Mubashar Nadeem
Pakistan’s inflation trajectory has once again been jolted, with the national CPI breaching the 5 percent mark in September 2025 — the first surge in nearly a year. Driving this spike is the staggering 50 percent month-on-month rise in wheat and wheat product prices, contributing almost a full percentage point to overall inflation. Yet, this is not merely a statistical shock; it is the manifestation of years of misplaced economic policy — a reform illusion that has now crumbled under its own weight.
For two years, Pakistan’s policymakers paraded their “wheat market reforms” as the dawn of a new era — one where the private sector would thrive, the state would withdraw from price controls, and market forces would guide production and trade. But behind the slogans of deregulation, no credible system was established to replace state intervention. There was no reliable pricing benchmark, no transition plan to protect farmers from market volatility, and no institutional mechanisms for storage, liquidity, or trade. The so-called reform was nothing more than fiscal maneuvering dressed as liberalization.
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By selling public wheat stocks early and curbing exports, the government engineered temporary disinflation — at the cost of farmer earnings and long-term stability. Now, with domestic prices soaring while global markets remain steady, Pakistan’s wheat crisis stands as a damning indictment of short-sighted policymaking. The government’s decision to revive the Minimum Support Price (MSP) framework is not a course correction; it is a public admission of policy failure.
Real reform was never about dismantling food security systems; it was about replacing crude instruments with smart mechanisms. A truly reformed wheat market should ensure that farmers earn fair returns while consumers pay affordable prices — through transparent benchmarks linked to global parity, predictable trade rules, and independent risk-protection mechanisms. Instead, Pakistan has built a system of perpetual uncertainty, where decisions are dictated by political cycles, not economic logic.
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A 50 percent price surge in a single month does not represent market correction; it represents market collapse. It shows the absence of any credible anchor for price discovery and exposes the fragility of Pakistan’s inflation management strategy. When wheat alone drives nearly a one-point jump in CPI, it destabilizes not only household budgets but also monetary policy, fiscal projections, and external accounts. The cycle of panic and intervention that follows only deepens the structural rot.
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The way forward requires not slogans but serious governance. First, Pakistan must establish a transparent national benchmark for wheat pricing, informed by independent data and international trends. Second, trade rules should be codified — with predefined criteria for when imports or exports can be opened, to end the era of arbitrary bans. Third, procurement should be rationalized to maintain only a two-month strategic reserve, ending the state’s unsustainable role as buyer of last resort. Fourth, farmers need targeted protection against extreme losses, not open-ended subsidies that distort the market. Finally, Pakistan must invest in logistics, storage, and collateral systems that empower private actors to stabilize supply chains.
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These are standard market tools, not revolutionary ideas. Countries with weaker institutions have implemented similar transitions with success. The problem in Pakistan is not capability — it is intent. Wheat policy has long been a stage for political theater: a show of populist subsidies one year and austerity-driven cutbacks the next. Each cycle erodes public trust and fiscal space while perpetuating inefficiency.
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The IMF, too, must resist endorsing another round of superficial fixes. Allowing Pakistan to reimpose MSP without a long-term transition plan will only institutionalize volatility. Conditionalities must be tied to genuine deregulation — not fiscal cosmetics. True reform means creating markets that work on rules, not on ministerial moods.
Ultimately, wheat policy reform is not about ideology; it is about survival. Pakistan cannot afford to finance distortions indefinitely, nor can it abandon farmers to unregulated chaos. The balance lies in building transparent, rule-based systems that protect both producers and consumers. A market where prices rise 50 percent in one month is not a market — it is a failure of governance. The time for illusions has ended; only real reform can restore credibility to Pakistan’s economic future.
