PUNJAB’S farmers are enraged. They are not getting what they call a fair price for their wheat harvest this year due to the government’s decision to ditch its decades-old policy of fixing the minimum support price for the staple, besides stopping its grain procurement operations. This has left them at the mercy of the private sector, causing the ‘price to crash’ in the market. The Pakistan Kissan Ittehad, a body that represents a sizable number of growers from the province, has sounded a warning that farmers cultivating wheat may switch to other more profitable crops — causing food shortages — next year unless the government reverses its new policy. “Poor farmers are being strangulated [due to the wheat price policy shift] ... They are unable to meet their basic needs,” a PKI leader said at a press conference.

At the heart of the problem is the government’s unplanned, poorly coordinated withdrawal from the wheat market beginning last year to meet a key goal of the ongoing IMF programme. The sudden reversal of the policy that regulated the wheat supply chain since the 1960s has proved to be disruptive for the unprepared farmers. But this disruption is temporary, even if it takes a couple of years and market volatility to settle. Indeed, the country’s wheat procurement and price support system has historically helped farmers get prices higher than international prices for their produce while ensuring more or less stable flour rates for urban consumers. This has worked well for most stakeholders including big farmers, middlemen, flour millers, etc — at the expense of smallholders and the government, which had to beat massive costs to subsidise urban consumers and farmers. The system, which had become fiscally unsustainable due to its soaring subsidy budget and rampant corruption in its procurement operations among other factors, demanded that market forces be unleashed to correct the market’s course. Given the sudden shift in policy the price shocks being felt by the farmers are not unexpected. But returning to the old system is not an option. Rather, the government must fully deregulate the wheat supply chain and allow market forces to work to avoid such shocks in future and unlock the export potential of wheat and wheat-based products. Government intervention should be restricted to helping small farmers access cheaper credit, quality inputs and new technology to boost their productivity and incomes.

Published in Dawn, April 25th, 2025