• Strike called to protest new withholding tax
• Small grinding units, dealers also down tools, disrupting supply

LAHORE: Urban consumers are bracing for a potential shortage of flour as the All-Pakistan Flour Mills Associ­ation (PFMA) went on a nationwide strike on Thursday in protest against the newly imposed withholding tax.

Owners of atta chakkis (small wheat grinding units) and flour dealers in various towns have also joined the strike, leading to significant disruptions in flour supply across many urban centres. PFMA Chairman Asim Raza has vowed to continue the strike until the association’s demands are met.

Mr Raza expressed his association’s strong reservations on the withholding tax, explaining that the measure has made flour mills withholding agents for tax collection. He said this tax is expected to increase flour prices by Rs8 per kilogram.

“The tax measure is unacceptable and impracticable as flour dealers are refusing to lift their consignments instead of sharing their tax details for withholding tax purposes,” Mr Raza said, warning that the strike will severely disrupt the supply chain.

Describing the imposition of a Rs600 tax on a Rs11,000 flour bag as inappropriate, the PFMA chief countered Punjab Food Minister Bilal Yasin’s claim that the strike had been postponed until after Ashura (July 17).

“Neither the government nor the FBR has contacted us for talks or to reconsider the strike,” Mr Raza added.

The strike has effectively halted the grinding and supply of wheat nationwide, affecting flour availability and related products.

“We don’t wish to trouble the public during Muharram, which is why the industry continued to supply flour to the market until July 10 despite bearing a tax burden of millions of rupees,” Iftikhar Ahmed Mattoo, chairman of PFMA’s Punjab chapter, said.

However, he asserted that bearing the tax burden was no longer feasible and that “extreme measures have to be taken”. He said flour mills from across the country have joined the strike on the PFMA’s call to ensure the industry’s survival.

“We are not against the tax. But it’s impossible to be a withholding tax collection agent for flour dealers, particularly because the tax amount to be withheld by the dealers will be more than the wheat grinding charges of flour mills,” Mr Mattoo said.

He said millers are already under a financial strain due to rising electricity bills, and the additional 2.5 per cent withholding tax “will further ruin our business”.

“The government needs to reconsider and withdraw the tax on wheat products; otherwise, it will inevitably increase prices, affecting consumers and retailers alike,” he said.

With 1,725 flour mills in Pakistan — 1,100 in Punjab, 300 each in Sindh and Khyber Pakhtunkhwa, and 25 in Balochistan — the daily national flour consumption stands at around 45,000 tonnes, according to the PFMA.

The ongoing strike has already halted flour supply to grocery stores in Lahore, and market stocks are expected to last only one week.

An official of the Grocery Stores Association has called for dialogue between the government and flour mills to resolve the issue and avoid an extreme measure like a strike.

In Karachi and Hyderabad, flour mill owners have also joined the strike, stopping wheat grinding and causing flour shortages in restaurants.

Aamir Abdullah, PFMA’s chairman for Sindh, confirmed an indefinite strike until the government withdraws the tax measures, noting that the suspension of wheat supply has also affected the bran supply for livestock.

Similar reports have emerged from Peshawar and Balochistan, where flour mills and dealers have joined the strike, causing market closures and exacerbating flour shortages.

Published in Dawn, July 12th, 2024