government quotas. The district governments hold flour millers responsible for the wheat shortage and the escalation of its price, as they are allegedly involved in hoarding of the commodity. Though the government provides wheat at the lowest rates to millers, yet they sell wheat flour at the increased rates. Had the flour millers stopped buying wheat from the open market and depended on the government wheat, the flour prices would have been declined.

Administrative Lacunae: It is hoped that the situation would improve in days ahead after recent measures taken by the government. For instance, Federal Food Committee (FFC) has increased Balochistan's daily wheat quota to 1,000 tons. The FFC has advised the provincial governments to establish control rooms to monitor the situation and has also given special powers to district administration to tackle the situation. The Frontier Corps personnel have been deputed at more than 60 flourmills and 45 godowns of Balochistan. The government has imposed a ban on the export of wheat to Afghanistan by the private sector. The Frontier Corps have also been deployed to check the smuggling of wheat to Afghanistan via border town of Chaman

The federal government has informed the provinces that it would not be able to subsidize wheat for them in the years to come, so they have to adopt their own mechanism for maintaining wheat stock and prices. Balochistan's total storage capacity of 0.223 million tones also needs to be enhanced, as the federal government has already increased the strategic reserve quota of wheat from 0.5 million tonnes to 1 million tonnes annually.

According to the official sources, Balochistan possesses 149,880 tons of wheat and the provincial stock is sufficient for 42 days. It needs 100,000 tons additional wheat to sustain its mill supply till April. The officials claim that administrative failure and problem in the supply chain were the main factors behind the flour crisis, turning a situation of plenty into scarcity. During the critical period, the provincial food department had 350,000 bags of wheat. According to the official sources, the provincial government is trying to manage 1.4 million bags from different sources including the Passco to overcome the worsening crisis in the province.