The government is again considering an increase in the wheat issue price from the existing Rs 625 per 40 kg to Rs 800 per 40 kg from September onwards, when the government starts releasing its stocks to flour mills across the country. The existing open market rate of wheat in Punjab is Rs 750 to Rs 800 per 40 kg while in other provinces the price of wheat is above Rs 1000 per 40kg.
The private sector would continue to supply wheat to flour mills till August and from September onwards the government would resume supplying. Officials of the Ministry of Food, Agriculture and Livestock said here on Thursday that if the government keeps the wheat issue price below Rs 800 per 40 kg, then a severe flour crises would occur in the country. In such a situation, they warned, the people would not be able to get even a 20kg bag of flour for Rs 600.
Even if the government starts releasing its stock at the rate of Rs 800 per 40kg, the existing 2.5 million tons of wheat imported would not be sufficient to meet the country's requirement and the government will have to import a further 4 million tons.
Comparing wheat prices with neighbouring countries, the Minfal officials said it is difficult for the government to ensure a smooth supply of flour because of the price parity. "All the wheat stocks would be smuggled to neighbouring countries," the officials claimed. The government officials warned that the government needs to adopt a realistic approach and increase flour prices as required.
The officials claimed if the government announced a price of Rs 450 per 20-kg flour bag, the existing situation would be automatically improve. The officials said that flourmills purchased the wheat at a rate of Rs 22 per kg in the open market and the provincial government of Punjab is asking them to sell the flour at a rate of Rs 19/ kg.
They questioned how it was feasible to sell a product below its cost of production. If the government announced a price of Rs 25 per kg of flour, the crisis would automatically disappear, as no one would smuggle the commodity, they claimed.
According to officials, the government had already announced the import of 2.5 million tons at the rate of about Rs 1100 per 40 kg and would distribute it to flourmills at a lower rate.
When the government was paying higher prices to growers of other countries, they asked, why was the government not willing to provide fair prices to local growers? The officials also suggested an increase in the existing wheat support price from Rs 625 per 40 kg to at least Rs 800/40kg. It would encourage the local growers to produce more and provide good returns. Higher wheat support price would also help the government save precious foreign exchange earning, they said.
They claimed that if the wheat procurement price was not increased, the country might witness another severe wheat crisis as the government would fail to procure wheat because of the higher prices offered by the private sector to wheat growers.
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