Wheat and flour production processes in Pakistan are described. Wheat is harvested from August to October and milled into flour. However, flour mills often mix lower quality wheat with the regulated supply to increase profits. This decreases actual profits for farmers and increases costs for consumers. Regulators should address unethical practices to protect stakeholders in the wheat and flour industry.

2. Presentation : WHEAT – FLOUR Faculty : SIR RAZA ALI – DIRECTOR FINANCE & PLANNING Course : COST & MANAGERIAL ACCOUNTING Presented by: Shahab Ahmed Khan Danish Anwar Talha Hakeem Muhammad Hamid Khan Dated : January 21, 2010 Institute : Newports Institute of Communication & Economics Karachi,

3. Table of Contents Sr. # Description 01 Executive Summary (Wheat – Flour) 02 Introduction (Wheat) Production Process Global Wheat Production Production Growth Rate Production Areas in Pakistan Global Wheat Consumption Wheat Consumption In Pakistan Cost of Production Wheat Gross Profit 03 Introduction (Flour) Production Process Average Production (Karachi) Cost of Production Flour Gross Profit 04 DILEMMA What kind of flour we buy Facts At what price we buy Facts Actual Gross Profit 05 Conclusion (Wheat – Flour) 06 Q&A & Thanks 07 References

4. Introduction (Wheat) Wheat is a grass, originally from the Fertile Crescent region of the Near East, but now cultivated worldwide. Wheat grain is a staple food used to make flour for leavened, flat and steamed breads, biscuits, cookies, cakes, breakfast cereal, pasta, noodles, couscous and for fermentation to make beer.

5. Production Process ( Pakistan) Time for Starting Harvesting : August ~ October Percentage of Seed Consumption: 40 ~ 60 KG Per Acre Land Preparation : To avail best production of wheat, farmer should be harvesting after Rice, Cotton.

6. Production Process ( Pakistan) Fertilizing & Seeds: October ~ December DAP Potash : 50Kg Per Acre Water : As per requirement. Urea : 50 Kg x 4 Bags Per Acre

7. Production Process ( Pakistan) Harvesting : February ~ March Thresher : March ~ April .

8. Global Wheat Production 2007/08 2008/09 2009/10 Change: 2009/10 over estim. f’cast 2008/09 million tonnes % WORLD BALANCE Production 607.3 684.6 655.8 -4.2 Trade 112.6 123.8 114 -7.9 Total utilization 618.2 644.7 655 1.6 Food 447 451.8 456.4 1 Feed 102.1 120.3 126.5 5.1 Other uses 69.1 72.7 72.1 -0.8 Ending stocks 151.6 191.3 192.4 0.5

9. Production Growth Rate Country* 2008 2009 2009 over 2008 million tonnes percent European Union 150 138.6 -8 China (Mainland) 112.5 111 -1 India 78.4 77.6 -1 United States of America 68 55.1 -19 Russian Federation 63.8 55 -14 Canada 28.6 25.9 -9 Pakistan 21.8 23.8 9 Ukraine 25.9 19.1 -26 Australia 21.4 22 3 Turkey 17.8 20 12 Kazakhstan 12.5 14 12 Iran Islamic Rep. of 9.8 13.5 38 Argentina 8.3 9.6 16 Egypt 8 7.8 -2 Syria 2.1 4 92 Other countries 55.8 58.8 5 World 684.6 655.8 -4

10. Production Areas in Pakistan

11. Global Wheat Consumption

12. Global Wheat Consumption

13. Wheat Consumption In Pakistan

14. Cost of Production Wheat

15. Gross Profit

16. Introduction (Flour) Flour is a powder made of cereal grains. It is the main ingredient of bread, which is a staple food for many civilizations. Making the availability of adequate supplies of flour a major economic and political issue at various times throughout history. Wheat flour is one of the most important foods in Asia, European, North American, Middle Eastern and North African cultures, Flour contains high proportion of starches, which are complex carbohydrates also known as polysaccharides.

17. Production Process Grading & Purifying the Wheat Before wheat can be ground into flour it must be free of foreign matter. This requires several different cleaning processes. The first device used to purify wheat is known as a separator. This machine passes the wheat over a series of metal screens. The wheat and other small particles pass through the screen while large objects such as sticks and rocks are removed. The wheat next passes through an aspirator. This device works like a vacuum cleaner. The aspirator sucks up foreign matter which is lighter than the wheat and removes it. Other foreign objects are removed in various ways. One device, known as a disk separator, moves the wheat over a series of disks with indentations that collect objects the size of a grain of wheat. Smaller or larger objects pass over the disks and are removed.

18. Production Process Preparing the wheat for grinding: The purified wheat is washed in warm water and placed in a centrifuge to be spun dry. During this process any remaining foreign matter is washed away. The moisture content of the wheat must now be controlled to allow the outer layer of bran to be removed efficiently during grinding. This process is known as conditioning or tempering. Several methods exist of controlling the amount of water present within each grain of wheat. Usually this involves adding, rather than removing, moisture. Instead of water, wheat may also be conditioned with steam at various temperatures and pressures for various amounts of time. If conditioning results in too much moisture, or if the wheat happens to be too moist after purification, water can be removed by vacuum dryers.

