Understanding the Wheat Crisis in Pakistan: Why Farmers Are Protesting and What the Government Should Do

Introduction

Agriculture is pivotal to Pakistan’s economy, contributing 23% to the gross domestic product (GDP) and employing 37.4% of the labor force. With 70% of the country’s exports directly or indirectly linked to agriculture, disruptions in this sector can have profound economic impacts. Recent protests by farmers, sparked by governmental policies and market conditions, have thrown the sector into turmoil, exacerbating the ongoing challenges of inflation and low foreign reserves.

Why Are the Farmers Protesting?

Reduced Wheat Procurement Target

The unrest began after the Punjab government slashed its wheat procurement target by roughly half, citing a carryover stock of 2.3 million tonnes already available. This caused an uproar among farmers as market prices plummeted to between Rs3,000 and Rs3,100 per 40 kilograms—significantly below the Rs3,900 per 40kg minimum support price (MSP) set for wheat for the 2024-2025 season. This disparity prompted major agricultural unions, including the Pakistan Kissan Ittehad and Kissan Ittehad, to urge farmers to hold on to their produce rather than offload it at the current market price.

Government's Avoidance of Procurement

Additionally, the government continued to avoid procurement, explaining that the grain was carrying “higher moisture than normal due to rain,” adding anxiety among the already forlorn farmers. The introduction of a mobile application for applying to sell wheat to the food department—replacing the traditional paper application method—further complicated matters, as many farmers in Pakistan are not tech-savvy.

Excessive Wheat Imports

Farmers also demand the government stop excessive imports of wheat. They accuse the caretaker government of causing a loss of over Rs400 billion to the national exchequer by importing $1 billion (approximately Rs277 billion) worth of wheat amid a severe foreign exchange shortage. This, they argue, has led to a glut in supply, driving down local prices.

Government’s Response

Blame Game

The Punjab Food Minister claimed the caretaker government was responsible for the crisis, promising a fact-finding investigation. The main opposition party, PTI, and Jamaat-i-Islami (JI) accused the caretaker government of corruption for allowing wheat imports but offered no evidence. Meanwhile, Punjab Chief Minister Maryam Nawaz denied any wheat crisis, stating that her government had plugged a channel of massive corruption reported in wheat procurement every year.

Technological Initiatives

In Khyber Pakhtunkhwa, provincial Food Minister Zahir Shah Toru announced an online app for wheat procurement aimed at facilitating farmers and suppliers, adding that transparency and merit would be upheld throughout the process. However, in Punjab, the government’s introduction of a mobile application for wheat procurement added to the farmers’ woes, as many are not familiar with such technology.

Key Actions

Investigation into Wheat Imports

Prime Minister Shehbaz Sharif ordered a committee to investigate the 3.2 million tonnes of wheat imported during the tenure of the caretaker ministry led by the then-prime minister Anwaarul Haq Kakar. The probe should have focused on who benefitted from the $1.1 billion import of wheat and why the government felt the need to import when wheat is expected to be a bumper crop this year.

Impact on Farmers

The carryover inventory and the delay in procurement by the Punjab government mean that farmers' produce is being sold at a much lower price than anticipated. Thousands of wheat farmers have joined the protest against the government, as the current market conditions severely impact their livelihoods.

Policy Failures and Recommendations

Inefficient Procurement System

Adil Mansoor, an agriculture researcher, highlighted the initial delay in procurement by the Punjab government, which led farmers to believe they would procure their produce at the standard price. However, the provincial government failed to keep its promise due to ballooning debt servicing and carryover inventory.

Lack of Sustainable Policies

Khalid Saeed Wattoo, a farmer and development professional, noted that the government's inability to set a sustainable wheat support price policy due to a cumbersome and corrupt procurement system harms farmers' profits and national agricultural productivity.

Impact on the Economy

The wheat crisis has significant implications for Pakistan's economy. If middlemen and flour millers choose to disrupt market prices, the government does not have sufficient stock to play the role of a stabilizer. The current stock with the government may be enough for strategic reserve but not enough to counter price manipulation by middlemen.

Conclusion

The wheat crisis in Pakistan highlights the need for a comprehensive policy overhaul to support the agricultural sector. The government must establish itself as a credible stabilizer of the market and an ally of vulnerable smallholders. Transparent and efficient procurement processes, along with sustainable support price policies, are essential to prevent such crises in the future and ensure the well-being of Pakistan's farmers and economy.