Flour shortage feared, millers on strike – Pakistan

• Strike in protest against new withholding tax
• Small grinding units and dealers are also laying down tools, which is disrupting the supply

LAHORE: Urban consumers are bracing for a possible flour shortage as the All-Pakistan Flour Mills Association (PFMA) on Thursday began a nationwide strike in protest against the newly imposed withholding tax.

Owners of atta chakkis (small wheat mills) and flour traders in various cities have also joined the strike, leading to major disruptions in flour supply in many urban centres. PFMA chairman Asim Raza has announced that the strike will continue until the association’s demands are met.

Expressing his association’s strong reservations about the withholding tax, Mr. Raza stated that the flour mills have become withholding tax collectors through this measure. He said this tax is expected to increase flour prices by Rs 8 per kilogram.

“The tax measure is unacceptable and impractical as flour traders are refusing to collect their deliveries instead of sharing their tax details for withholding purposes,” Raza said, warning that the strike would significantly disrupt supply chains.

The PFMA chief termed the imposition of a tax of Rs 600 on a sack of flour worth Rs 11,000 as unreasonable and contradicted Punjab Food Minister Bilal Yasin’s claim that the strike had been postponed until after Ashura (July 17).

“Neither the government nor the FBR have contacted us for discussions or reconsideration of the strike,” Mr Raza added.

The strike brought wheat milling and supply to a virtual standstill across the country, affecting the availability of flour and related products.

“We do not want to inconvenience the public during the Muharram festival. Therefore, the industry has continued to supply flour to the market till July 10 despite a tax burden of crores of rupees,” said Iftikhar Ahmed Mattoo, chairman of the PFMA Punjab chapter.

He, however, stressed that the tax burden was no longer bearable and that “extreme measures must be taken.” He said flour mills across the country had joined the strike to heed the PFMA’s call and ensure the survival of the industry.

“We are not against the tax. But it is impossible to act as tax collectors for flour traders, especially because the amount of tax to be withheld from the traders will be more than the wheat milling fees of the flour mills,” Mr Mattoo said.

He said millers were already under financial strain due to rising electricity bills and the additional 2.5 percent withholding tax “will ruin our business even further.”

“The government must reconsider and withdraw the tax on wheat products, otherwise there will inevitably be price increases that will hit both consumers and retailers,” he said.

According to PFMA, there are 1,725 ​​flour mills in Pakistan – 1,100 in Punjab, 300 each in Sindh and Khyber Pakhtunkhwa and 25 in Balochistan – and the daily national flour consumption is around 45,000 tonnes.

Due to the ongoing strike, the supply of flour to grocery stores in Lahore has already come to a standstill and stocks are expected to last only another week.

A representative of the Grocers’ Association called for a dialogue between the government and the flour mills to resolve the problem and avoid extreme measures such as a strike.

In Karachi and Hyderabad, flour mill owners also joined the strike, which resulted in the halting of wheat milling and a shortage of flour in restaurants.

Aamir Abdullah, PFMA chairman for Sindh, confirmed an indefinite strike until the government withdraws the tax measures, pointing out that the suspension of wheat supply had also affected the supply of bran for livestock.

There are similar reports from Peshawar and Balochistan, where flour mills and traders have joined the strike, leading to the closure of markets and a worsening flour shortage.

Published in Dawn, July 12, 2024