THE government’s wheat policy is mired in utter confusion. Sandwiched between global lenders and wheat farmers, it seems to be sailing in two boats at the same time. On the one hand, it is struggling to implement a free wheat market mechanism, scrapping the decades-old system of minimum support prices and public procurement to meet a key benchmark of the current IMF funding programme. On the other, it has recently fixed Rs3,500 per 40kg as the new minimum support price for the next harvest to protect growers from the vagaries of the market and prevent a price crash, which was witnessed during the last harvest earlier this year. This apparent policy reversal has left many wondering what the government actually intends to do. If the centre and provinces have indeed agreed under the IMF programme to let market forces determine the prices, who will buy the farmers’ grain at the officially fixed rate? This question, raised by the PPP, goes to the heart of the policy incoherence that continues to haunt our agricultural governance.

It is in this policy vacuum that the introduction of the Electronic Warehouse Receipt Financing mechanism is being touted as a modern, market-based and technology-enabled alternative to state-led procurement. Under this system, accredited warehouses issue e-receipts acknowledging the quantity and quality of the agricultural commodities stored by farmers. These receipts can then be pledged by them as collateral for bank loans of up to 70pc of the stored commodity’s value, to avoid distress sales at harvest time and potentially secure better prices once market conditions improve. If allowed to function without official interference or policy distortions, this mechanism, though not without pitfalls, could potentially lay the foundation for a genuine market-based wheat trading system and emerge as a credible alternative to state-led procurement. Regrettably, the government’s political compulsions appear to have turned the mechanism into a tool for circumventing IMF restrictions by choosing to shoulder the cost of borrowing itself rather than pursuing an effort at structural reform. In its present form, the latest wheat policy signals a complete reversal — a retreat from last year’s push to liberalise the market. Once again, it is the middlemen who stand to gain the most, while small farmers remain trapped in the same cycle of dependency that the new policy is supposed to end.

Published in Dawn, October 24th, 2025