EDITORIAL: The federal government’s decision to sell 500,000 metric tons of wheat at subsidised rates is defensible only because the alternative was worse.
Allowing imported stocks to sit longer would have meant higher carrying costs, further deterioration in quality and added pressure on domestic prices as the new harvest approaches.
In that narrow sense, the move reflects prudence. But it is also the final chapter of a policy sequence marked by poor planning, abrupt reversals and avoidable damage to farmers and the public purse.
The origins of the problem are not difficult to trace. Two years ago, authorities withdrew the wheat support price and abruptly stopped procurement from farmers as part of a broader shift toward market liberalisation, a direction closely associated with IMF-linked reform commitments.
At the same time, expensive wheat imports contracted earlier began arriving, swelling public stocks just as domestic growers were left exposed to market forces.
The consequences were immediate. Wheat prices reportedly collapsed to around Rs2500 per 40 kilograms, inflicting heavy losses on farmers who had planted in good faith based on past procurement practices.
Confidence in official policy eroded, and the credibility of future procurement signals suffered accordingly. Meanwhile, the state found itself holding large quantities of imported wheat purchased at high global prices and stored at significant cost.
Once that damage was done, options narrowed quickly. Imported wheat held since 2022 has progressively lost market value relative to fresh arrivals. Storage cost continued to accumulate, and retaining the stock longer risked pushing prices down further during the upcoming Rabi harvest.
In that context, the Economic Coordination Committee’s decision to dispose of wheat below cost is less a policy choice than an acknowledgement that earlier decisions had boxed the government into a corner.
The fiscal cost is substantial. Losses on the disposal run into tens of billions of rupees when purchase, handling and storage costs are taken into account. These losses are being absorbed after farmers were already made to bear the brunt of policy missteps through depressed prices and abandoned procurement. That sequence should trouble policymakers far more than it appears to have done so far.
The handling of PASSCO underlines the deeper governance failure. The entity is being wound up even as it remains responsible for managing and offloading wheat stocks accumulated through flawed decisions. If the objective was to move toward a market-based wheat regime, it required careful sequencing: predictable procurement rules, transparent reserve management and alignment between import decisions and domestic production cycles. None of that materialised.
Instead, wheat policy has been driven by reactive fixes rather than coherent strategy. Procurement was halted abruptly, imports were mistimed, and stocks were then allowed to become a liability. By the time corrective action was taken, the only option left was to cut losses and move on.
At this stage, disposal is the least harmful choice available. Selling the wheat ensures it is used rather than wasted, reduces carrying costs and avoids further market distortion during the harvest season. It also helps stabilise supplies for consumers and provincial governments in the short term. That much is sensible.
That food security policy cannot be run through sudden reversals dictated by fiscal pressure alone is a fact.
Farmers, millers and traders respond to signals, and when those signals change without warning, markets break rather than adjust. The costs inevitably return to the exchequer through subsidies, write-downs and emergency interventions.
The current decision may prevent further waste, but it also stands as a reminder of how avoidable this episode was. Cutting losses is necessary. Avoiding the next one is the real test.
Copyright Business Recorder, 2026