LAHROE – SALMAN ABDUHU - The government has, at last, bowed down before the demand of flour millers and agreed to increase the rate of their produce by Rs1.5 per kg.

Deputy Prime Minister Chaudhry Pervaiz Elahi principally agreed in a meeting with representatives of the Pakistan Flour Mills Association (PFMA) on Sunday that the price of flour would be raised by Rs1.5 per kg, or Rs30 per 20kg bag.

The new price would be implemented from Monday (today) and a notification in this regard would also be issued on the same day, said former PFMA Chairman Sheikh Asim Raza Ahmed while talking to TheNation.

Sources in the Utility Stores Corporation (USC) said the government would not increase the rate of flour and continue to sell the commodity at the existing rate of Rs430 per 20kg to the customers. However, the USC would have to pay extra Rs19.5 million daily to the flour millers, since about 650,000 20kg flour bags are being supplied daily to USC outlets across the country.

The sources added that the government would have to bear the burden of around Rs390 million as an additional payment to the flour millers for the remaining 20 days of the holy month of Ramazan.

It is to be noted that the millers had announced to stop the supply of flour to USC outlets across the country after their demand of raising the price of 20kg flour bag by Rs40 was not met.

Sheikh Asim Raza Ahmed told TheNation that the PFMA had given five days to USC authorities to raise the commodity’s price. “After this deadline elapsed, we suspended the supply of flour to USC outlets in Karachi, Sukkur, Rawalpindi, Gujranwala and Sialkot on Friday,” he added. The remaining suppliers also stopped sending flour consignments to USC outlets from Saturday. The supply remained suspended until the price of flour was raised by Rs30 per 20kg bag.

Earlier, a source in the USC claimed that the government was not in a position to raise the price of flour, particularly when it was giving a huge subsidy on flour to the public during Ramazan.

Sources said the rising demand of wheat for export purposes had created panic in the domestic market, especially since the price of wheat in the global market had increased by Rs250 per 40kg. Market sources viewed that the price of wheat / flour will further increase after Ramazan.

Wheat prices in the world market crossed $300 per tonne mark after a long gap and export at this price level was viable for Pakistani exporters, they said. In addition, exporters also obtained warehouses to store their newly-acquired wheat stocks, they added. Currently, exporters are quickly procuring wheat from the open market because wheat prices in the world market are on higher side and they are expecting huge export orders.

They said wheat price had registered an increase of Rs1,250 per tonne in the domestic market during a week. Market sources said commodity exporters were aggressively procuring wheat to fulfil export requirements because commodity prices in the world market were steadily on the rise.

Pakistan’s wheat export had declined over the last few months because of low prices in the world markets, but rising wheat prices abroad had opened up new venues for export of the commodity. With the current rise, wheat is being sold at Rs27,750 per tonne against a price of Rs26,500 per tonne a week ago.

Flour millers have already announced to increase flour price by Rs2 per kg with economy flour being sold in the market at Rs320 per 10kg bag. Previously, it was being sold at Rs300 per 10kg bag.