KARACHI: The retail price of sugar has soared to Rs135-140 per kilogram from Rs120-125 while flour millers have jacked up prices, citing rising rates of wheat in the open market.

Millers have raised the rate of flour No 2.5 to Rs149 per kg from Rs135, followed by a Rs12 per kg jump in the prices of fine flour to Rs153 per kg after an increase in the price of a 100kg bag of wheat in the open market to Rs12,800 from Rs11,700.

The Sindh government had imposed a ban on the supply of wheat to flour mills in Karachi from the rest of Sindh in March, but it lifted the ban after Eidul Azha.

According to Chaudhry Aamir Abdullah, the chief of the Pakistan Flour Mills Association (PFMA), Sindh Zone, “lifting of ban is inconsequential as hoarders have taken over the wheat market and they are releasing stocks as per the demand and supply situation”.

He said the provincial government had procured less than one million tonnes of wheat from growers, while the target was 1.4m tonnes and did not release locally produced wheat to millers, leaving them at the mercy of open market traders who continued to keep pushing up priaes.

A high wheat procurement price of Rs4,000 per 40 kg from Rs2,200 last year is also responsible for the rise flour prices, the PFMA chief added.

According to the Economic Survey, the country’s wheat production crawled up to 27.634m tonnes in FY23 from 26.208m tonnes in FY22.

The government imported 2.729m tonnes of wheat at a cost of one billion dollars during the first 11 months of FY23, while the figures for FY22 were 2.206m tonnes and $795m.

“Despite a good wheat harvest, the government should allow the private sector to import three to four million tonnes of wheat in FY24 to control prices,” Chaudhry Abdullah, the PFMA chairman, said.

He said it was the right time to give a go-ahead for wheat import as Ukrainian and Russian stocks were available at $265-270 C&F price.

Rauf Ibrahim, Chairman of the Karachi Wholesalers Grocers Association (KWGA), said hoarders had made wheat stocks disappear from the market.

Sugar prices

The wholesale sugar price has shot up by Rs14 per kg over the last 15 days to Rs131-132 per kg as the Satta Mafia (speculators) has gate-crashed into the market, piling up stocks to make windfall gains in future.

According to Mr Ibrahim, sugar prices had started climbing after the government’s decision to allow its export.

Pakistan exported 214,789 tonnes of sugarfrom February to date, fetching $104m. There were no exports in FY22.

As a result of more area sown and lucrative market price, sugarcane production rose by three per cent to 91.111m tonnes in FY23 from 88.651m tones the previous year.

Mr Ibrahim, the wholesalers’ body chief, said some sugar millers issue delivery orders (DOs) to the market. The market keeps it with them for a longer period than usual and these orders change hands too.

As a result, sugar is not shipped or sold and remains on paper, allowing vested interests to make extra bucks in future.

Rauf Ibrahim said the DOs should include details about income tax, sales tax and the NTN number of market traders who get these orders.

“There is a need to make a law making it mandatory for DOs to carry expiry dates of one week or bind the traders not to hand over the DOs to other market people.”

Rauf said that despite strict checking at the borders, sugar is finding its way into Afghanistan and Iran through informal channels.

He said the government and the Federal Board of Revenue (FBR) should keep strict vigil on sugar mills and monitor their production data, daily deliveries and ex-mill rates.

Farid Qureishi, the General Secretary of Karachi Retail Grocers Group (KRGG), said “investors, after losing hope because of plummeting gold and dollar rates, are now trying their luck in commodity procurement due to rising prices of essential items”.

Amid high imports and a good wheat crop, the data of Sensitive Price Indicator (SPI) ending July 6 quoted the national average rate of a 20 kg flour bag at Rs2,550-3,000 compared to Rs980-1,940 on July 6 last year.

The national average rate of sugar was Rs125-140 per kg as compared to Rs85-100 a year ago.

Published in Dawn, July 13th, 2023