The government has fixed wheat release price for the mills at Rs 11,000 per ton for 2006-07, and asked provincial food departments and Pakistan Agriculture Storage and Services Corporation (Passco) to follow a quota-free and liberal policy till December 31, after which the government will review its wheat policy.
Provincial food departments and Passco have also been directed to follow the cascading formula to adjust the storage and handling cost of wheat on monthly basis.
Under cascading formula, food departments and Passco will charge Rs5 per 40kg more to adjust the wastage, storage and handling cost of wheat. Sources said provincial food departments and Passco will release wheat as and when required by mills.
Provincial food departments and Passco have huge stocks of wheat this year. Massive carryover and new stocks of over six million tons of wheat helped government food departments to follow a liberal policy of releasing the commodity for the current season.
The Punjab food department started issuing wheat to mills in different regions from mid-July. Historically, provincial food departments and Passco begin release of wheat quota to mills from October 1. From April to September, mills rely on private sources for buying of wheat to meet their grinding requirement.
However, this time the situation is different for millers. Stocks position of provincial food departments are comfortable and they want to feed mills as much as they can grind to ensure smooth supply of flour in the open market.
But millers prefer private sources for wheat procurement. They say cheaper wheat with the private sector was an attraction for them and they will like to buy from this channel as long as it remains available to them.
Provincial food departments and Passco had procured 4.514 million metric tons of wheat this year. Official stocks figures indicated the private sector has procured 1.358 million metric tons and showed it as pledged stocks with banks.