Flour millers seek market-driven wheat policy, targeted subsidies

The Progressive Group of the Pakistan Flour Mills Association asked the government on Tuesday to let wheat move at market prices and to replace blanket flour subsidies with direct cash help for poor households, saying frequent policy changes have left growers and millers uncertain about the market.

Khaleeq Arshad, who leads the group within the PFMA, made the demand in Lahore at a meeting with a delegation of the Agriculture Journalists Association, Minute Mirror reported. Dawn reported that the millers want the changes to end what the association called severe market distortions.

Arshad said repeated switches between a rationing system, a quota system and different wheat procurement and release arrangements had created uncertainty in the market and hurt farmers and flour millers alike.

He pointed to past market behaviour. When wheat was readily available, the price of a flour bag fell from Rs2,800 to Rs1,300, a drop he said came from better supply and competition among mills rather than from government intervention. When wheat prices later rose, the government capped them and began speculation proceedings against mills and traders, accusing them of manipulating the market.

Had the market been left to work, Arshad said, the higher prices would have encouraged farmers to plant more wheat the following season.

He welcomed the government's decision to set the wheat support price at Rs4,500 per maund as an incentive for growers, but said mills should receive wheat at a price reflecting procurement cost, storage, transport and other expenses.

"Buying wheat at Rs4,500 per maund and subsequently releasing it at a substantially lower price creates distortions in the market and leads to operational problems," he said.

On subsidies, Arshad said blanket flour subsidies gave the same benefit to a low-income labourer and to an affluent consumer, and that public money should be directed at families below the poverty line and households with limited purchasing power. He named the Kissan Card, the Benazir Income Support Programme and initiatives of Punjab Chief Minister Maryam Nawaz Sharif as databases the government could use to identify them.

He also said the government should take flour from mills in proportion to the subsidised wheat supplied to them. Mills were ready to meet delivery obligations, he said, but should not be forced to carry an extra financial burden.