Last month, a multinational operating in Pakistan’s grain storage and trading sector inaugurated a modern 40,000-tonne storage facility in Multan, comprising mechanical steel silos for storing wheat, maize, and other grains. Such a large facility marks a vital step towards modernising grain storage in a country where post-harvest losses run as high as 10 per cent — far exceeding global benchmarks.
In Pakistan, it is a familiar headline: hundreds of thousands of tonnes of government-held wheat devoured by rodents (rats), or flour mills refusing to lift water-damaged, insect-infested wheat stocks. In such circumstances, modern bulk storage is no longer a luxury; it is a necessity, especially for a country that has to store a significant portion of its strategic wheat reserves in open-air stacks.
Pakistan’s public sector (excluding Trading Corporation of Pakistan) has around four million tonnes of proper wheat storage capacity. This storage largely consists of traditional brick-and-mortar (house-type) godowns. Ironically, Punjab and Sindh — the country’s two largest grain-producing provinces — have only 2.3m and 0.71m tonnes of storage capacity, respectively, while the federal government (Pakistan Agricultural Storage and Services Corporation — Passco) accounts for around 0.6m tonnes.
Regrettably, since the 1990s, massive public funds have been funnelled into motorways, highways, bypasses, underpasses, and overhead bridges. With the policy focus persistently skewed toward road infrastructure, critical agricultural infrastructure failed to receive government priority. As a result, substantial quantities of wheat are either wasted altogether or suffer severe quality deterioration every year, jeopardising both the country’s food security and food safety.
With the policy focus persistently skewed toward road infrastructure, critical agricultural infrastructure failed to receive government priority
Meanwhile, a policy shift is now under way in Punjab, which produces about 77pc of the country’s wheat. This year, the provincial government engaged 11 companies (aggregators), including the aforementioned multinational, to procure wheat from farmers and store it — a role historically performed by the provincial Food Department. The move could encourage greater private-sector investment in large-scale, modern storage.
However, such private investments may receive an even greater boost if the government fully deregulates the wheat sector and permits private sector players to hold as much wheat inventory as they wish. To guard against any potential market manipulation, however, the government can enforce the existing Punjab Registration of Godowns Act, 2014, which requires stockists to declare their inventories to the relevant government departments when required.
Nevertheless, it must be acknowledged that commercial entities operate for profit rather than public service. With another intermediary entering the wheat value chain — whether government-backed aggregators or private stockists — consumers may ultimately have to pay more, as these entities would expect to earn a return from seasonal wheat price appreciation or storage fees. Otherwise, there is no economic incentive for the private sector to invest in storage infrastructure.
On the flip side, the public has long paid an even heavier price for the inefficiency and systemic corruption associated with public-sector procurement, alongside the colossal interest payments on commercial bank loans taken by the government each year to finance wheat procurement from farmers.
Irrespective of whether wheat storage is managed by the government or the private sector, one thing is certain: Pakistan needs better grain-storage infrastructure capable of maintaining grain quality and minimising losses caused by wheat weevils, rodents, microorganisms and poor storage conditions in traditional house-type godowns.
However, the question remains: what benefits will these modern storage facilities bring for consumers and farmers, especially smallholders, who make up over 96pc of the country’s 11.7m total farmers?
As far as consumers are concerned, they could benefit from improved food safety, as bulk storage such as silos offers better-controlled storage conditions. However, better-quality grain — particularly wheat — may come at somewhat higher prices, partly reflecting the cost of capital investments made by private-sector operators in modern storage facilities.
Farmers, too, could benefit. A larger network of privately operated storage facilities could expand the scale and geographical reach of the electronic warehouse receipt (EWR) system — which currently covers barely 500,000 tonnes of accredited storage capacity, concentrated in a few cities. This would allow farmers to store their produce, including wheat, maize, and paddy, and use the resulting warehouse receipts as collateral to obtain bank loans to finance inputs for their next crop, instead of resorting to distress sales.
In conclusion, reducing post-harvest losses — particularly for wheat, the country’s primary staple and largest crop — should be a national priority, especially since Pakistan is forced to import large quantities every two to three years.
Unfortunately, modern storage infrastructure has historically received inadequate public investment. Now, as the government moves towards deregulating the wheat sector, partly in the context of its International Monetary Fund (IMF) programme commitments, policymakers must introduce policies that encourage private investments in modern grain-storage facilities. However, this transition cannot succeed unless the government fully liberalises wheat buying, trading, and storage — just like the free-market frameworks already in place for maize and rice.
Khalid Wattoo is a development professional and a farmer and Dr Waqar Ahmad is a former Associate Professor at the University of Agriculture, Faisalabad.
Published in Dawn, The Business and Finance Weekly, October 12th, 2026
