The Punjab government is playing with fire. After engineering last year’s wheat price collapse through deliberate policy decisions, it has now turned on the growers, dismissing their grievances as exaggerated theatrics. Just last week, the province’s de facto price control czar insisted on television that the state cannot prioritize “a few thousand farmers” over “millions of consumers.”
The lawmaker is right—in theory. Price supports are distortionary and inhibit the development of competitive markets. But that’s a lazy argument—conveniently ignoring the structural dysfunction that defines Pakistan’s wheat market and the state’s role in deepening it.
Yes, maize and rice—cultivated by the same farmers on the same land, sold in the same mandis—operate without price support. And yes, like wheat, these crops also face harvest-season price dips due to supply gluts, limited storage, and weak forward markets.
But the similarities end there. Wheat is a beast of a different kind—not only because it’s a staple but because it has never been allowed to evolve into a functioning market. Unlike rice or maize, where deregulation has enabled some level of price discovery and absorption capacity, wheat remains trapped in a dysfunctional system distorted by decades of state intervention and sudden withdrawal.
Consider this: if Pakistan produces 10 million tons of rice, the private market—arthis, traders, processors—steps in with enough liquidity to absorb most of the crop. Prices may be suboptimal, and yes, gains accrue disproportionately to those with storage capacity, but growers at least find a buyer.
Wheat doesn’t have that luxury. With over 9 million hectares under cultivation and annual output exceeding 30 million tons—worth over Rs 2 trillion—the scale dwarfs all other crops. Historically, government agencies procured up to 30 percent of the crop, anchoring prices and signaling demand. That anchor is now gone. And the market isn’t ready.
Instead of a gradual transition, the government exited with no preparation. Result? An additional 30 percent of output has been dumped into a market that simply lacks the depth, appetite, or capital to absorb it. This isn’t price discovery—it’s price destruction.
Worse still, government agencies have been offloading old grain stocks at below-market rates—just as harvest began. Officially, this is to cut storage costs. In reality, it’s to suppress market prices ahead of what’s widely expected to be a shortfall year. This price suppression is deliberate, cynical—and deeply counterproductive.
Just how absurd is the situation? Wheat prices today are lower than last year despite a projected 10–12 percent drop in output. They’re also lower than the government’s own estimated cost of production from two years ago. In a country with 20 percent inflation since then. In a year of water stress and a shrinking wheat area.
If the policy goal is to ensure farmer flight from wheat, then mission accomplished. The area under cultivation has already declined 11 percent. If prices remain depressed, input-intensive crops like wheat will continue losing acreage to maize and fodder. The downstream impact on food security, rural incomes, and import bills will hit by late 2025.
For now, carryover stocks and distressed farmer selling are masking the cracks. But come autumn, when market players realize they’ve misread the supply pipeline—and millers scramble for grain—there will be panic. Worse, cheap Pakistani wheat may even leak across borders through informal trade, further depleting domestic supplies.
This is not a market failure. It’s a policy-engineered collapse. And it’s unfolding under a government whose electoral mandate is questionable and whose policy instincts seem allergic to course correction—even as warning signs flash red.
If this crisis deepens, it will not be an accident. It will be authored. And avoidable. The state must urgently rethink its wheat policy architecture. Market liberalization cannot mean abdication. Without transitional mechanisms such as strategic procurement, limited price bands, or private warehousing guarantees, this policy will only trigger the very instability it claims to avoid.
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