LAHORE, July 2: The Punjab government on Wednesday warned millers to withdraw the recently announced flour price hike of Re1 per kilogram or get ready to face administrative and legal action.

Talking to Dawn, Food Secretary Rao Iftikhar Ahmed sounded the warning that the millers found guilty of executing arbitrarily raised price would be taken to task with all administrative and legal might.

During the last two meetings, he said, the millers had agreed to avoid such unilateral increase and instead take the case to the department for negotiations. “They have violated their side of the understanding. They asked for a meeting today (Wednesday) but were told to withdraw the hike first and than expect the meeting,” he said.

“The government has the right to fix price, consider the anatomy of flour milling and heat trade and equipped with means to execute the price,” he said. The millers cannot and should not have gone for such a unilateral increase, he added, saying they had done it without consulting the department and they were on their own and the government would move to keep the prices at the level they were before Wednesday.

The millers, however, refused to budge under the official pressure, saying that they were compelled to increase price because of market forces, and insisted they had the right to unilaterally fix the prices.

“The government cannot and should not dictate prices in a free market economy,” says one of the millers who refused to be named for fear of being “singled out” for official wrath. “It is not a matter of one or two days. The wheat prices have gone up and the millers cannot absorb the inflation on sustained basis. Thus, they had no choice but to increase price,” he said.

The department should try to understand market realities rather than taking up administrative cudgel, he said and added: “The department can simply start releasing wheat and bring the price down rather than going for punitive measures, which may bring prices down for the time being but would not correct terms of trade for the millers. All free markets equilibrate themselves and so would flour market if government starts releasing wheat.”

Trouble with the millers is that they have been earning windfall profits because of trade with the NWFP and Balochistan province, says a Food Department employee. “Even now, the millers from Punjab were feeding the NWFP and the millers from the NWFP were sending all their grinding to Afghanistan. The total requirement of the NWFP is around 7,000 tons daily and the millers from Punjab were sending some 5,000 tons daily there under the official permits. Fine flour (maida) is in addition to that. Now they (millers) wanted to pressurise the department into increasing the permitted quantity for the NWFP, where they earn windfall profits. The government could easily withdraw their permits and bring the millers down to their knees. During the next few days, one would see permits being withdrawn as first step before any other administrative actions and the millers would definitely fall in line,” he said.