Bread, noodles to get dearer by 20% as maida heats up

Maida up 60-80% from April levels

Consumers will soon have to pay at least 20 per cent higher for bread and noodles, as producers have cut down supplies to the market, in anticipation of higher prices of key input maida in the near future.

Maida prices have recently jumped by 60-80 per cent to Rs 16 a kg in the wholesale market and Rs 18 a kg in the retail market compared with levels witnessed at the start of flour milling season in April.

As a result, prices of bread/ pav and noodles have also shot up by half over the last three to four months.

In fact, the uptrend in wheat prices has pushed down maida consumption by about 20 per cent so far this year.

All involved directly or indirectly in wheat consumption have expressed dissatisfaction over the current trend of short supply but hoped this was just a temporary phase, which should be overcome soon.

Flour mills unanimously demanded immediate government intervention to release the extra quota, which it held. "Since April this year there has been no release of wheat through 'open market sale', through which flour mills procure and process wheat to convert it to maida," said Ajay Goyal of Shivaji Roller Flour Mills.

"At present, we are buying wheat from open market at offering premium to spot prices and are processing it just to run our plant. Our capacity utilisation has declined by more than half, to 40 per cent," he added.

Goyal, however, has hope. He said the government had signed contracts for additional procurement of 70 lakh tonne, which should soon be released through 'open market sale'.

D Manikchand, managing director, Panchaganga Roller Flour Mills, blamed it on multinational companies. He said they had spoiled domestic flour mills' wheat procurement position by cornering about 22 million tonne this year.

When the flour season started in the second half of April this year, wheat prices were hovering just around Rs 760 a quintal, but they crossed the Rs 1,000 a quintal mark last week owing to multinationals' continuous appetite. If the price of raw material rises over 25 per cent, that of finished product is bound to go up 50 per cent. Therefore, flour mills saw their margins shrink drastically.

"Storing maida is not possible as it spoils in a short time. So, we are selling at throwaway prices with a minimum grinding margin of 75 paise a kg," Manikchand said.

The flour industry requires about 1.20 million tonne wheat every month to grind it into maida in order to meet the annual demand of 75 lakh tonne.