Wheat sector: Govt fast-tracks deregulation under IMF terms

KARACHI: The federal government is aggressively working on the deregulation of the wheat sector to fulfill the conditions set by the International Monetary Fund (IMF).

According to the IMF’s Memorandum of Economic and Financial Policies for the 37-month Extended Fund Facility, Pakistan has agreed to fully deregulate its agricultural commodity and input markets starting from the fiscal year 2025-26. The move is part of broader economic reforms aimed at ensuring market efficiency and meeting the IMF’s structural benchmarks.

In this regard, the Ministry of National Food Security and Research (MNFSR) has announced plans to organize a “National Workshop on Deregulating the Wheat Sector” to develop a comprehensive strategy for deregulating the wheat market while ensuring strategic reserves and food security.

Wheat procurement: Body formed to prepare plan as per IMF terms

The Workshop on Deregulating the Wheat Sector will be held on Friday, 24 January 2025, in Islamabad to build consensus on the deregulation of the wheat sector.

Under the ongoing IMF program, the government has committed to deregulating agricultural commodity markets starting in FY26. In a deregulated market regime, the government will discontinue the practice of announcing support prices for key commodities, such as wheat, and will no longer engage in procurement as done in previous years.

In addition, under the Prime Minister’s directive, the Pakistan Agricultural Storage and Services Corporation (PASSCO) is in the process of winding up its operations.

Considering these changes, the Ministry of National Food Security and Research believed that it is imperative for the federal, provincial, and regional governments to develop a comprehensive strategy to deregulate the wheat market while also maintaining strategic wheat reserves.

Understanding the importance of this issue, MNFSR has requested provincial food security plans to ensure preparedness in a deregulated environment. In addition, to support this effort, MNFSR has developed a concept paper outlining strategies for maintaining strategic wheat reserves and buffer stocks for your review and consideration.

To discuss this policy issue, the ministry is going to organize a day-long national workshop on Friday, 24 January 2025 in Islamabad to make strategy and avoid any crisis in the future.

During the workshop, representatives of all provinces will present their plans for deregulating the wheat sector and provide innovative solutions to maintain wheat reserves.

Historically, Federal and provincial governments announced the Profitable Support Price (PSP) and procurement targets of wheat to ensure the food security and price stability of wheat across the country. In the IMF’s Memorandum of Economic and Financial Policies, for the 37-month Extended Fund Facility, it has been agreed that Pakistan will fully deregulate its agricultural commodity and input markets from FY2025-26.

As per proposed plan, the federal government is contemplating to establish a new entity which would be jointly owned by the federal and provincial governments to maintain strategic wheat reserves and meet the unforeseen food security emergency in the county.

This entity will have a legal personality of a parastatal or an SOE in which all shareholding governments will have proportional representation (by population) and hold stake in its operation and budget. This entity may take over the current storage facilities of Punjab, Sindh, and PASSCO, develop a new business model, and establish its management and legal structure.

Copyright Business Recorder, 2025