The International Monetary Fund (IMF) has imposed a strict condition on Pakistan’s federal and provincial governments as part of its $7 billion bailout package, barring them from setting support prices for key agricultural commodities, including wheat, sugarcane, and cotton.
This condition is part of a broader effort to reduce government spending and limit subsidies. The IMF’s directive mandates the gradual elimination of price-setting mechanisms by all five governments—federal and provincial—starting with the current Kharif crop season and concluding by June 2026. As a result, prices for essential crops like wheat, sugarcane, and cotton, along with imported fertilizers, will no longer benefit from government-set rates or subsidies.
In Punjab, the government has already halted wheat procurement from farmers, leading to a 40% drop in wheat and flour prices, which contributed to the country’s single-digit inflation rate last month. Additionally, the IMF has barred provinces from offering electricity and gas subsidies during the 37-month loan period.
While the IMF’s directives have been communicated to Punjab, provincial officials have denied receiving formal notice. Despite this, sources confirm that the conditions will be enforced, marking an end to government intervention in the agricultural market.
The policy change is expected to have a profound impact on the agricultural sector, especially the sugarcane industry, where price-setting by the government has long been a contentious issue between farmers and mill owners.