The wheat sector in Punjab is facing an unprecedented crisis in 2025. As farmers across Pakistan’s agricultural heartland struggle with plummeting prices, rising production costs, and a radical shift in government policy. The Punjab wheat policy reforms include abolition of the decades-old minimum support price (MSP) mechanism. It has left farmers vulnerable to market volatilities, triggering widespread protests and raising serious concerns about the country’s food security. This blog examines the current challenges. It proposes bold reforms that could potentially rescue Punjab’s wheat sector from its deepening crisis.
Fig1:Cutting of wheat with out knowing Punjab wheat policy reforms
1. Understanding the Punjab Wheat Crisis
1.1 Economic Pressures on Farmers
Wheat farmers in Punjab are caught in a devastating economic squeeze. The cost of wheat cultivation has surged to approximately Rs 3 ,200 per maund (40 kg), driven by rising input costs. It include fertilizers, seeds, diesel, and pesticides. However, market prices have plummeted to around Rs2,500 per maund, creating a loss of Rs700 per maund for farmers. For small farmers like Muhammad Aslam from Multan, the situation is even worse. Some traders are offering as little as Rs2,100 per maund – nearly Rs1,200 less than production costs. This massive disparity has been created. Due to Punjab wheat policy reforms, an unsustainable economic model for wheat cultivation. It threatens the livelihoods of millions of farmers across the province.
The financial strain is particularly acute for small-scale farmers who often rely on loans to finance their cultivation. With current returns failing to cover production costs. Many farmers are unable to repay their debts or invest in the next crop cycle. This vicious cycle threatens not only individual farmers but the entire agricultural ecosystem that forms the backbone of Punjab’s economy.
1.2 Policy Shifts
At the heart of the crisis lies the federal government’s decision to abolish the wheat support price mechanism & Punjab wheat policy reforms. A policy that had been in place for over five decades. This dramatic policy shift was implemented as part of conditions attached to the International Monetary Fund’s (IMF).Aspart of the 2023ExtendedFundFacility(EEF)agreement. Punjab wheat policy the transitioned to a free market approach was intended to reduce state intervention in agriculture. But critics argue the implementation was poorly timed and executed without adequate consultation with stakeholders.
The timing of this policy change appears particularly problematic given recent government actions. Last year, despite projections of a bumper crop
, the government imported 3.5 million tonnes of wheat for $1 billion, creating a surplus that crashed local prices and inflicted significant losses on farmers. This contradiction in policy – importing wheat despite local surplus, then removing price supports – has created deep mistrust among the farming community.
1.3 Public Response
The policy shift has triggered massive protests across Punjab. Farmers’ organizations, including the Pakistan Kissan Ittehad and Kissan Board Pakistan, have organized demonstrations, sit-ins, and protest rallies in multiple districts, including Sheikhupura, Rahim Yar Khan, and Sargodha etc . These protests have united farmers across the province, with clear demands for government intervention.
Fig 2: Protest against Punjab wheat policy reforms
Protesters are specifically demanding the reinstatement of the MSP at Rs4,000-4,500 per 40kg, a rate they believe would provide fair compensation given current production costs. Some political parties, including the PTI, have gone further, supporting demands for Rs5,000 per maund. The protests highlight not just economic grievances but a broader feeling of abandonment among the farming community, who feel the government has sacrificed their interests to satisfy international financial institutions.
2. Key Factors Contributing to the Crisis
2.1 Market Liberalization
The push toward market liberalization in Pakistan’s agricultural sector represents a fundamental shift in economic policy. While free markets can theoretically improve efficiency and reduce government expenditure, the abrupt transition has left farmers vulnerable to market manipulations. Without proper regulatory frameworks or transitional measures, the sudden liberalization has created a power imbalance where middlemen and traders can exploit farmers who lack bargaining power.
Pakistan Business Forum Chief Organiser Ahmad Jawad criticized the hasty implementation, stating: “The government rushed into adopting a free market policy despite having another year to negotiate terms with the IMF. Without stakeholder consultation, this abrupt shift has left farmers vulnerable to exploitation by middlemen and market fluctuations”. This highlights the importance of gradual, well-planned transitions when implementing significant policy changes in critical sectors like agriculture.
2.2 Procurement Policy Changes
Compounding the crisis is the Punjab government’s inconsistent procurement policy. Despite announcing support prices and distributing gunny bags for the previous harvest, the government abruptly decided not to procure wheat from farmers at the season’s end . This inconsistency has severely damaged farmer trust in government commitments.
The situation is further complicated by contradictory regulatory measures. While the government has withdrawn from price support, it continues to regulate the market in other ways. In 2024, Punjab’s Food Department capped wheat prices at a maximum of Rs2,675 per maund in some districts and even filed FIRs against those who sold at Rs2,800. Pakistan Kissan Ittehad President Khalid Mahmood Khokhar highlighted this inconsistency: “This isn’t a free market. The government still fixes flour prices, violating IMF terms anyway”. Punjab wheat policy reforms is halfway approach to liberalization creates the worst of both worlds – farmers face free market risks without free market benefits.
2.3 Climate Variability
Climate change presents an additional challenge to Punjab’s wheat sector. Pakistan ranks 5th among countries most affected by climate change globally, with projections indicating continued temperature increases through 2025 . These changing climate patterns directly impact wheat yields and quality, adding another layer of uncertainty for farmers already dealing with policy and market challenges.
The impact of climate variability is reflected in production figures. Punjab, which contributes over 75% of Pakistan’s wheat. It is expected to produce 19.5 million tons in the 2025 harvest season. But falling 12% short of its 22 million ton target. Overall wheat production in Pakistan is estimated at 27.9 million tons. That approximately 11% less than the original estimate of 31.4 million tons . This shortfall further threatens food security in a country where wheat is a staple food.
