Punjab’s newly introduced private-sector wheat procurement model is drawing criticism from farmers and flour millers, who say the government’s pricing mechanism and incentives for selected companies could disrupt the wheat market and reduce returns for growers.
The provincial government has appointed 11 private companies as official aggregators to purchase wheat directly from farmers at a fixed rate of Rs. 3,500 per maund, replacing the traditional system of large-scale government procurement.
Official procurement price trails market rates
Industry stakeholders argue that the policy is difficult to implement because wheat is currently trading at around Rs. 4,000 per maund in the open market, leaving a gap of nearly Rs. 500 per maund between the government’s procurement price and prevailing market rates.
They say the price difference reduces the incentive for farmers to sell wheat through the new procurement system unless additional financial support is provided.
Concerns over incentives for private aggregators
Critics also question the incentives reportedly offered to the selected aggregators, including access to government storage facilities, subsidized financing, and mechanisms designed to reduce commercial risk.
Some industry representatives have compared the model to Pakistan’s Independent Power Producer (IPP) framework, arguing that the selected companies may be protected from market losses while the financial burden could ultimately be borne by the public sector.
Farmers and flour millers raise market concerns
Farmers fear the fixed procurement price could limit their ability to benefit from stronger open-market prices, particularly during periods of higher demand.
Flour millers have also voiced concerns that concentrating government-backed procurement among a limited number of companies could reduce competition, influence wheat supplies, and affect price stability across the market.
Government yet to clarify implementation strategy
The Punjab government has not publicly explained how it plans to maintain the Rs. 3,500 per maund procurement price while market prices remain significantly higher.
Authorities have also not disclosed the level of financial assistance that may be required to support the aggregator model or how the procurement mechanism will operate if market conditions continue to diverge from the official rate.
The policy forms part of Punjab’s broader effort to transition wheat procurement from direct government purchasing to a private-sector-led system, but questions remain over its long-term impact on farmers, grain markets, and food supply chains.
