The hand-wringing over the "collapse" of Pakistan’s wheat procurement system is as predictable as it is misguided. Every analyst from Islamabad to London is currently mourning the death of a mechanism that was never designed to work in the first place. They call it a crisis. I call it a long-overdue execution.
The prevailing narrative is simple: the government failed the farmers by not buying their wheat at the promised support price, the private sector "exploited" the market, and now food security is at risk. This is a fairy tale for the economically illiterate. The truth is that the state-run procurement model is a bloated, corrupt relic of the 1960s that has done more to impoverish the average Pakistani than any drought ever could. If you found value in this article, you should look at: this related article.
If we want a functional economy, we need to stop fixing the system and start dismantling it.
The Support Price Is a Subsidy for the Rich
Let’s kill the biggest myth first. The Minimum Support Price (MSP) is framed as a shield for the "poor farmer." In reality, it is a massive wealth transfer from the urban poor to the landed elite and the middlemen. For another look on this development, refer to the latest update from Business Insider.
Small-scale farmers—the ones with two or three acres—rarely see the MSP. They don’t have the political connections to get the "bardana" (gunny bags) from the food department. They don’t have the storage capacity to wait for a government official to show up. They sell to the local "arhti" (middleman) at a discount just to pay off the debt they accrued for fertilizer and seeds.
Meanwhile, the large-scale landlords, the ones with hundreds of acres and seats in provincial assemblies, sell 100% of their crop at the inflated government price. The state then borrows billions from commercial banks at high interest rates to pay for this wheat, racking up a "circular debt" that currently sits like a millstone around the neck of the national budget.
When you scream about the procurement system "backfiring," what you are actually saying is that the government ran out of other people’s money to subsidize the wealthy.
The Myth of Private Sector Exploitation
The media loves a villain. This year, the private sector is the bogeyman because they bought wheat at market rates—which happened to be lower than the government’s arbitrary support price.
But wait. Why was the market price lower? Because the government allowed massive imports of wheat just before the local harvest. This wasn't a "glitch." It was a market signal. The world had plenty of wheat. The local price was artificially high. The private sector did exactly what it is supposed to do: it reacted to supply and demand.
To blame the private sector for "undermining" the government is like blaming a thermometer for the fever. The government set a price that didn't reflect reality, failed to manage its own import timing, and then got upset when the market refused to play along.
The Staggering Cost of "Food Security"
We are told that the government must buy wheat to ensure food security. Let’s look at the math.
The state buys wheat at a high price, stores it in subpar facilities where a significant percentage is lost to rot and rodents, and then sells it to flour mills at a subsidized rate. This process is funded by bank loans. The interest alone on these loans is often higher than the actual value of the wheat stored.
This isn't food security. This is an organized crime against the taxpayer.
True food security doesn't come from a government official holding a clipboard in a warehouse in Sargodha. It comes from:
- Productivity: Pakistan’s wheat yield per acre is abysmal compared to global standards. We are throwing more land and more water at a problem that requires better genetics and smarter techniques.
- Purchasing Power: People go hungry not because there isn't enough wheat, but because the government has destroyed the value of the Rupee by printing money to fund—you guessed it—inefficient procurement schemes.
The Contrarian Path: Radical Liberalization
If we actually cared about the farmer and the consumer, we would do the unthinkable: get the government out of the wheat business entirely.
1. Abolish the Food Departments
The provincial food departments are hotbeds of rent-seeking. They serve no purpose other than to act as a bottleneck between the producer and the consumer. Shut them down. Sell the warehouses to private logistics firms that actually know how to manage inventory without losing 10% of it to "moisture loss" (a polite term for theft).
2. Transition to Direct Cash Transfers
If the goal is to protect the poor from high flour prices, stop subsidizing the mills. Use the Benazir Income Support Programme (BISP) or similar data-driven platforms to give cash directly to the bottom 20% of the population. Let them buy flour at the market price. This eliminates the middleman and ensures the subsidy actually reaches the person who needs it.
3. Open the Borders
Let wheat be traded like any other commodity. If it’s cheaper to import from Russia or Ukraine, let the private sector import it. If Pakistani farmers can get a better price by exporting to Afghanistan or the Gulf, let them export it. Competition will force the local industry to modernize. As long as the government provides a "guaranteed" price, no one has an incentive to innovate.
The Risks of Doing Nothing
The downside of my approach is obvious: volatility. Market prices fluctuate. In a bad harvest year, prices will spike. But the current system doesn't prevent spikes; it just delays them and makes the eventual crash more catastrophic. We are currently seeing that crash.
The government is broke. It cannot afford to buy the crop. The farmers are protesting. The mills are confused. This is the "stability" the old guard is so desperate to preserve.
I’ve spent years watching policy "experts" tweak the procurement quotas and adjust the support prices by a few hundred Rupees. It’s like rearranging deck chairs on the Titanic. The hull has been breached by the reality of global economics. You can’t command a price into existence when you don’t have the cash to back it up.
The Brutal Reality for the Farmer
To the farmers currently blocking the highways: your anger is justified, but your target is wrong. You are demanding that a bankrupt state fulfill a promise it never should have made.
The state didn't "fail" you this year. It has been failing you for decades by making you dependent on a rigged lottery instead of helping you become a competitive global producer. You are growing a crop for a buyer that is insolvent.
The procurement system isn't "facing collapse." It is dead. It is a corpse that the political class is trying to galvanize for votes.
Stop asking the government to buy your wheat. Ask them to get out of your way. Demand the right to export. Demand access to international-grade seeds and fertilizers that aren't controlled by a local cartel. Demand a stable currency so your input costs don't double every six months.
The death of the procurement system is the best thing that could happen to Pakistan's agriculture. It is the only way to force the transition from a medieval patronage network to a modern, productive industry.
The collapse is not the problem. The attempt to prevent it is.
Let the market burn the old structures down. Only then can we grow something worth harvesting.
