KARACHI, May 19: As four to 4.5 million tons of wheat worth Rs9 billion is in private hands, a tussle between the food establishment and market forces, represented by millers, traders and brokers, appears to have entered a new phase.

Although federal food minister Nazar Gondal has threatened hoarders to surrender their wheat stocks with the provincial governments, the millers in Karachi have complained of going dry and have asked the provincial government to supply them wheat from official stocks at Rs1,800 for a 100kg bag.

“Hardly 2,000 tons of wheat is with the mills in Karachi,” said Akhtar Sheikh, a flour mills industry leader, who fears that all the 80 mills of Karachi may go dry by the weekend if government fails to make adequate arrangement for supply of wheat from its stocks.

“At least 17 mills in Karachi are not working because of wheat scarcity,” said Pakistan Flour Mills Association (Sindh Chapter) Chairman Iqbal Daud Pakwala in a statement from Sukkur.

He said three flour mills have closed down in Sukkur, and urged the government to allow Sukkur-based flour mills to procure wheat from Sukkur and Khairpur districts.

On Saturday, Sindh food minister Mir Nadir Magsi asked the millers not to pay more than Rs1,800 for a 100kg wheat bag to traders and brokers so that wheat flour could be sold at Rs22 to Rs23 per kg to consumers in retail.

On Monday, millers complained that none of the traders in Karachi agrees to sell them wheat at Rs1,800 for a 100kg bag.

“The traders are demanding Rs2,000 to Rs2,100 for a 100kg wheat bag,” a local miller said who contended that if wheat is available at this rate, flour could be sold at Rs24 to Rs26 per kg to consumers.

Millers and traders say that a bulk of wheat is in private hands in Sindh and it is stocked in rural areas in vacant buildings of schools, dispensaries and basic health units, ginning units and rice husking plans.

Those who have stocked wheat are “powerful and influential and closely connected with governments in Sindh and Punjab’’ to quote a leader of the Pakistan Flour Mills Association.

There is hardly any significant quantity of wheat in Karachi because farmers are not ready to sell it at less than Rs2,000 to Rs2,100 for a 100kg bag.

The government has fixed a price of Rs1,565 for 100kgs for procurement from farmers and is reporting difficulties in getting a favourable response.

Millers’ case is that wheat crop in Sindh has exceptionally been good this season, and some estimate it at three million tons plus, but many, including officials, millers, farmers and traders, are convinced that there is about 2.7 to 2.9 million tons of wheat this season.

The government has procured hardly 480,000 tons so far as against a target of 600,000 tons. The procurement is now almost in the last phase and a bulk of wheat has been purchased by the private persons or stocked by farmers for their own consumption.In Punjab, wheat harvest is expected at around 19 million tons, of which the government agencies are reported to have procured two to 2.5 million tons. But more than two to 2.5 million tons of wheat is with private people.

The government wants flour mills in Sindh and Punjab to get their wheat requirement from traders and brokers at Rs1,800 for a 100kg bag.

In the meantime, the government wants to build its reserve of about seven million tons in Sindh and Punjab from where it intends to release wheat from September onwards till next March.

While 250,000 tons of wheat is being imported right now, the government proposes to import about 1.5 million tons so that a steady supply of wheat is maintained from official stocks, particularly in September when Ramazan will set in.

Market analysts attribute all confusion in domestic wheat market to incompetence and corruption-prone bureaucracy and a political leadership that goes for quick and easy money. “Wheat trading is giving a good and quick return to many political and business families for the last many decades,” an analyst in a well-known and established brokerage house remarked who said that with the passage of time, many more business houses have joined.

In the decade of nineties, the Asian Development Bank proposed to wind up provincial food departments, terminate subsidy on wheat trading and do business on free market principles.

Sindh, Balochistan and the NWFP agreed but the wheat-growing province of Punjab rejected the proposal and the old system continues and consumers suffer.

Analysts warn that wheat flour prices may touch Rs30 per kg in the coming days and may go beyond this in Ramazan.

For the last several years, conflicts between wheat growers and millers and traders, sugarcane growers and sugar millers and cotton growers and spinners have become a regular annual feature in which consumers suffer and small farmer is denied a fair price. Those who gain are bureaucrats, politicians and the traders.