LAHORE: More than 67 percent flour mills have been closed in Punjab during the last four years due to wrong policies of the government. Pakistan Flour Mills Association former chairman Dr Bilal Sufi observed that the role of export rebate policy is crucial to destroy more than 67 percent of small and medium sized flour mills, as this policy is misused by the big players.
If government diverted the amount of Rs3 billion of rebate to subsidize wheat in local market, not only the consumer will get benefit but the flour mills also could have been functional to export flour and its finished products to Afghanistan.
He said that the government would have to lower wheat prices to dispose of last year’s carry-over stock because the next year’s bumper crop will increase the total commodity stock to 5 million tons, which could create storage problems in Punjab province.
Industry experts said the government should divert agriculture relief package of Rs341 billion to provide subsidies to farmers on agri inputs and lower the rate of wheat. In the last export policy, there was restriction of minimum 5,000 tons of export and only big exporters were eligible to export wheat, who misused the rebate facility.
Dr Bilal Sufi said that that due to higher stocks of wheat and lower international prices of the commodity, Pakistan needs to make concerted efforts to export surplus wheat stock in order to create physical and fiscal space for the new crop procurement.
A small quantity of surplus wheat could be exported by the private sector despite attractive rebate on export. Dr Bilal Sufi, chairman of Standing Committee on Wheat and Flour FPCCI, said that the wheat continued to be purchased from the food department and sold in the local market whereas rebate was applied for on fake documents.
He said this practice not only caused damage to wheat export but also rendering 95 percent of flour mills as scrap which remained unable to purchase costly wheat. Bilal Sufi said that Food department released wheat to exporters at around Rs1120 per 40 kg (after payment of rebate) which was hurting national exchequer.
If minimum limit for export is removed along with announcing new price of wheat at around Rs1200 the Punjab wheat will be lifted in full speed by the mills as well as the small and big exporters, he suggested.
He further said that the wheat export policy was widely misused by big exporters, as wheat was purchased from food department and sold in the local market and rebate was collected on fake documents. He said that that government wheat export policy could not be fruitful despite announcement of huge rebate for the exporters.
First announcement of export was made in March 2015 and period of export was expanded four times but export target was not achieved. The country could succeed to export around 0.5-0.6 million tons of wheat to Afghanistan annually when the rate was at Rs1200 per ton locally. And now, despite announcement of $90 rebate on each ton, export target was not achieved mainly due to high price of commodity.
Source: The Nation
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