Pakistan's Grain Storage Crisis: A Major Bottleneck in the Agriculture Supply Chain

Pakistan's grain storage capacity is woefully inadequate, according to experts. The Louis Dreyfus Company (LDC) recently inaugurated a new 40,000-tonne grain storage facility in Multan, but this small addition barely makes a dent in the country's storage needs.

The facility is LDC's first owned industrial site in Pakistan and is expected to enhance their service to suppliers and customers. However, with an annual wheat crop of around 29 million tonnes, the new facility accounts for only 0.14% of production.

Pakistan's storage problem is not just about infrastructure; it's also about access. Only 37 warehouses are accredited by the State Bank for electronic warehouse receipts (EWRs), which can confirm grain quantity, quality, and location, making them bankable collateral. These accredited warehouses have a combined capacity of 461,550 tonnes, but geography makes their effective capacity even smaller.

The lack of reliable storage has led to recurring market disorder, with farmers selling their crop at rock-bottom prices due to limited options. Punjab's wheat procurement system is also vulnerable to corruption and often favors large growers and middlemen.