Pakistan's Wheat Procurement Failure Leads to Massive Dollar Imports

Pakistan's wheat procurement failure has led to a massive import of grain at a high cost in dollars. The country imported 3.44 million tonnes of wheat duty-free in 2023-24 at a cost of $1.005 billion, and now faces another large import of 29.31 million tonnes against consumption of roughly 31.9 million.

The state failed to purchase the existing grain from farmers at a price that reflected its value while it was still in their hands. Private intermediaries bought wheat from farmers for Rs 2,900-3,200 per 40 kilograms and then sold it on the open market for Rs 4,600 by July.

The old procurement system was flawed and only captured about a quarter of production, favoring large landholders and politically influential actors. The abolition of the system without proper infrastructure has left farmers vulnerable to cartels they cannot match.

Farmers are shifting away from wheat due to suppressed returns and delayed buyers, with many opting for canola and mustard crops that face different demand elasticities and lack strategic reserve backing.