Arshad Mahmood Awan

The ongoing flip-flopping of Pakistan’s policymakers has once again reared its head in the wheat sector, and unfortunately, this time, their decision-making is neither consistent nor timely. If Pakistan’s policymakers are determined to make U-turns, they should at least master the art of doing so effectively. Instead, their latest move showcases a clear lack of coherent strategy and a failure to understand the critical need for timely and efficient governance. The government’s recent actions—or lack thereof—have only deepened the crisis surrounding wheat procurement and market management, causing immense distress to the farming community and the broader rural economy.

In May 2024, the Punjab government threw the farming sector into disarray when it suddenly decided to exit the wheat procurement market, leaving farmers bewildered and unprepared. The decision was abrupt, poorly timed, and had disastrous consequences. Wheat prices plummeted from Rs125 per kg to Rs80 per kg within a matter of weeks, creating a financial crisis for growers who had already invested heavily in their crops. The impact was particularly severe for rural areas, where wheat cultivation is a major economic driver. To make matters worse, Punjab had a bumper wheat harvest of 31.5 million metric tons (MMT), while the government simultaneously imported 3.5MMT, further saturating the already oversupplied market. This ill-considered policy move could have been disastrous at any time, but its timing made it all the more damaging.

Fast forward a year, and the effects of the government’s erratic policies are painfully evident. Wheat cultivation in Punjab has dropped sharply from 9.7 million hectares last season to 9 million hectares this year, signaling a clear retreat from farming due to the financial trauma caused by last year’s blunder. Farmers, having experienced a serious setback, are now reluctant to invest in seeds, fertilizers, and other essential inputs. Adding to their woes, the province faced an unusually dry winter, coupled with a diminishing canal water supply, which has all but ensured that the harvest this year will be significantly weaker. Industry experts are now predicting that the total wheat output may fall to around 28MMT, a notable decline from last year’s surplus.

In a desperate attempt to salvage the situation, the federal food security minister recently recommended reinstating the wheat support price, but this eleventh-hour proposal is symptomatic of deeper issues in governance. Announcing a support price so close to the harvest season is not only impractical but also a glaring example of the government’s chronic indecision. The window for signaling wheat prices to farmers closed long ago—in November and December, when farmers make critical decisions about allocating resources and determining land-use patterns for the coming season. By waiting until just weeks before the harvest to announce the support price, the government has not only undermined its credibility but also failed to address the immediate economic needs of the farming community.

This recommendation, while perhaps well-intentioned, is also problematic for a number of reasons. Most notably, it directly contradicts the guidelines set by the International Monetary Fund (IMF) in their staff report released in September 2024. According to the IMF, Pakistan is expected to gradually deregulate agricultural commodities over an 18-month period, ultimately phasing out outdated support price mechanisms. This is a necessary step for the agricultural sector, which has been plagued by price distortions for decades. The government’s response to this directive—dissolving the Food Department and creating the “Price Control & Commodities Management Department”—appeared to be a decisive move at first. However, in reality, it was a superficial restructuring that did little to address the underlying issues of wheat market regulation.

The real scandal lies in the government’s inaction over the past year. Rather than moving forward with meaningful reforms and deregulation, policymakers have failed to introduce any of the structural changes necessary to ensure a transparent, efficient, and market-driven wheat system. Despite the promises of reform, Pakistan has yet to see the introduction of critical mechanisms such as publicly traded domestic wheat contracts, a robust warehouse receipts system, or a flexible and transparent import-export regime. What’s worse is that the government’s failure to act has resulted in significant financial losses for farmers, while simultaneously giving rise to temporary inflationary optics that have done little to alleviate the underlying problems. In fact, the drop in the national Consumer Price Index (CPI) from 23 percent to a more manageable 1.5 percent—celebrated as a success—has turned out to be a hollow victory, masking the real crisis brewing in the agricultural sector.

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At the heart of this crisis lies the government’s failure to take a long-term, sustainable approach to market regulation. Instead of focusing on meaningful deregulation and market-driven price discovery, policymakers are reacting to short-term challenges with panic measures. The recent recommendation to reinstate support prices, in particular, seems driven by fears of a looming price spike that could embarrass the government politically. However, this approach is neither effective nor fair to the farmers who are already bearing the brunt of last year’s mismanagement.

It is time for Pakistan’s government to break free from the cycle of flip-flopping policies. The reality is that farmers should not be subject to arbitrary price controls, especially when such interventions have historically led to inefficiency and market distortions. If the government’s goal is to foster a more sustainable and competitive agricultural sector, it must focus on facilitating true deregulation, as mandated by the IMF. This involves stepping away from outdated support price mechanisms and allowing the market to play a more significant role in price discovery. When the harvest season ends in July, the government should focus on facilitating timely imports to meet any shortfall in wheat supply, rather than trying to manipulate prices in an already volatile market.

Furthermore, Pakistan’s policymakers must take meaningful steps toward structural reforms that promote transparency and fairness in the agricultural sector. This includes implementing a transparent pricing mechanism, improving access to financial instruments like warehouse receipts, and creating an efficient and flexible import-export system. Such reforms would not only stabilize wheat prices but also enhance the long-term competitiveness of Pakistan’s agricultural industry, benefitting both farmers and consumers in the process.

In conclusion, the government must end its pattern of indecision and start implementing policies that support a genuine transition toward market-driven agricultural reforms. Enough of the flip-flopping and policy theatrics. It’s time to let the market work for once and, most importantly, to ensure that farmers are given the opportunity to profit from their hard work. Only then can Pakistan hope to build a resilient and sustainable agricultural sector that meets the needs of both its farmers and its people.