Poor planning, flour mills’ malpractices caused wheat crisis, inquiry reveals

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–Report holds food security secretary responsible for failures, PASSCO’s former MD for missing wheat procurement target

–Recommends formulating mechanism to monitor export of wheat and wheat products by private sector

ISLAMABAD: A Federal Investigation Agency (FIA) inquiry into the recent wheat crisis has revealed that the shortage originated due to poor planning by the federal and provincial governments and malpractices of the flour mills.

The report, presented to Prime Minister Imran Khan on Saturday, states that the Punjab Food Department was unable to control flour mills and started collecting wheat after a delay of 20-22 days.

It further mentioned that the food department failed to come up with a process for the demand and supply of the product. The report claimed that did not take decisions as the situation evolved.

Former food secretary Naseem Sadiq and ex-food director Zafar Iqbal have been blamed in the report for failing to handle the wheat crisis. Furthermore, the report claims that Punjab food minister Samiullah Chaudhry did not take the measures necessitated by the situation.

“No single individual can be held responsible for procuring inadequate wheat from Sindh,” adds the report.

The report said that the Sindh government did not take any decision on the summary for wheat procurement. It said that the responsibility of buying wheat in low stock cannot be placed on any single person.

Khyber Pakhtunkhwa Food Secretary Akbar Khan and Food Director Sadaat Khan have also been held responsible for not procuring wheat in accordance with the government’s target.

According to the report, PASSCO failed to meet its procurement target and fell short by 0.42 million tons in a year where the national carry forward stocks remained the lowest during the last five years.

The report said the ministry failed to grasp the market situation following low national produce and as such their recommendations to the federal government were routine and misleading.

The committee said the ministry’s decision to allow the export of other wheat products like Maida and Suji on August 7, 2019, was inexplicable. It observed that all wheat products were exported under the same code in the system of Federal Board of Revenue (FBR) and it was very difficult for even customs officers to say that the wheat flour was exported in the grab of line Atta and Maida.

According to the report, the ministry failed to timely advise the federal government for import of wheat, a policy intervention that could have effectively discouraged speculations, hoarding and profiteering that subsequently fueled wheat shortage and price hike.

The report held the Secretary MNFS&R responsible for failures, adding the responsibility of missing the procurement target of PASSCO lied with its former managing director.

Federal Minister for National Food Security and Research (NFS&R) Makhdoom Khusro Bakhtiar had maintained distance from attending the meeting of Economic Coordination Committee (ECC) of the cabinet.

The minister, in a statement issued here, said it was a well-documented fact that “I have always maintained a distance and refrained from attending ECC meetings related to any sugar related decisions due to any perceived potential conflict of interest.”

At provincial level, the Punjab Food Department delayed procurement by crucial 20-22 days and ultimately failed to meet its target by 0.67 million tons, less in a year where its carry forward stock remained the lowest during the last five years.

The report also found that the Punjab Food Department failed to exercise control on flour mills, which resorted to profiteering campaigns as they sensed the government was ill-prepared to handle the wheat demand and supply chain.

A sample survey by ACE Punjab had identified some mill owners who were involved in malpractice and recommended that a post-audit of flour mills especially involved in such practices needed to be conducted.

The report said the Punjab Food Department allowed, with tacit approval, the poultry feed mills to purchase huge quantities of wheat from the private market.

The Punjab government resorted to erratic transfers in the food department including posting/transfer of four food secretaries and of nearly all DFCs thrice during the year.

The Punjab Food Department failed to devise a mechanism to regulate the demand and supply of wheat, and keep track of the government and private stocks that started heading in every direction, without being accounted for.

The report said the department did not put in place any reform to rectify the situation.

According to the report, the responsibility for failure to meet the procurement targets lied with the ex-food secretary and Ex-Director Food Punjab whereas the Minister for Food was responsible for not devising any reform agenda to address the chronic ailments in the functioning of Punjab Food Department.

In Sindh province, the provincial government decided not to procure stocks, whereas MNFS&R had set up a target of 1 million tons for the year, at a time when the national surplus remained the lowest during the last five years.

The Sindh government claimed having carry forward wheat stock to the tune of 0.98 million tons, whereas the veracity of those stocks was seriously put into question when the National Accountability Bureau found massive pilferage and theft in the Sindh wheat stocks.

The Sindh Food Department failed to lift wheat allocated to it by PASSCO in time, thereby allowed the shortage and price hike to continue, the report said, adding the department failed to devise a mechanism to regulate the demand and supply of wheat, and keep track of government and private stocks.

The responsibility for failure to procure could not be fixed in Sindh individually as the decision on summary to procure wheat was not taken by the cabinet, it added.

The Food Department of Khyber Pakhtunkhwa failed to meet its procurement target for the last two years, it said, adding the responsibility lied with the Ex-Secretary Food Department and Ex Director Food Department and the Minister for Food.

RECOMMENDATIONS:

The report recommended the NFS&R to devise a mechanism for accurate crop assessment, on scientific basis, in coordination with the provinces, adding the ministry should set up the procurement targets in accordance with the available carry forward stocks.

A minimum wheat stock should be calculated and agreed to which would serve as a standard for calculating procurement targets and the need to import or export wheat, it added.

The report recommended that the MNFS&R and provinces should strengthen a mechanism for policy formulation, planning, coordination and implementation effectively, especially those related to setting up and achieving procurement targets by PASSCO and provinces.

The ministry should formulate a policy and implementation mechanism for aggressive procurement this year as the opening stocks at the beginning of coming crop year would be the lowest in last 10 years. The minimum support price may also be enhanced to ensure competitiveness with market rates.

The ministry should have a mechanism to monitor export of wheat and wheat products by private sector for proper assessment of the situation and the requirement of any intervention.

The report recommended that the provinces should meet the national wheat procurement target set up by the MNFS&R, adding they should devise a mechanism for monitoring private stocks to ensure that prices were not manipulated by creating artificial shortage.

They should also devise an effective mechanism for safety of public stocks, including putting in place IT-based surveillance mechanism, to prevent pilferage and damage, besides devise an IT-based mechanism of QR codes for tracking every bag of wheat supplied to flour mills and flour bags produced.

The provincial governments should conduct post-audit of the flour mills to verify the allegations of malpractice in grinding of public wheat and recommended quota allocation of public wheat to flour mills, the report concluded.

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