THE national wheat sector has once again entered a deep economic and policy crisis, exposing structural weaknesses in agricultural planning, procurement management and food security governance. What initially appeared to be a routine procurement season has evolved into a confrontation between market realities and administrative controls, with farmers, flour millers and policymakers locked in uncertainty.
Taking stock of the situation, Punjab Chief Minister Maryam Nawaz this Thursday ordered strict action against traders who fail to declare their wheat stocks within two weeks – a move reflecting official concern over the size of the 2025-26 crop and fears of rising flour prices in the coming months.
The directive comes amid reports of lower wheat production and accelerated speculative buying by traders and investors anticipating future shortages and higher prices. Officials fear undeclared private stocks, combined with weak public reserves, could further fuel inflation.
Punjab Agriculture Department says average wheat yield this year remained around 33 maunds per acre, while official assessments indicate Punjab’s production fell short by three to 10 per cent. Sector analysts believe the national crop may be more than 20 per cent below annual requirements – a worrying deficit at a time of volatile global grain markets due to the Russia-Ukraine conflict and instability in the Middle East.
Poor procurement planning, rising input costs and inconsistent intervention have intensified uncertainty across Pakistan’s wheat sector
Ironically, wheat stocks held by the Pakistan Agricultural Storage and Services Corporation Ltd (Passco) and provincial food departments are considered insufficient to bridge the expected gap. Analysts say delayed procurement decisions, contradictory policies and uncertainty over stock regulations have further destabilised the market.
At the centre of the crisis lies a basic contradiction: the government attempted to control a market that had already moved beyond administrative pricing mechanisms. Economists argue the crisis is not simply about “hoarding” but reflects rapid market repricing triggered by anticipated scarcity, weak confidence in procurement policy and expectations of future shortages.
Last year, farmers received nearly Rs2,200 per maund for wheat – a price many growers described as financially devastating. The poor returns discouraged cultivation this season, contributing to reduced acreage and lower fertiliser use. Although the Punjab government later announced a procurement price of Rs3,500 per maund this year, farmers at the beginning of the season reportedly received only Rs2,900 to Rs3,100.
Pakistan Kissan Ittehad President Khalid Khokhar said the Minimum Support Price mechanism was designed to protect farmers during price crashes, not suppress prices once the market recovered.
“The government intervened when wheat prices rose to Rs3,700, instead of when farmers were forced to sell between Rs2,800 and Rs3,200 per maund,” he said.
Farmers say the economics of wheat cultivation has deteriorated sharply because of rising input costs. Progressive farmer Amer Hayat Bhandara said DAP fertiliser prices had increased from around Rs12,000 per 50kg bag last year to over Rs16,000 this season, while diesel, electricity, seed and labour costs had also surged.
“Regrettably, the government reduced the indicative wheat price from Rs3,900 per 40kg last year to Rs3,500 this year. How can growers sell at this rate?” he asked.
Mr Khokhar warned that wheat yields had already fallen by nearly five maunds per acre because many growers reduced fertiliser use amid uncertainty over procurement and pricing.
The flour milling industry believes inconsistent regulatory interventions and weak financing arrangements worsened the crisis. Progressive Flour Millers Group’s Khaleeque Arshad said the state entered procurement with a support price that quickly became irrelevant once open-market prices crossed it.
Farmers, for the first time in years, found themselves in a relatively strong bargaining position and therefore withheld stocks, expecting higher prices later in the season. However, procurement through aggregators relied heavily on bank financing, and financial institutions were reluctant to assume the risks associated with what many considered an untested procurement model.
According to Mr Arshad, only a few of the 11 shortlisted aggregators for procurement secured bank funding, and approvals came too late, after much of the crop had already moved into private storage networks.
The Pakistan Flour Mills Association warned that speculative investors unrelated to the wheat trade had entered the market solely for profit-driven stockpiling. PFMA leader Iftikhar Mattoo said uncertainty over raids, transport restrictions and stock seizures discouraged flour mills from maintaining normal inventories.
Economists argue that one of the government’s biggest policy mistakes was simultaneously pursuing aggressive procurement targets, restrictive movement controls and administrative intervention at below-market prices. Instead of improving supply flows, such measures reduced market liquidity by creating fear among traders and private buyers.
Markets react not only to actual shortages but also to expectations of shortages. Once farmers and traders became convinced that the crop was smaller and procurement weaker than expected, prices adjusted rapidly.
Many believe freer wheat movement and transparent private-sector participation carry stronger economic logic. If flour mills are allowed to build inventories openly, wheat ultimately reaches consumers through flour production. However, when traders fear raids or arbitrary restrictions, they hold stocks longer, further tightening supply.
Yet government concerns cannot be dismissed entirely. Flour inflation carries serious political and social consequences, particularly for urban populations already struggling with rising living costs. Authorities, therefore, remain under pressure to maintain strategic reserves and prevent uncontrolled price escalation. The problem this year is that reserve levels themselves appear increasingly inadequate.
Stakeholders suggest reforms, including earlier crop estimates using satellite and field data, flexible procurement prices linked to market conditions, stronger warehouse financing systems, transparent private-sector participation before harvest, clearer stock-declaration rules without excessive punitive measures, and reduced inter-provincial movement barriers.
PFMG’s Majid Abdullah said governments should focus less on administratively suppressing flour prices and more on reducing agricultural input costs to encourage higher production. A bumper crop naturally stabilises flour prices more sustainably than coercive controls.
“If wheat and flour prices continue rising under a freer market structure, targeted subsidies for vulnerable populations may prove more effective than broad untargeted interventions that distort incentives across the supply chain.”
Published in Dawn, May 24th, 2026
