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LAHORE: The Punjab government is yet to secure a necessary credit line from commercial banks to facilitate the purchase of three million metric tonnnes of wheat for the 2026-27 season.
To fill this gap, the province is depending on a new aggregator model led by banks through public-private partnership agreements. However, it has been reported that banking channels have only committed financing for 2.1 million metric tonnnes so far, resulting in a shortfall of 0.9 million metric tonnnes compared to the official target of three million metric tons, according to an insider privy to the Monday’s official meeting proceedings.
A senior official stated that banks are currently working to add another one million metric tons through their aggregators. If successful, this would increase the total arranged procurement beyond the target of three million metric tons, he claimed.
Nonetheless, the additional credit line is still under negotiation and has not yet been allocated. This situation has raised concerns about the feasibility of initiating large-scale physical procurement. Sources claimed that it is for the first time in the post-independence history of the province that bank financing arrangements for wheat procurement have not been finalised even by the third week of April.
Officials explain that the government’s involvement in the market serves two primary purposes. First, it ensures that farmers receive better prices, as current market rates are advantageous for achieving that goal. Second, it enables the government to build strategic reserves without disrupting open market dynamics.
Officials also note that farmers are free to sell to any buyer, and the government will remain active in the market through public-private partnerships until the end of June. Historically, 75 per cent of government procurement takes place in May, which aligns with seasonal trends, he added.
Nonetheless, the delay in finalising quotas for bank-backed aggregators has resulted in procurement being at a standstill. This situation may leave Punjab falling short of its annual supply target unless additional funding is secured promptly.
It is learnt that Punjab has included some aggregators who were previously excluded from the process due to compliance issues, aiming to ensure the purchase of necessary volumes. Banks are exercising caution in extending credit without robust guarantees regarding stock recovery and verification in addition to factoring in individual financial standing of bidders.
To buy bulk of wheat, the provincial government is now relying on May, the peak month for procurement, to meet as much target as possible. However, without a solid credit line and the rapid onboarding of bank-backed aggregators, the target of three million metric tonnes may be jeopardised.
According to analysts, the upward price trend in wheat market also created a situation where farmers may not incline toward selling produce to aggregators.
They said that this week is crucial in determining whether financial closure on the additional one million metric tonnes can be achieved and whether procurement centres can become fully operational.
While the government asserts that its arrangements are in place, the disparity between policy intentions and actual execution remains evident until banks disburse funds and aggregators start lifting wheat stocks from the markets. This year, the government altered its approach of discontinuing procurement by resuming purchase of wheat from farmers through aggregators after a two-year pause. Punjab decided to involve aggregators in the 2026-27 procurement season to ensure market participation, support wheat prices, and build strategic grain reserves.
