World Grain - September 2014 - 44

FEATURE: PROFILING PAKISTAN'S MILLING INDUSTRY

above 10 tonnes per day per roller body.
The importance of the wheat quotas
varies from mill to mill according to the
season. Because the number of mills has
grown while the government has limited
its total wheat procurement for budgetary reasons, the allocation to any mill is
rarely enough for more than a few hours
of daily production.
Financially weak mills may only operate when subsidized wheat is available. Strong, well-managed mills are
able to stockpile sufﬁcient good quality wheat after harvest when prices are
lower so that they have little need to buy
from the government poor quality wheat
with high levels of impurities.
In good crop years the Punjab Food
Department wheat price may be higher
than that available in the market even four
or ﬁve months after harvest. The ofﬁcial
minimum support price paid to farmers
has been ﬁxed at 3,000 rupees ($306) per

tonne for a number of years. The Punjab
Food Department sells the wheat to mills
at the same price, without adding the costs
of bagging, storage, transport and storage.
DRAWBACKS
There are numerous drawbacks to longstanding public grain policy. Because
wheat millers could always count on the
government to store wheat and release it
onto the market in the quantities needed,
they have built relatively little warehouse
and silo storage capacity.
In contrast to the highly modern feed
milling sector that has much steel silo
storage, the entire system of government
wheat procurement and distribution is
based on inefﬁcient and corruptionprone bagged transport and storage.
The size of mills has been constrained by the government quota
system that covers only up to 8 roller
bodies per mill. Many uncompetitive

and ﬁnancially weak mills have been
kept in business simply because they
qualify for subsidized wheat part of
the year. Indeed, there are many "ghost
mills" that have not operated in years
but whose owners, including members
of parliament, illegally sell their wheat
quota to other mills.
Pakistan's roller milling industry is
critical to food security in a country
where wheat ﬂour accounts for over
70% of average caloric intake. Whether
heavy government involvement helps or
hinders its performance of this key role
remains subject to debate.
David McKee's grain industry consultancy, Key
International LLC, provides market research,
feasibility analysis, technical studies and project
guidance to companies and organizations. He
can be reached at davidmckee59@msn.com.
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