LAHORE: The current wheat situation reflects a core contradiction: the provincial government tried to manage a market that had already moved beyond administrative pricing, according to Progressive Flour Millers Group (PFMG) leaders Muhammad Khaleeque Arshad and Majid Abdullah.
“This season’s price spike was not simply hoarding, instead it was a rapid repricing driven by anticipated scarcity, weak confidence in policy execution and uncertainty around procurement. Markets reacted not only to actual shortages but to expectations of future shortages. Once traders and farmers believed the crop was smaller and procurement weak, prices adjusted immediately,” they said.
Several dynamics have shaped the ongoing crisis. The state machinery entered procurement with a support price that quickly became irrelevant after open-market rates crossed it due to multiple factors. For the first time in years, farmers gained a strong bargaining position and held stock expecting higher prices. Aggregator-based procurement relied heavily on bank financing, but financial institutions were reluctant to absorb risk under a new, untested structure.
On the other hand, flour mills, which traditionally serve as the country’s operational buffer stock, faced uncertainty over policy direction and inventory rules. Government enforcement drives against hoarding could not materially improve availability because the issue was rooted in supply expectations, not just illegal storage, PFMG leaders observed.
The biggest policy mistake, the flour millers said, was attempting simultaneous market intervention, restrictive movement controls and aggressive procurement at below-market rates. That combination reduced market liquidity further as participants feared selling into an uncertain regulatory environment.
Talking about the way forward, they said, allowing free movement of wheat and reducing panic procurement has clear economic logic. If mills can build inventories openly and transparently, wheat reaches consumers through flour production. When traders fear raids, seizures or arbitrary restrictions, they turn defensive and hold stocks longer.
Markets stabilise faster when participants trust they can buy, transport, finance, and sell grain without sudden policy reversals. Strategic reserves remain important for provincial government, but trying to build them in panic mode after prices spike is not feasible, as move becomes counterproductive, they viewed.
At the same time, the government’s concern is legitimate. Flour inflation has become politically and socially destabilising, especially for urban consumers. The authorities try to maintain strategic reserves to smooth prices and ensure food security, but this year the size of that reserve is already compromised.
The real lesson is not that the government should never intervene, but that the intervention must be predictable, credible, and aligned with market realities, the leaders argued. A more sustainable framework for future seasons should include earlier crop estimation using satellite and field data, flexible procurement prices tied to market conditions and stronger warehouse receipt financing systems.
Transparent private-sector participation before harvest begins is also critical, along with clear stock declaration rules without punitive overreach. Inter-provincial movement barriers should be reduced, and strategic reserves must be accumulated gradually, not during panic spikes, flour millers stressed.
This season has demonstrated that wheat no longer behaves like a purely controlled commodity. Once supply tightens and expectations shift, price discovery happens rapidly, regardless of administrative intentions. Markets respond to demand, supply, confidence and incentives, not notifications and enforcement orders.
Rather than focusing only on roti prices, the Punjab government should work to reduce agricultural input costs for farmers to encourage bumper crops. Abundant wheat will naturally lead to lower atta prices for the public. If wheat and atta prices rise in line with free-market norms, the underprivileged should receive targeted subsidies instead of across-the-board subsidies, the PFMG leaders said and added that current wheat stocks are not enough for the whole year, and timely import of grain remains an option before it is too late.
