Khilafah.com

The profits of flourmills were even higher when they were grinding governmentÕs wheat stocks issued to them according to fixed quotas on subsidised rates, sources associated with flourmills said.

The sources estimated that at current price level of Rs1,750 per 100 kilogram bag of wheat each flour mill which grinds 25,000 wheat bags per month nets monthly profit of Rs4.375 million whereas earnings of some mills is much higher than this. Sources associated with the flourmills said that cost of production for flour was Rs75 per 100 kg bag of wheat.

Prior to flour crises the mills were earning only Rs10-15 profit on grinding 100 kilogram of wheat and now they are making Rs150 to Rs200 on the same quantity.

The food department is currently on wheat procurement drive and is not releasing wheat quota to mills.

The mills were getting 100 kg wheat bag on subsidised rate of Rs1,250, which is now being priced at Rs1750 in wholesale market following governmentÕs decision to allow flour mills of Karachi to buy wheat from growers in four districts of the province. A day before this announcement a 100 kg bag of wheat was selling at Rs1800.

Flourmills were getting wheat at concession rates because they had assured the government to prepare 100 percent flour of grade No2.5. As per agreement the mills were supposed buy part of their requirement from open market and rest from the government but most of mills were grinding only quota stocks and subsequently it created flour shortage particularly in Karachi during last six months.

Even while grinding only quota wheat, the mills were not producing 100 per cent flour only and used subsidised wheat to make other by-products that offer higher profit margins.

Flourmills sources divulged that most of the mills produced 50 percent flour of grade No2.5, besides 12 percent fine flour, 18 percent maeda (super fine flour) and bran 20 percent from official wheat meant for producing ÔattaÕ only.

The government was supplying wheat to flourmills at concession rates to provide ÔrotiÕ to people at reasonable price and was paying a colossal amount of Rs48 billion in the form subsidies, but instead of public the benefit of subsidy went to wheat hoarders and millers.

The mills also soak wheat to increase their profits. They soak wheat in large bins for 12-15 hours. Wheat absorbs 5 to 6 percent water and gains 3.5-4 per cent extra weight. So after washing 100 kg of wheat bag its net weight increases to 103 kg, it means the actual cost of mills on 100 kg bag of wheat is only Rs1,688.75. The total cost of production including grinding, labour, transportation, bardana (bags) and overheads is Rs75 per 100 kg bag, flourmills sources informed.

At present 80 kg bag of flour that has net 79 kg of 2.5 No flour is retailed at Rs1,675, fine flour at Rs1,750, maeda at Rs1,800 and wheat bran is being traded at Rs385 per 50 kg.

On the basis of these calculations an average mill after grinding 2,5000 bags is earning Rs4.375 million per month, whereas earnings of some mills is much higher even at current level of wheat price of Rs1,750 per 100 kg. However, the taxes they to the exchequer are not commensurate with their earnings, sources claimed.

The flour mills are still in the position to create flour crises on the basis of the fact that some mills have piled up wheat stocks more 20,000 to 50,000 bags in their warehouses. The sources anticipated that future flour crises could easily be diverted by forcing mills to continue grinding operations and mills must not be allowed more than 3,000-4,000 wheat bags in their gadowns.

TrackBack URI for this entry