Pakistan's wheat policy backfires as procurement system faces collapse

Lahore [Pakistan], May 9 (ANI): Pakistan's Punjab province's government's newly introduced wheat procurement model has run into serious trouble, with private companies failing to purchase wheat amid pricing disputes, banking complications, and growing resistance from farmers, as reported by Dawn.
According to Dawn, under the 2026 procurement framework, the provincial administration planned to buy nearly 3 million tonnes of wheat through 11 selected private firms, replacing the traditional state-controlled procurement system. To facilitate the process, the government reportedly offered multiple incentives, including subsidised financing, free storage facilities in Food Department warehouses, and the deployment of hundreds of experienced officials to assist participating companies.
However, the initiative has struggled from the outset. Representatives of participating firms revealed that negotiations with banks over financing arrangements collapsed after disagreements over interest rates linked to KIBOR. Companies were eventually compelled to secure funding under tougher conditions, increasing fears of financial losses due to the high cost of holding wheat stocks for extended periods. The procurement mechanism has also faced resistance from farmers because the government-fixed purchase price of Pakistani Rs 3,500 per maund is significantly lower than the open market rate, which has climbed to around Pakistani Rs 3,700 per maund. Farmers have therefore either withheld their produce in anticipation of further price increases or sold directly to traders and middlemen.
Industry insiders claim that at least nine of the eleven shortlisted companies have so far failed to procure any wheat, effectively paralysing the scheme. Meanwhile, authorities have intensified crackdowns on what they describe as illegal wheat transportation from Punjab to other provinces. Food Department and PERA teams have reportedly intercepted consignments and redirected them to government-linked warehouses where the wheat was purchased at official rates, as highlighted by Dawn.
Farmer organisations have sharply criticised the government's handling of the crisis. Pakistan Kisan Ittehad President Khalid Khokhar accused authorities of intervening only after market prices increased instead of supporting farmers when wheat prices had earlier collapsed below production costs. He further alleged malpractice at procurement centres, including unfair deductions and faulty weighing systems. Another farmers' leader, Mian Umair Masood, also rejected official claims regarding the distribution of subsidised gunny bags, alleging widespread corruption and mismanagement in the support programme, as reported by Dawn. (ANI)