19. Production Process Processing & packing the flour: The wheat moves between two large metal rollers known as breaker rolls. These rollers are of two different sizes and move at different speeds. They also contain spiral grooves which crack open the grains of wheat and begin to separate the interior of the wheat from the outer layer of bran. The product of the breaker rolls passes through metal sieves to separate it into three categories. The finest material resembles a coarse flour and is known as middlings or farina. Larger pieces of the interior are known as semolina. The third category consists of pieces of the interior which are still attached to the bran. The middlings move to the middlings purifier and the other materials move to another pair of breaker rolls. About four or five pairs of breaker rolls are needed to produce the necessary amount of middlings.

20. Product From Wheat and it’s Margin Product Margin Atta (Use in Homes Bread) 55% Fine Atta (Use in Nan & Bakery Product) 15% Maida 15% Bran ( Use in Animal Feed ) 20%

21. Cost of Production Flour

22. Selling Price of 100 Kg Wheat Bag After Processing

23. Gross Profit

24. DILEMMA Are You Ready!

25. DILEMMA What kind of flour we taken! Facts During the research we meet different Production Managers and some of Mill owners regarding understand all process and actual costing. All the Managers/ Mill owners advised that they process Wheat into Flour who receive from the Government allocated quota. An reliable source confidently say that if Flour Mills process wheat of govt. allocated quota only then they should earn over 1.2 million rupees in a month. Approx. all Flour Mills owner purchase sub category / expired / animal feed wheat (which is available less price of Govt. sale to Flour Mills) from the local market and mix it into above all process causing to increase total quantity of flour to make more profitability. Average profit of flour mill owners increase to Rs. 5.0 million/month.

26. DILEMMA Actual Gross Profit

27. DILEMMA Farmer Wheat Cost Rs. 492 Sales Rs. 600 - 800 Where is the Gap Government to Flour Purchase Rs.950 Sale Rs 2710 Middle Man (Arti) Purchase Rs. 600 - 800 Sale Rs. 950 Mill Owner Purchas Rs. 2710 Sales Rs. 2750

28. Conclusion (Wheat – Flour) Official URL of Pakistan www.pakistan.gov.pk About Pakistan The Islamic republic of Pakistan emerged as an independent sovereign state on 14th August 1947, as a result of the division of former British India. It lies between 23-35 to 37- 05 north latitude and 60-50 to 77- 50 east longitude touching the Hindukush Mountains in the north and extending from the Pamirs to the Arabian Sea. Pakistan covers 796,095 sq.km with a population of 132.35 million according to population census 1998. It is divided into four provinces: Sindh, Punjab, North West Frontier Province & Balochistan. Climatically, Pakistan enjoys a considerable measure of variety. North and north western high mountainous ranges are extremely cold in winter while the summer months of April to September are very pleasant. The country has an agricultural economy with a network of canals irrigating a major part of its cultivated land. Wheat, cotton, rice, millet and sugar cane are the major crops. Among fruits: mangos, oranges, bananas and apples are grown in abundance in different parts of the country. The main natural resources are natural gas, coal, salt and iron. The country has an expanding industry. Cotton, Textiles, sugar, cement, and chemicals play an important role in its economy. The country comprises of a vast area that was the great center of ancient civilizations of the world. Its historical sites beginning with stone-age to Twentieth Century A.D are a mirror of the life of its people who were, by nature, simple, virile, hospitable and hard working.……

29. Q&A & Thanks

30. References: Wheat: Basic Concept: Sir Raza Ali – Director Finance & Planning NICE, Karachi. Visit : Mirpurkhas and Patdan To attain basics of Wheat Farming. Data: Pakistan Official Web, University of Arkansas – Division of Agriculture, SMEDA, Agriculture Statistics - Federal Bureau of Statistics PK, SBP.org.pk, Sukker Institute of Business Admin., Business Recorder, Google, Wikipedia, Yahoo, Local Market, etc. Flour: Basic Concept: Sir Raza Ali – Director Finance & Planning NICE, Karachi. Visit : 1) Qaiser Floor Mills 2) Korangi Flour Mills 3) BMA Traders 4) Meskay & Famtee Tradding To attain basics of Flour Process, . Data: Altavista, Google, Yahoo, Ask, Local Market, etc. etc. After Information Technology, world is like global village, we all try hard to gain information to complete presentation as like professionals but due to many restrictions we are unable to get 100% information. At the end we all very thankful to Sir Raza to guide us day by day to attain proper and specific information / data to complete or make effective presentation /report.

31. Disclaimer: We all apologies during the presentation if we hurt you or hurt from our language / emotions (verbal / non verbal), words, body language, communicating data, language, or from the presentation etc.