In the sun-scorched fields of Punjab, a farmer named Ghulam stares at his ripening wheat, heart heavy with uncertainty. Last harvest, prices crashed to Rs2,200 per 40kg—barely covering costs—after the government scrapped public procurement to appease the IMF. Now, just months later, the government has set a new Minimum Support Price (MSP) at Rs3,500 for the upcoming crop, promising protection. But who will buy at that rate if the market stays free?
This dizzying U-turn isn’t just policy flip-flopping—it’s a betrayal of trust, leaving millions of smallholders like Ghulam adrift in a system that speaks of reform but delivers confusion. As Pakistan juggles IMF demands for market liberalization with political pressures to shield farmers, its wheat policy has become a textbook case of incoherence, trapping growers in dependency while middlemen thrive and food security hangs in the balance.
The contradiction is glaring. For two years, the government trumpeted a shift to a free wheat market, slashing state procurement and ending the decades-old MSP to meet IMF benchmarks under the $7 billion Extended Fund Facility. The goal? Let supply and demand set prices, reduce fiscal burdens, and build a modern commodity ecosystem. Yet, after last year’s harvest saw prices plummet—triggering farmer protests and rural distress—the centre and provinces quietly agreed to fix Rs3,500 per 40kg as the new MSP for 2026. The PPP, a key coalition partner, fired the first shot: “If the market is truly free, who will enforce this price?” Their question cuts to the core. Without public buyers, the MSP is a hollow promise—a political placebo that calms rural voters but changes nothing on the ground. In Sindh and Punjab, where 80 percent of wheat is grown, farmers are left guessing: sell now at market rates risking a crash, or hold out for a government that may renege again?
This policy whiplash isn’t new—it’s a 50-year cycle. Every few years, the state swings between heavy intervention and abrupt withdrawal, leaving farmers as pawns. In 2023, procurement hit 7 million tons at inflated MSPs, costing Rs400 billion in subsidies. In 2024, it dropped to near zero, triggering the price collapse that saw wheat fall below production costs (Rs2,800–3,000 per 40kg). Now, with Rs3,500 MSP, the government risks repeating the same fiscal trap—unless, as critics fear, it plans to fund purchases off-budget, dodging IMF scrutiny. The result? A policy vacuum where no one trusts the rules, private traders hold back, and farmers rush to distress sales, driving prices down further. In RY Khan last May, farmers burned crops in protest; in Multan, suicides rose. The human cost of this chaos is measured in broken lives, not just balance sheets.
Enter the Electronic Warehouse Receipt (EWR) Financing mechanism—a glimmer of hope in this mess. Rolled out with fanfare, it’s a tech-driven alternative to state procurement. Farmers store grain in accredited warehouses, receive digital receipts verifying quantity and quality, and pledge them for bank loans up to 70 percent of value. No need to sell at harvest lows; hold the crop, repay the loan later when prices rise, and pocket the difference. In theory, it’s brilliant: empowers growers, reduces post-harvest losses (currently 15–20 percent), and builds a market where banks, traders, and farmers interact directly. India’s e-NAM and Ethiopia’s ECX show it works—farmers there access credit at 8–10 percent interest, sell at 20–30 percent higher prices, and distress sales drop 40 percent. In Pakistan, with 1,200 warehouses targeted by 2026, EWR could unlock Rs500 billion in annual financing, freeing farmers from middlemen who lend at 50–100 percent interest.
But in Pakistan’s hands, even this innovation risks distortion. Instead of letting banks lead with market rates, the government is reportedly planning to subsidize borrowing costs—shouldering the interest burden itself to “protect” farmers. This isn’t reform; it’s old wine in a digital bottle. By guaranteeing loans and capping rates, the state crowds out private capital, inflates warehouse demand, and recreates the same fiscal dependencies it claims to end. Banks, wary of default risks without skin in the game, will lend cautiously; warehouses, often politically connected, may prioritize big players. Small farmers—80 percent of the total, holding under 5 acres—will still face high collateral demands, poor storage access, and digital literacy gaps. In Bahawalpur, where 60 percent lack smartphones, EWR remains a distant dream. And if the government funds the scheme off-budget, it violates IMF transparency rules, risking program suspension.
The real tragedy? This could have been a turning point. A genuine EWR system needs three pillars: independent warehouse regulation (not PASSCO cronies), market-linked interest rates (12–15 percent, not subsidized), and farmer training via mobile apps and cooperatives. Pair it with a transparent price discovery platform—daily auctions linking Lahore to Chicago markets—and MSP becomes obsolete. Let private traders, flour mills, and exporters bid via e-receipts; farmers choose when to sell. The state’s role? Strategic reserves (2 million tons, not 7), disaster insurance, and climate-resilient seeds. This isn’t radical—it’s what Bangladesh did in rice, boosting farmer incomes 25 percent in five years.
Instead, political compulsions reign. With elections looming, no party dares alienate rural votes. The PML-N fears Punjab backlash; PPP guards Sindh’s feudal base. So, MSP returns as a vote-bank balm, EWR gets hijacked as a subsidy vehicle, and the IMF is placated with promises of “gradual” reform. Middlemen—arthi, warehouse owners, millers—laugh all the way to the bank, pocketing margins while farmers wait for loans that may never come. In Gujranwala, one arthi admitted: “EWR? Great for us. We store, charge fees, lend at 5 percent monthly—government pays the bank.”
Pakistan’s wheat policy isn’t just confused—it’s cowardly. It wants IMF funds without structural pain, farmer votes without fiscal cost, and market reform without political risk. The result? Small growers like Ghulam remain trapped: borrow from arthi at harvest, sell cheap, repay dear, repeat. Food inflation spikes (wheat up 50 percent monthly in September), poverty deepens (44.7 percent below $4.20/day), and exports suffer as mills hoard or smuggle.
True reform demands courage: phase out MSP over three years, cap state reserves at 2 months’ need, let EWR run on commercial terms with bank-led risk assessment. Invest Rs50 billion in rural digital literacy, 5,000 cooperatives, and 500 new warehouses in tehsils. Enforce contracts via fast-track courts; punish hoarding with 7-year terms. The payoff? Farmer incomes up 30 percent, fiscal savings of Rs300 billion annually, inflation stabilized, and a wheat market that works for people, not politics.
Until then, Pakistan sails in two boats—heading nowhere. Farmers deserve better than promises that evaporate at harvest. The IMF wants markets; voters want security. Deliver both through EWR done right, or watch the next crisis—price crash, farmer suicide, bread riot—unfold. The wheat is in the field. The choice is in Islamabad’s hands. Will they plant reform, or just another illusion?