- Proposed Bold Reforms
3.1 Reinstating and Adjusting MSP
The most immediate reform needed is the reinstatement of Punjab wheat policy reforms, the Minimum Support Price mechanism at a level that reflects current production costs. Based on farmer organizations’ assessments, an MSP of Rs4,000-4,500 per 40kg would provide a reasonable margin above the current production cost of approximately Rs3,200-3,400 per maund. . This would ensure farmers receive fair compensation for their crops and have the financial capacity to reinvest in future production.
However, a reformed MSP system should include flexibility mechanisms to adjust to changing market conditions and production costs. An annual review process involving representatives from farmer organizations, economic experts, and government officials could determine appropriate MSP levels based on transparent criteria including:
3.2 Documented production costs across different farm sizes
- Inflation rates for agricultural inputs
- International wheat price benchmarks
- Food security considerations
This approach would balance farmer interests with fiscal responsibility while providing much-needed predictability for the agricultural sector.
3.3Enhancing Storage and Infrastructure
A significant contributor to market volatility is inadequate storage infrastructure. Strategic investments in modern grain storage facilities across Punjab would reduce post-harvest losses and give farmers more flexibility in when they sell their produce, reducing vulnerability to seasonal price fluctuations.
The government should consider public-private partnerships to rapidly expand storage capacity, particularly in underserved rural areas. and reinstate Punjab wheat policy reforms Modern silos with temperature and humidity control would not only preserve grain quality but also allow for more sophisticated market mechanisms like warehouse receipt financing, where farmers can use stored grain as collateral for loans.
Improved rural road networks and transportation systems would further enhance market access, reducing dependency on local middlemen and allowing farmers to reach markets with better prices.
3.4 Financial Support Mechanisms
Beyond price supports, farmers need access to affordable financial services. Innovative financial products specifically designed for the agricultural sector could provide critical support, including:
- Weather-indexed crop insurance to mitigate climate risks
- Interest-free or low-interest loans specifically for small farmers
- Input subsidy programs that directly reduce production costs
3.5 Digital payment systems that increase transparency and reduce exploitation
The recent Kissan Card initiative shows promise in this direction, providing immediate relief to small landholders by enabling them to access quality farm inputs on deferred payment . Expanding and refining such programs could provide crucial support during the transition to more market-oriented systems.
3.6 Transparent Policy Framework
Perhaps most importantly, Punjab needs a consistent, transparent, and consultative agricultural policy framework. Policy changes should be implemented only after thorough stakeholder consultation and with adequate transition periods. The framework should clearly articulate the government’s long-term vision for agriculture while providing mechanisms for farmer input in decision-making processes.
A dedicated agricultural policy council with representation from farmer organizations, academic institutions, and relevant government departments could provide ongoing oversight and recommendations. This would build trust between farmers and policymakers while ensuring policies reflect on-the-ground realities.
4.1 Fiscal Constraints
The implementation of these reforms faces significant fiscal challenges. Pakistan’s economic situation remains precarious, with the country operating under IMF conditions that specifically push for reduced government intervention in markets. Reinstating the MSP would require substantial financial commitments at a time when government resources are already stretched thin.
Creative financing approaches will be necessary, such as redirecting funds currently used for wheat imports toward supporting domestic production. The Pakistan Business Forum has warned that without intervention, Pakistan may need to import wheat by December 2025, further straining foreign reserves. A preemptive investment in domestic production could ultimately prove more economical than reactive imports.
4.2 Political Will and Bureaucratic Hurdles
Successful implementation of these reforms would require strong political commitment across all levels of government. The current political environment in Pakistan is characterized by polarization and competing priorities, making sustained focus on agricultural reform challenging. Additionally, bureaucratic inefficiencies and corruption can impede even well-designed policies.
Overcoming these challenges would require agricultural reform to be positioned as a national priority that transcends political divisions. An implementation framework with clear timelines, responsibilities, and accountability mechanisms would be essential to translate policy intentions into tangible outcomes.
4.3 Market Dynamics
Balancing free market principles with necessary protections for farmers represents a complex challenge. International experience shows that agricultural markets rarely operate as perfect free markets due to their strategic importance for food security and rural livelihoods. Finding the right balance requires sophisticated regulatory approaches that protect farmers from exploitation while still allowing for efficiency gains through market mechanisms.
Phased implementation of reforms with ongoing monitoring and adjustment would allow for course correction as market dynamics evolve. Learning from other countries that have successfully navigated the transition to more market-oriented agricultural systems could provide valuable insights for Pakistan’s approach.
Call to Action
Punjab’s wheat crisis requires immediate, bold, and comprehensive action. The current situation – where farmers lose Rs700-1,200 per maund – is unsustainable and threatens not only rural livelihoods but Pakistan’s food security. With domestic consumption expected to increase by around 2.2 percent to 31.9 million tonnes in 2025-26, ensuring robust domestic production is more critical than ever.
The proposed reforms – reinstating an adjusted MSP, enhancing storage infrastructure, introducing targeted financial support, and creating a transparent policy framework – represent a holistic approach to addressing the crisis. While implementation faces challenges, the cost of inaction would be far greater, potentially leading to further rural distress, increased dependence on imports, and heightened food insecurity.
Call To Policemaker
Policymakers must recognize that wheat is not just another commodity but the foundation of Punjab’s rural economy and Pakistan’s food security. Farmers are not merely seeking handouts but fair compensation for their essential work. As protests continue across the province, the message from farmers is clear: the status quo is untenable, and bold reforms are necessary. The question now is whether there is sufficient political will to implement these changes before the crisis deepens further.
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