Lahore, May 9, 2026 — Punjab’s new wheat procurement model has stalled after private firms backed out and farmers refused to sell at the government-set price, according to reporting by Dawn.
Under the 2026 framework, the provincial government intended to shift procurement of nearly 3 million tonnes of wheat from state-run channels to 11 selected private companies. To encourage participation, authorities offered incentives including subsidised loans, free storage in Food Department warehouses and deployment of experienced officials to assist the private buyers.
The plan ran into difficulties almost immediately. Several shortlisted firms say bank financing broke down amid disputes over interest rates tied to KIBOR. Forced to accept more expensive loans on less favorable terms, companies warned that high carrying costs would leave them exposed to losses if they had to hold large grain stocks for prolonged periods.
At the same time, farmers have resisted delivering wheat to the new procurement system because the government purchase price — set at Rs 3,500 per maund — is below prevailing market rates of roughly Rs 3,700 per maund. Many growers have withheld supplies in hopes of higher prices or sold directly to traders and middlemen, undermining the scheme’s supply expectations.
Industry insiders told Dawn that at least nine of the eleven nominated firms had so far failed to buy any wheat, effectively paralysing the programme. Provincial teams have stepped up enforcement against what officials call illegal transfers of wheat out of Punjab; intercepted loads have reportedly been redirected to government-linked warehouses and accepted at the official procurement price.
Farmer organisations have criticised the government’s handling of the crisis. Pakistan Kisan Ittehad president Khalid Khokhar said authorities intervened only after market prices rose and did not support growers earlier when prices had fallen below production costs. Farmers have also alleged malpractice at procurement centres, including unfair deductions and faulty weighing, and accused the administration of corruption and mismanagement in distributing subsidised gunny bags.
The situation highlights tensions between price-setting, market dynamics and financing arrangements after a major structural change to procurement. With private buyers reluctant to commit under current financial terms and farmers unwilling to accept below-market rates, the province faces a collapse of the intended purchasing mechanism unless prices, funding conditions or programme design are quickly adjusted.
This account is based on reporting by Dawn and a syndicated feed from ANI.
