World Grain - September 2014 - 42

FEATURE: PROFILING PAKISTAN'S MILLING INDUSTRY

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Pakistan still has a large informal
milling sector made up of chakkis (stone
mills), some water powered, mainly operating in villages. However, roller mill
flour from industrial mills has replaced
chakki atta in the diets of many villagers
for much of the year. They may grind
their own wheat as long as it lasts in local chakki mills, but choose to buy flour
for at least part of the year thanks in part
to its subsidized price.
GOVERNMENT'S ROLE
The government food departments in
all of Pakistan's provinces provide subsidized wheat to the privately owned mills,
a practice dating back decades. There
are no state-owned mills in the country.
These schemes, which vary considerably from province to province under

Pakistan's highly devolved federal system of government, have two main goals:
ensure farmers receive a minimum price
that will serve to guarantee that the country remains self-sufficient in wheat production; and to enable government intervention to mitigate price rises in the lean
months leading up to the next harvest.
The Punjab Food Department operates the largest scheme. It targets annual
purchases during the harvest in April to
June of about 4 million tonnes out of total government procurement of 6 million
tonnes. This wheat is received and stored
at 600 collection centers. The majority of
them are open area facilities technically
known as Cover and Plinth (CAP).
Distribution of the subsidized wheat
takes place in Punjab beginning in midNovember and continuing to the start
of the next year's harvest in mid-April
when wheat prices normally fall.
There is little doubt that the scheme

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helps to stabilize the prices paid by millers for wheat and the prices received
by farmers. Government pays farmers,
particularly smaller ones who could not
afford to store their wheat long after harvest, a higher price than they would get
selling to traders immediately.
Large farmers and traders who do
speculate by holding on to wheat for
several months after harvest are not able
to raise their prices as much due to the
government wheat allocations to millers beginning in November in Punjab
and as early as September in KPK and
Baluchistan provinces.
Quotas are assigned based on a mill's
daily capacity calculated per government norms as 20 tonnes per roller
body, with no mill allowed quota for
more than 8 roller bodies. In practice,
because of load shedding (power outages) and the age of their equipment,
few mills achieve production rates

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World Grain - September 2014

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