KARACHI: Despite high imports and good crops of sugar cane and wheat in 2021, the government has failed to curb an alarming rise in the prices of different varieties of wheat flour and sweetener in the country as consumers have been paying higher prices over the past one year, it emerged on Saturday.

With 27 million tonnes of wheat and 81 million tonnes of sugar cane production, Pakistan had imported 3.612 million tonnes of wheat and and 281,328 tonnes of sugar in FY21. The country opted for higher imports of the two main commodities to control their skyrocketing prices, but efforts have so far failed to provide any price relief to consumers.

The increasing prices of wheat and sugar in world markets at a time when the rupee is losing ground against the dollar can further increase the prices of these two commodities in the local market.

Flour and sugar rates continued to crawl up despite weekly meetings of the National Price Monitoring Committee, which had only taken decisions to push up imports to avert any food crisis instead of focusing on ground realities relating to checking stocks at mills and warehouses, pricing mechanism and hoarding and profiteering by stakeholders.

Increasing prices in world markets and unstable dollar can further increase rates of two commodities in country

According to the average monthly price data of the Consumer Price Index (CPI), the rate of a 20kg wheat flour bag was Rs1,134 in August 2021 as compared to Rs999 in August 2020 while it was Rs1,127 in July 2021, showing a jump of 0.59 per cent and 13.45pc over July 2021 and August 2020.

The average rate of refined sugar in August 2021 stood at Rs105.46 per kg compared to Rs102.24 per kg in July 2021 and Rs94.90 per kg in August 2020, up by 3.15pc and 11.13pc compared with July and August 2021.

The import bill of 3.612m tonnes of wheat in FY21 stood at a whopping $983m whose average per tonne price was $272.

The Economic Survey FY21 gave an impressive wheat crop of 27m tonnes versus 25m tonnes in 2020.

Similarly, the Economic Survey pointed out sugar cane production of 81m tonnes in 2021 as compared to 66.38m tonnes, up by 22pc, while sugar production as per figures of Large-Scale Manufacturing (LSM) rose by 16pc to 5.694m tonnes from 4.881m tonnes. The import bill of 281,328 tonnes of sugar in 2021 stood at $128.6m while the average per tonne price was $457.

Govt focus on controlling food shortage Stakeholders offered different views as to why the government decided to import these two products despite ample local production as well as no price relief to end users.

The central chairman of the Pakistan Flour Mills Association (PFMA), Badaruddin Kakar, opined that the government expedited imports of wheat to first ensure availability to consumers and control food shortage instead of keeping a vigil on rates.

He said there was a panic that subsidised wheat was available in low quantities coupled with negligible carryover wheat stocks last year.

Mr Kakar was of the opinion that the country’s actual wheat consumption was 30 million tonnes keeping in view the rising population, which has forced the government to manage over three million tonnes of import through the private sector and the Trading Corporation of Pakistan (TCP) in 2021.

Price stability

Chairman of the Cereal Association of Pakistan (CAP) Muzammil Chappal said the government, while keeping focus on price stability, was more interested in averting any serious wheat and sugar crises. The government had imported two main grains at a crucial time.

He said the private sector had imported 1.45m tonnes of wheat out of the allocated target of 1.5m tonnes in FY21 at a price hovering between $218-308 per tonne from different countries, mainly Ukraine.

The private sector, he added, had imported 175,000 tonnes of sugar at the rate of $435-440 per tonne in the last fiscal year.

Mr Chappal said the government had allowed the private sector to import one million tonnes of wheat this year but the rising world market rates and losing rupee value had made imports difficult.

He said importers were reluctant to import sugar at higher international rates of $600 per tonne as they also needed to pay 17pc GST (general sales tax) in addition to the high landing cost of sweetener in view of declining rupee value against the dollar.

One dollar is now traded at Rs167 in the interbank market as compared to Rs151 in May 2021.

The Sindh Circle’s chairman of PFMA, Mohammad Yousuf, claimed that Pakistan had been lucky where wheat and flour prices had not gone up substantially as compared to other countries.

“The government should have adopted liberal policy of importing wheat for the private sector whenever a gap arises between demand and supply,” he said when asked why the prices of flour items had gone up despite huge imports and good wheat crops.

He said imported wheat should be available as per the country’s requirement but wheat was provided in limited quantities.

“The current world market rate is $360 per tonne, which means the per tonne price of a 100-kg bag will come to Rs6,300 making imports impossible for the private sector,” he said.

The chairman of the Karachi Wholesalers Grocers Association (KWGA), Rauf Ibrahim, said the government made timely imports of wheat and sugar otherwise the flour price would have gone to Rs100-125 per kg followed by sugar at Rs125 per kg.

The government, he said, should remove 17pc GST on sugar imports by the private sector to offset the impact of rupee devaluation against the dollar otherwise imports would not be possible.

Published in Dawn, September 5th, 2021