LAHORE: The Punjab government has started releasing wheat from its storage to flour mills at a reduced price of Rs3,000 per 40kg in an effort to ease the financial burden on consumers. However, experts warn that the policy could lead to wheat smuggling, corruption, and market distortions.
According to the new policy, wheat will only be provided to operational flour mills. The government has fixed the retail price of flour at Rs1,810 for a 20kg bag and Rs905 for a 10kg bag. The price of a 100-gram tandoori roti has been set at Rs14. Each mill will receive 20 bags per body quota, a relatively small amount given the province’s demand.
While the move aims to stabilize flour prices, the large gap between the government’s release price and the market rate has raised concerns. The official release price of Rs3,000 per 40kg is about Rs800 lower than Punjab’s market rate of Rs3,800 and nearly Rs1,000 below prices in Sindh, Khyber Pakhtunkhwa, and Balochistan.
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This price difference creates strong incentives for profiteering and smuggling. Market observers say subsidized wheat may be diverted to other provinces where it can fetch up to Rs4,200 per 40kg, causing shortages within Punjab and defeating the purpose of the subsidy.
The policy has also been criticized for encouraging inefficiency and corruption among millers. Under the new rules, mills receive a quota based on 50 percent of their daily grinding capacity. Smaller or less efficient mills may sell their subsidized wheat to larger ones instead of producing flour, earning easy profits of Rs800 per 40kg without doing any processing.
Experts believe the government’s well-intended subsidy could backfire if strict monitoring is not ensured. They suggest that the release price should be closer to the market rate and that a transparent tracking system should be put in place to ensure the wheat reaches consumers instead of black-market traders.
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Analysts also warn that the move could hurt farmer confidence. The government had earlier set an indicative price of Rs3,500 per 40kg for the upcoming wheat season.
By offering wheat at Rs3,000 now, the government risks sending mixed signals to farmers just before the sowing season, potentially discouraging cultivation and leading to shortages in the future.
Mill owners, meanwhile, say they face losses because they cannot compete with mills receiving cheaper government wheat. They recall that last year, mills that purchased wheat at Rs4,000 were forced to sell flour at lower government rates without any compensation.
Experts say the Punjab government must strike a balance between supporting consumers and protecting both farmers and millers to avoid long-term damage to the province’s wheat supply chain.
