Retailers not sharing flour price cut with consumers

KARACHI: Mill owners on Friday further reduced the rates of various flour varieties by Rs4 per kg to pass on the impact of huge arrival of cheap imported wheat in the country.

However, despite a persistent drop in flour rates at the wholesale stage, retailers are not fully passing on the benefit of price cut to consumers.

Former chairman of the Pakistan Flour Mills Association Chaudhry Mohammad Yousuf said the price of flour No 2.5 had been slashed to Rs92 per kg from Rs96 and that of fine and super fine to Rs120 from Rs123-124.

In February, these varieties were available at Rs122 and Rs136-140 per kg.

Mr Yousuf said import of around 3.5 million tonnes of wheat by the private sector from September 2023 to March 2024 amid rupee stability and falling world prices had averted major wheat and flour crises in the country, besides reducing the prices of various flour varieties.

Millers’ demand for export of surplus sugar pushes up local prices

He said imported wheat is available at Rs8,400-8,500 per 100kg bag while the commodity from Sindh is being sold at Rs8,400 in the open market. He insisted that the millers and private sector cannot be blamed for any crisis for the growers as imports were initiated as per the government’s decision to provide relief to the inflation-hit consumers.

“I personally think that the private sector has made extra imports as 2.5m tonnes of wheat were enough instead of huge 3.5m tonnes costing one billion dollars,” Mr Yousuf said.

Disagreeing with the notion that growers are the losers now, he recalled that they had sold the grain at Rs5,000 per 40kg last year instead of the officially rate of Rs3,900. He urged the government to freely open wheat import and export of value-added wheat products, besides linking local flour rates with imported wheat rates.

Consumers yet to get relief

Despite a persistent drop in mills flour rates, consumers are not getting a full relief as retailers are slowly passing on the price cut to the consumers. The retailers selling flour No 2.5 at Rs120-130 per kg and fine and super fine at Rs150-160, which otherwise should be below Rs100 per kg.

Karachi Retail Grocers Group general secretary Farid Qureishi said retailers still held the old stocks purchased at higher rates, while some are facing losses by selling flour at reduced rates despite purchasing the commodity at higher rates.

“Besides commodities, the government should seriously ponder over the rising power and gas bills and soaring school fees which are eating up the bulk of consumers’ salary and income. Consumers need urgent relief in these areas to offset the rising cost of living,” he said.

A commodity wholesaler said it appeared that the millers had grinded the entire imported wheat stock in order to avert any losses and clear the stocks in view of arrival of the new crop.

Sugar export

A spokesman for the Pakistan Sugar Mills Association (Punjab Zone) said sugar prices in the world market are falling and the government should immediately allow export of 1.5 million tonnes of surplus sugar to ensure timely payments to the sugarcane growers and earn more foreign exchange.

He said the landed cost of imported sugar came to Rs240 per kg, or $553 per tonne, at Karachi Port, while the ex-mill rates at Jodia Bazaar and south Punjab are Rs134.25 and Rs135.75 per kg, respectively, instead of Rs145-150 as claimed by the market forces.

The spokesman claimed that the cost of sugar production is Rs175 per kg due to purchase of sugarcane at Rs425-550 per 40kg from the growers, as compared to Rs300 last year.

“Input costs like petroleum products, chemicals, interest rates, sales tax and labour have increased manifold.

Published in Dawn, April 27th, 2024