The country is presently facing a serious crisis of wheat grain and flour and despite all efforts by the federal and provincial governments the crisis is not been controlled, and the masses are compelled to pay high price for an essential item.

The government has taken several steps to curb the soaring prices of wheat and flour in the country, and import is major part of these efforts. However despite the huge import of the commodity the prices have not been controlled, which means that there are some local elements involved in the wheat crisis.

Market sources said the country had massive stocks of wheat grain but hoarding of the commodity by some wheat exporters and millers was the chief reason for the current crisis.

A miller, on condition of anonymity, said the whole crisis had been created by the millers and they were earning huge profit from the sale of wheat flour, despite availability of government subsidized wheat grains.

He said profit of flourmills was gradually increasing and surged by 712 per cent to some Rs6.5 million per month during the last nine months.

A detail study has been conducted on the flourmills’ cost, expenses and sales value, which proves that flourmills are the major beneficiaries of wheat and flour crisis in the country and criminally exploiting the situation at the cost of consumers.

Industry sources said despite the huge supply of wheat by the food department, the millers are selling wheat at a high price by saying that they (millers) were getting some wheat from the open market on expensive rates to fulfill the demand of the masses.

As per details, some 72 flourmills are operating in Karachi and they have demand of some 30,000 100kg bag per month, out of which around 14,000 bags of 100kg wheat are being provided by the food department at Rs1,250 per 100kg bag.

While, millers are procuring some 16,000 100kg bag wheat from open market at Rs2,100 per 100kg bag and the average rate of wheat has been calculated at Rs1,691 per 100kg bag.

The milling, transportation and other expenses have been calculated at Rs83 per bag, however a gain on per bag that has been calculated is three per cent or Rs50.73 per bag, therefore the flour cost has been calculated at Rs1,723 per 100kg.

The millers are getting 16 per cent Maida, 13 per cent fine flour, 50 per cent Atta and some 21 per cent Bran (Chokar) from 100kg wheat bag, while the average price they are getting for these commodities is Rs25 per kg or Rs2,018 per 80kg bag.

However, despite the facts the average cost of wheat has been calculated at Rs1,723 per 100kg bag and millers are selling the commodity at Rs2,018 per 80kg bag in the local market. Therefore the profit of millers has also increased rapidly.

Normally flourmills gain about Rs8-10 per 80kg bag, however at present they earn some Rs300 per bag profit by creating artificial flour shortage, industry sources said.

They said the millers' average profit stood at Rs800,000 per mill last April, however it has rapidly surged and it reached Rs6.5 million in December 2007. It is expected that the profit of millers would touch a new peak of Rs9 million during the current month.

Sources alleged that some officials of the food department were also involved in the flour crisis.
They claimed that some millers were also involved in selling their quota to other mills or in the market.

"Food department already has increased the wheat quota for the mills by some 700 bags, as presently it is supplying some 3,500 bags of 100 kg per week to the mills compared to 2,800 bags in December," they added.

The government is supplying wheat from allocated quota at Rs1,216 per 100kg bag to the mills and some 47,000 tons of wheat has been supplied to 72 mills for 15 days (January 1 to January 15) in advance, they said.

They said presently millers had a huge stock of wheat and if the millers stooped buying the commodity from the open market by depending on the government wheat than the wheat grain prices would decline.

“Millers are also paying nominal taxes to the government by showing minimum profit and they are showing in the documents a net profit of around Rs0.4-0.8 million per year,” they added.

Flourmills are selling fine Atta at Rs24 per kg, Chakki Atta Rs22-24 per kg and Maida at Rs24 per kg to the retailers. The retailers are also earning Rs2-4 per kg from flour sale.

Sources said during the peak of wheat and flour crisis, millers had also stopped supply of wheat flour to the wholesalers and shopkeepers, while they demanded CNIC photocopy from customers for the sale of commodity to further intensify wheat crisis.

Although the food department has further increased wheat quota for the mills from 14,000 10kg bags per month to 16,800 100kg bags, and it aimed at further controlling the price of wheat flour.
The millers have been blamed for further increasing wheat and flour crisis by asking customers for their CNICs.

However the millers’ point of view is that the step of CNIC copy has been taken to control black marketing of wheat flour.

Sources said although the Federal Food Committee has deployed law enforcement agencies at the flourmills after receiving reports of millers being involved in the artificial shortage, the millers are still manipulating the wheat and flour crisis.

Sources said millers had stopped the sale of subsidized wheat grain in the market, however they were still selling the commodity at a high price and were earning huge profit.

The millers are selling fine wheat flour at the price of Rs20-22 per kg, while they are procuring wheat from the food department at the rate of Rs1,225 per 100kg bag or Rs12.25 per kg.

Although the millers are selling Dhai Number Atta for Rs17 per kg, its quality is questionable.
People and retailers have stressed the government officials to take necessary action against the millers and review the prices of wheat flour.