LAHORE: The Progressive group of the Pakistan Flour Mills Association (PFMA) has urged the government to adopt a market-driven wheat policy and replace untargeted flour subsidies with direct financial assistance to low-income households to eliminate severe market distortions.
Frequent shifts in government policy ranging from rationing and quota systems to varying procurement arrangements have bred uncertainty, undermining both farmers and mill owners, progressive miller Khaleeg Arshad told reporters here on Tuesday.
Recalling market trends, he noted that flour bag prices once dropped from Rs2,800 to Rs1,300 purely due toimproved supply and healthy competition, rather than state intervention.
Conversely, when prices naturally rose, the government imposed artificial price caps and targeted millers for price manipulation, ignoring that higher prices incentivised farmers to increase wheat cultivation in subsequent seasons.
While acknowledging the fixing of the wheat support price at Rs4,500 per maund as a positive step for growers, Mr Arshad emphasised that wheat releases to flour mills must reflect actual procurement, storage, and transport expenses.
‘Procuring wheat at Rs4,500 per maund and subsequently releasing it at a substantially lower price creates deep distortions in the market and leads to severe operational problems,’ he observed.
Instead of blanket flour subsidies thatequally benefit affluent consumers and low-income groups, he recommended leveraging existing social safety nets such as the Benazir Income Support Programme, Kissan Card, and Punjab government initiatives to deliver direct financial relief to underprivileged households.
He also called for maintaining strategic wheat reserves strictly to manage emergency shortages rather than to artificially suppress prices, adding that any emergency releases should occur at prevailing market rates.
Addressing structural flaws in mill quotas, the PFMA leader questioned the ongoing allocation of wheat to inactive units, asserting that the state holds no obligation to keep commercially unviable operations afloat. Quotas, he argued, should be allocated to active mills basedstrictly on performance and open competition.
He criticised the government’s dual approach of partially liberalising the market while retaining heavy-handed controls on prices and supplies, urging policymakers to choose a definitive direction. Highlighting current operational losses, he pointed out that while subsidised wheat is released at around Rs3,700 per maund against market rates of roughly Rs5,400 per maund, mills are beingforced to sell 20 to 25 per cent of flour produced from their own commercially bought, expensive wheat at the lower subsidised rates.
Urging an immediate end to this requirement, he stated that mills should supply subsidised flour strictly in proportion to the subsidised grain provided to them.