If Pakistan’s policymakers are in the business of flip-flopping, at least let them excel at it. Unfortunately, their latest escapade is neither consistent nor timely—two virtues evidently lacking from the government’s dictionary.
In May 2024, the Punjab government blindsided farmers by abruptly exiting wheat procurement—a shock-and-awe tactic straight from the playbook of governance blunders. The fallout was predictable yet brutal: wheat prices plummeted from Rs125 per kg to Rs80 per kg within weeks, leaving growers scrambling and the rural economy reeling. Adding insult to injury, a bumper harvest of 31.5 million metric tons (MMT) and ill-timed imports of 3.5MMT further saturated an already drowning market.
Fast forward one year and the consequences of last year’s botched policy execution are now glaringly evident. Wheat cultivation dropped sharply from 9.7 million hectares last season to just 9 million hectares this year. Financially battered and suffering from acute information asymmetry, farmers predictably scaled back input investments. Adding to their misery, an unusually dry winter and dwindling canal water supply have all but guaranteed a weak harvest. Industry experts now anticipate output could slide back to as low as 28MMT, significantly lower than last year’s surplus.
Enter the federal food security minister, whose recent recommendation to reinstate the wheat support price at the eleventh-hour smacks of administrative desperation. To say that the timing is problematic would be generous. The window for price signaling closed in November-December, precisely when farmers allocate capital and decide land-use patterns. Announcing a support price now, just weeks away from harvest, serves no practical economic purpose except to showcase the government’s chronic indecision.
This recommendation, aside from being unfair, is also squarely at odds with IMF guidelines, clearly outlined in the staff report released in September 2024. The IMF mandated Pakistan’s government to progressively deregulate agricultural commodities over an 18-month timeline, phasing out the archaic support price mechanism. Punjab’s response—disbanding its Food Department and establishing the “Price Control & Commodities Management Department”—appeared decisive at first glance but did little beyond cosmetic restructuring.
Indeed, the real scandal lies in the government’s inaction. Over the past year, not one meaningful step was taken toward genuinely deregulating the wheat market. Price discovery via publicly traded domestic wheat contracts? Missing. Robust warehouse receipts system? Nowhere to be seen. Transparent, flexible import-export regime? Simply nonexistent. All policymakers achieved was financial trauma for farmers and temporary inflation optics, bringing national CPI down from 23 percent to a mere 1.5 percent—a hollow victory disguised as “mission accomplished.”
Now, perhaps worried about potential political embarrassment from a looming price spike, the minister’s recommendation reeks of policy panic. Instead, the government must resist this shortsighted temptation. If farmers bear the losses during times of surplus, basic fairness dictates they reap the profits when the pendulum swings back. Let them.
The government’s duty now is not to meddle again by reinstating outdated and distortionary support prices but rather to finally step up and facilitate true deregulation. If a shortfall arises post-harvest, allow timely imports once the harvest season wraps up in July. Take decisive steps toward meaningful structural reform, market transparency, and genuine price discovery.
Enough flip-flopping. Enough policy theatrics. Let the market work—and for once, let the farmers profit.
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