CCP recommends reduction in govt’s role in fixing wheat support price

A policy note issued by CCP recommends consistent wheat export policy, removal of overlapping of regulatory regime between provincial and federal legislations and a level playing field in the wheat sector

ISLAMABAD: The Competition Commission of Pakistan (CCP) issued a policy note titled “Policy recommendations in the wheat sector”, on Wednesday, recommending that the government gradually withdraws from fixing the support price of wheat.

The CCP has suggested that this policy of fixing minimum wheat support price is adding distortions to the economy and creating circular debt in the food sector. The note pointed out that the government can bring transparency in the official departments only through minor amendments in existing laws.

The heavily controlled wheat sector by government is less advantageous for both small farmers and the large scale atta chakki mills, CCP noted saying that despite mills are the major players in the supply chain of wheat but there is no official quality check of wheat products by these flour mills.

The policy note also found that Chakki catered about two-thirds, or 75 percent, of the market share but they are getting more than 95 percent of subsidized wheat quota annually. Furthermore, these mills are getting wheat procured by the public sector while the flour produced by the mills is of low quality and not considered as good edible flour. “The flour mills distribute wheat flour to retail and wholesale shops, clay ovens and occasionally directly to consumers,” the policy note said.

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In the policy note, the CCP recommended gradual withdrawal of government intervention from minimum support price fixation regime, consistent wheat export policy, removal of overlapping of regulatory regime between provincial and federal legislations and a level playing field in the wheat sector.

The federal and provincial governments may only intervene by making judicious use of their strategic reserves, when there is dire shortage of wheat in the market due to abnormal market conditions. It may define and experiment with the idea of expanding the role of the private sector, millers, and those who stock wheat in the procurement, trade, and bulk storage of wheat.

The government’s role may henceforth be restricted to oversight in terms of standard/quality, fostering R&D initiatives to enhance domestic as well as international competitiveness, CCP recommended.

An official of the CCP further explained, “The government can eradicate wheat flour crises simply by taking two steps: first by making the labelling mandatory at all flour bags showing contents of flour such as percentage of choker and other components,” and secondly, the government should make it mandatory that the subsidised wheat be used only to make whole wheat and not other products like maida, fine atta, suji, choker etc.

“These are profitable items and the main focus of flour mills is to make these products, these are also the main items smuggled or exported to Afghanistan, whereas the quality of wheat flour supplied by the flour mills is very low,” he said.

Earlier, on August 24, CCP held a consultative meeting with key stakeholders to discuss competition distortions and consumer protection issues faced by the country’s wheat sector.

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