Punjab Wheat Procurement Plan Faces Delays

Punjab government’s wheat procurement strategy is facing delays as most private companies selected under the revised model have yet to begin large-scale purchases amid financing constraints, pricing disputes and resistance from farmers, according to Dawn.

Industry sources stated that at least nine out of the 11 selected firms have so far failed to procure significant quantities of wheat because growers are unwilling to sell at the official procurement rate of Rs3,500 per maund while open market prices remain around Rs3,700 per maund.

Many farmers have reportedly withheld wheat stocks in anticipation of further price increases or opted to sell directly to private traders and arhtis instead of government-backed procurement centres.

This year, the Punjab government shifted away from direct procurement and planned to secure 3 million tonnes of wheat through 11 private-sector firms. Under the arrangement, the government offered subsidised financing, free storage at Food Department warehouses and operational support through procurement staff deployed across centres.

However, procurement activity has remained limited as open market wheat prices moved above the government-supported procurement rate.

Officials said financing arrangements also emerged as a major challenge for participating firms. A representative of one company stated that banks and shortlisted firms failed to finalise financing terms despite initial expectations that borrowing costs would remain manageable.

Sources indicated that banks were expected to charge around 9% markup until September, with rates increasing by an additional 1% every month thereafter until repayment. Participating firms feared that the financing structure would substantially increase the cost of holding wheat inventories.

According to the Dawn report, a representative of one participating company said the firm initially submitted its financing proposal at Karachi Interbank Offered Rate (KIBOR) plus 1%, but later had to seek capital through less favourable financing arrangements after negotiations with banks stalled.

Authorities have meanwhile intensified enforcement measures against movement of wheat from Punjab to other provinces. Teams from the Food Department and Punjab Enforcement & Regulatory Authority have intercepted wheat consignments and redirected them to state-linked storage facilities.

Farmer organisations criticised the government’s intervention in the market and questioned implementation of support measures.

President of Pakistan Kisan Ittehad Khalid Khokhar stated that many growers in South Punjab had already sold nearly half of their wheat crop earlier at prices ranging between Rs2,800 and Rs3,200 per maund, averaging around Rs3,100 per maund.

He said the Minimum Support Price mechanism was intended to protect farmers when market prices decline, but authorities intervened only after wheat prices increased in the market.

Khokhar also alleged that procurement centre staff were deducting up to 15 kilograms from every 100-kilogram wheat bag on the basis of impurities and claimed weighing machines were operating against the interests of farmers.