KARACHI: The Sindh government has agreed to fix issue price for wheat at Rs975 per 40kgs or Rs24.35 per kg against the procurement price of Rs950 per 40kgs fixed by the federal government.
A decision to this effect was taken at a recent meeting held between Sindh food department and millers.
Consequently, the retail price of wheat flour would come to Rs31 per kg.
As issue price of wheat would hardly cover procurement cost of wheat, sources said the Sindh government would have to foot a huge subsidy of up to Rs1.75 billion.
All the provincial governments take huge bank loans for procurement of wheat and other crops and have to pay high mark-up, including storage, transportation cost, etc., but their common and biggest problem is pilferage of grains from their storage places.
Sindh food minister Nadir Ali Magsi was supposed to officially announce the issue price of wheat fixed at Rs975 per 40kgs at a press conference but somehow this could not take place, sources said.
After adding cost of jute bag (bardana), the ex-godown price of wheat would go up to Rs25.25 per kg. However, millers also have to incur incidental costs, such as transportation and hidden cost paid at a time of release of wheat from government sources which would take ex-mill price of wheat to Rs29 per kg.
It is unusual that no Ramadan package is being announced and this indicates that high procurement price of wheat has already put a huge financial burden on provincial governments.
Whereas Sindh and NWFP have fixed release or issue price of wheat at Rs975 per 40 kgs or Rs24.35 per kg, the Punjab government is reported to have fixed it higher at Rs1,000 per 40kgs. However, millers are agitating over higher issue price.
On harvesting bumper wheat crop at 25 million tons, larger quantity of wheat was procured by provincial governments and Pakistan Agriculture Supplies and Storage Corporation. The Passco procured around 9 million tons, Punjab 5.8 million tons and Sindh 1.2 million tons.
All-Pakistan Flour Mills Association (Southern zone) chairman Syed Johar ali Kandhari told Dawn it would be in the best national interest if all the provinces and Passco release their wheat stocks at the earliest.
He said the carrying cost of wheat stocks is so high that ultimately the government would be forced to increase prices which presently common man cannot afford due to very high cost of living.
It is more important, he said, when next wheat crop is due in February or March (2010), the early release of wheat from provincial and Passco stocks will help create financial space for procurement of next crop.
Mr Kandhari further said that under current price structure, millers enjoy little advantage for getting wheat from official stocks over open market.
He said on getting wheat from government stocks, millers have to make advance payment whereas on purchasing wheat from open market, the payment is made even after a week.
Above all, APFMA chief said wheat price in the open market is at Rs26.50 per kg which is Rs1.25 costlier than official release price at Rs25.25 per kg along with jute bag (bardana).
But still it is better to get wheat supply from open market because they give an advantage of two kg for jute bag (bardana) in weigh against one kg allowed by the government.
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