KARACHI, March 11: Big money coming from neighbouring country via Dubai along with locally available cheap finance has given traders an opportunity to hoard essential grains like wheat and rice thereby creating artificial shortages resulting in unprecedented price spiral.

"This is a new trend we are witnessing for the first time in the recent history of this country where small and big traders having financial support from abroad and abundantly available cheap finance in the local financial market are making big profits out of cash crops," a leading grain dealer who requested anonymity claimed.

The rental value of many godowns and warehouses in the port city has also gone up owing to high demand from hoarders of food grains who are looking for such facilities in areas like Gulbai, SITE, Hawksbay, TPX sheds and Korangi.

Traders further said that in a short period of six months the demand for warehouses suddenly rose pushing per square foot rent per month from Rs5.25 to Rs7.50.

"I must say a big game was being played which may be politically motivated or plain greed i.e. to make quick money at the cost of poor masses of the country," another grain dealer said. The present situation could be easily put in few words: "hoarders all over the country are reaping while the poor are weeping," he added.

This is the ugly side of the easy capital access, which wrecks all norms and values and gives rise to ruthless exploitation, making poor more poor, another dealer said.

Apart from the flow of capital from neighbouring country through Dubai, the official scheme of export re-finance which is a blessing for exporters, is also being widely mis-used in the form of pre-shipment re-finance, dealers said.

Giving some details about the modus operandi of some exporters who are abusing the export re-finance facility which is available at a mark-up of maximum 3 per cent, grain dealers said that a dummy Letter of Credit (L/Cs) are arranged against which such re-finance is taken, thereafter, they pile up stocks without any fear.

The post-shipment finance is understandable but pre-shipment re-finance, on agro commodity creates artificial shortage resulting in artificial price hike in the local market. Above all there are no exports against such L/Cs for which cheap finance has been taken by such unscrupulous elements.

Consequently, the prices of most of the food grains in the country are presently touching unprecedented level with Irri-6 rice and wheat going sky high.

According to grain market sources, presently only four traders of the city who are not exporters are holding back around 170,000 tons of Irri-6 rice and around 250,000 tons are reported to have been held back by dealers in interior of Sindh.

As a result of this the Irri-6 prices have touched all time high level at Rs13,000 per ton which comes to around $245 per ton (fob). In the world market Irri-6 is presently being quoted at around $205 per ton.

Already loud whispering is going on in the market circles that Irri-6 prices are likely to go higher by end June as the current rice season would end by November this year. Therefore, the artificial shortage created by these hoarders are likely to push prices further high.

Whereas the 'game played' in the wheat is a well known fact to everybody but involvement of foreign investment in collaboration with local dealers based in Dubai have wrecked the entire grain sector, dealer said. After Eid-ul-Azha, prices of wheat and coarse rice have shot up amazingly, and one wonders whether this all was being done to topple the present government.

A wheat dealer said that the Ministry of Food way back in September or October last year pointed out that the country would need around 0.5 million tons of wheat to meet the looming shortage but much to the surprise of general public the imports are being carried out in the month of February when arrival of wheat crop starts in Sindh.

The involvement of big wigs in hoarding wheat stocks upto 0.5 million tons is reported to have helped them to mint around Rs 200 to Rs300 crores in a short period of three months, dealers said. The wheat stocks situation was not bad and the country was only in need of some buffer stocks to check price flare-up from time to time.

However, it all ended in allowing boarders to reap at the cost of poor who are even today paying high cost for the 'roti', once they used to pay Rs2 but now the same has gone up to Rs3 with lesser weight and size. Similarly, wheat flour prices in the open market has gone as high at Rs16 to Rs18 per kg.

DAWN