FLOUR INDUSTRY

Pakistan is the largest country where wheat is the staple food of nearly entire population. Wheat Flour Mills
of Pakistan have raised to the challenge of grinding up to half of 24 to 25 million tons of wheat harvested
in the Pakistan every year. The Pakistani Flour Milling Industry provide not only for Pakistan’s 180 million
mouths, but also produce up to 700,000 tons of flour for export to Afghanistan in some years.
The Flour Milling Industry was just by the name at the time of Pakistan born in 1947 but it was the necessity
of the people just like in today’s life. At present over 1400 flour mills are operating in Pakistan process
almost exclusively domestic wheat. Few flour mills are equipped with imported milling equipment as low
cast local manufactured plants are available. There is no foreign direct investment in Pakistan’s milling
sector.

The first Flour Mills was built in Pakistan in 1950s relied on equipment imported from Europe. Most of the
mills built since the 1980s, used equipment referred to as “Russian Mills” through it was 100 percent
produced in Pakistan. At present, larger Flour Millers in some big cities like Lahore, Islamabad and Karachi
have begun to replace the decade’s old technology with the latest equipment from abroad.
The largest concentration of Flour Mills is in the Punjab Province, which accounts for 66.78 % of the total
Flour Milling Industry in Pakistan. Though there is only 38 % capacity utilization industry wide, new flour
mills continue to build, keeping profit margins razor thin.

Milling practices across the Pakistan depending on type and quality of wheat flour demanded in the local
market. In Punjab province, the Flour Mills extract between 12 percent and 18 percent bran for chapattis
made in tandoor or on griddles. In urban area, extractions are higher, converting 55 percent to 60 percent
wheat grain to wheat flour for baking flat bread or Nan. The reminder is divided between fine flour (Maida)
demanded by industrial backers and semolina (Suji) for confectionary products. The Flour Milling Industry
in Pakistan is far behind in number of fields some of them are below.

Pakistan’s agriculture sector plays a central role in the economy as it contributes 18.9 percent to GDP and
absorbs 42.3 percent of labor force. It is also an important source of foreign exchange earnings and
stimulates growth in other sectors. The government is focusing on supporting small and marginalized
farmers and promote small scale innovative technologies to promote growth in this sector. According to the
6th Population and Housing Census of Pakistan 2017, the country’s population is growing at the rate of 2.4
percent per annum. This rapid increase in population is raising demand for agricultural products. The
present government is focused on developing this sector and in this connection initiated a number of
measures such as crop diversification, efficient use of water and promotion of high value crops including
biotechnology, reducing mark-up rates, agriculture credit enhancement, subsidized fertilizer prices and
cheap electricity for agri tube-wells. As a result, this sector’s performance increased manifold after
witnessing a moderate and subdued growth in last 13 years.

During 2017-18, wheat crop was cultivated on an area of 8,734 thousand hectares showing a decrease of
2.6 percent compared to 8,972 thousand hectares during the corresponding period last year. Wheat
production stood at 25.492 million tons during 2017-18, recording a decline of 4.4 percent over the
production of 26.674 million tons last year. Wheat accounts for 9.1 added in agriculture and 1.7 Pakistan.
The shortfall in production is attributed to decline in area sown, delayed and prolonged sugarcane crushing
season, acute water shortages and fog and smog in the country.
Current Production

Favorable conditions have led to an increase in Pakistan’s wheat production in 2017-18, up 800,000 tons
to 26.3 million tons, according to a survey conducted on 3rd august 2018.Global Agricultural Information
Network report from the U.S. Department of Agriculture. The Pakistani government procured nearly 6
million tons of wheat from the recently concluded harvest, the USDA noted. “At a procurement price of
$310 per ton, producers who receive the government support price are among the better compensated wheat
growers globally,” the USDA said. “In spite of the lower-than-targeted procurement, the government now
holds 10.8 million tons of wheat at the start of the local marketing years, one of the highest beginning stock
levels on record. “Wheat exports in 2017-18 were around 1.2 million tons, unchanged from the previous
USDA estimate. Exports for the coming crop season are forecast slightly lower at 1 million tons, reflecting
800,000 tons of subsidized exports plus 200,000 tons of wheat-equivalent flour to Afghanistan.

EXPORT

Pakistan’s most reliable market is Afghanistan, where wheat flour is exported via close relationships
between traders on either side of the border. Recent closings of a number of border crossings and the high
price of wheat in Pakistan appear to be stopping the flow of flour into Afghanistan. Wheat equivalent
exports to Afghanistan are estimated at 400,000 tons and total exports are estimated at 600,000 tons.
Pakistan’s wheat stocks have risen to a record nine million plus tons. Flour millers’ data, substantial wheat
stocks have accumulated due to carryover stocks of previous years. Wheat consumption in Pakistan stands
at 23 million tons per annum.

FUTURE PROSPECTS

International market has gone down to almost half but the Pakistani wheat price is constantly increasing,
rendering the flour mills in a miserable condition, causing closure of about 700 flour mills in the country.
The government has taken decision to raise support price. One of the major reason for the down fall in
exports is due to closure of trade between Pakistan and Afghanistan but this situation will recover as their
relations will be stabilized