$7,113-million from the IMF<\/strong><\/a>, to be disbursed from the 2024-25 to 2027-28 fiscal years (FY: July-June).<\/p>\nThe so-called memorandum of economic and financial policies, submitted by the Pakistan government to the IMF for availing the loan, has clearly stated that in the case of wheat \u201cwe have abstained from announcing support prices and undertaking provincial procurement operations during the 2025 Rabi season and are committed to continue this approach going forward\u201d.<\/p>\n
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That\u2019s not all. The memorandum has also committed to \u201cwinding down PASSCO\u201d under an overall plan to \u201cphase out federal and provincial government price-setting for agricultural commodities by end-FY26\u201d.<\/p>\n
Pakistan\u2019s Minister for Parliamentary Affairs, Tariq Fazal Chaudhry, confirmed in the National Assembly earlier this month that PASSCO is being \u201cwound up\u201d, as the government isn\u2019t any longer buying wheat or regulating its prices. It has already appointed a consultancy firm, TAGM & Co, to assess the total value of PASSCO\u2019s warehouses, offices and other assets, and formulate a winding-up plan for the 51-year-old corporation \u201cwithin three months\u201d.<\/p>\n
But it\u2019s not just MSP, procurement and PASSCO.<\/p>\n
The memorandum given to the IMF has promised to review all relevant legislation underpinning government interventions in commodity markets \u201cby end-December 2025\u201d. These include the Price Control and Prevention of Profiteering and Hoarding Act, 1977 (similar to India\u2019s Essential Commodities Act of 1955) and provincial laws such as the Punjab Foodstuffs (Control) Act, 1958 and the Sindh Essential Commodities Price Control and Prevention of Profiteering and Hoarding Act, 2005.<\/p>\n
If these weren\u2019t enough, all the four provinces of Pakistan \u2013 Punjab, Sindh, Khyber Pakhtunkhwa and Balochistan \u2013 have amended their individual Agriculture Income Tax legislation. These have now been fully aligned with the federal-level personal and corporate income tax regimes applicable for ordinary farmers and commercial agriculture respectively. The amendments will enable taxation of farm incomes to \u201ccommence from January 1, 2025\u201d.<\/p>\n
The contrast with India<\/strong><\/p>\nStory continues below this ad<\/p>\n
India hasn\u2019t been under any IMF-guided programme since June 1993, when it borrowed the last tranche of a Standby Arrangement loan of 2,207.925 million SDR (special drawing rights), equivalent to $2,394 million. This loan, taken between April 1991 and June 1993 when the country was facing a balance of payments (BOP) crisis like Pakistan is today, got completely repaid by May 31, 2000.<\/p>\n
With no IMF conditionality linked to financial assistance, there\u2019s no question of any reforms in India being imposed from outside, leave alone at gunpoint. Government agencies here have so far procured almost 30 mt of the 2024-25 wheat crop at the MSP of Rs 2,425 per quintal (the Indian rupee is over 3.3 times the Pakistani rupee). They have further purchased 85.5 mt of paddy (equivalent to 57.3 mt of milled rice) at the MSP of Rs 2,300-2,320 per quintal.<\/p>\n
Apart from MSP procurement and stocking of grain by FCI, India provides subsidies on fertilisers, electricity for irrigation and canal water, crop credit, insurance premium and other farm inputs. Income from agriculture attracts no tax either.<\/p>\n
Agriculture reforms in India \u2013 especially those dealing with distorted cropping patterns (more rice, wheat and sugarcane being grown at the expense of pulses, oilseeds, maize, cotton and millets) and promoting inefficient\/excessive use of nitrogen and water \u2013 are less likely under any BOP crisis-induced, IMF-dictated external pressure of the sort seen in 1991.<\/p>\n
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The Central government\u2019s having to repeal the three farm laws liberalising trade in agricultural produce \u2013 which it had pushed through Parliament in September 2020 \u2013 demonstrates the limitations of reform by central fiat under the given political economy realities.<\/p>\n
The impetus to farm reform in India is more likely to come from internal fiscal, as opposed to external BOP, pressures. And that would probably be at an individual state level (Punjab, for instance) rather than from the Centre.<\/p>\n
Production comparisons<\/strong><\/p>\nThe US Department of Agriculture (USDA) expects Pakistan\u2019s wheat production in 2024-25 (that crop is now being marketed) at 28.5 mt, down from last year\u2019s record 31.44 mt.<\/p>\n
The decline is due to a reduction in area sown, from 9.6 million to 9.1 million hectares. That, in turn, is attributed to the Pakistan government\u2019s decision to discontinue MSP procurement and also dry weather.<\/p>\n
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Since October 2024 and throughout the growing season, rainfall was below average and temperatures well above average. While wheat is a largely irrigated crop, the 2-3 showers normally received during the winter-spring months help in supplementing irrigation water and positively impacting yields.<\/p>\n
Wheat is Pakistan\u2019s staple food, with its per capita consumption of around 124 kg per year being \u201cone of the highest in the world\u201d, according to USDA. The agency projects the country\u2019s consumption in 2025-26 at 31.5 mt, which will then necessitate imports. Pakistan was forced to import 3.59 mt in 2023-24 (May-April) and 2.73 mt in the previous marketing year.<\/p>\n
It\u2019s the opposite situation in rice, where Pakistan\u2019s annual production of 9.75-9.8 mt is way ahead of domestic consumption of 4.1-4.2 mt. That makes Pakistan an exporter of rice, the world\u2019s fourth largest after India, Vietnam and Thailand. Pakistan\u2019s rice shipments were at 6.49 mt in 2023-24 and 5.5 mt in 2024-25.<\/p>\n
The accompanying table shows Pakistan to be a significant producer of wheat, rice, maize and cotton.<\/p>\n
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![\"Production](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/05\/Production-of-Key-Crops-in-2023-24-01.jpg\")
Production of key crops. (Graphic by Angshuman Maity)<\/p>\n
While its output of these crops is lower than India\u2019s, a more appropriate comparison would be with Uttar Pradesh (which has almost the same population) and Punjab (having similar growing conditions).<\/p>\n
Pakistan scores reasonably on the above counts, although the medium and long-term impact of the IMF-imposed reforms, plus more resources going towards military spending (\u201cguns versus butter\u201d), on its agricultural economy remains to be seen.<\/p>\n","protected":false},"excerpt":{"rendered":"Can one imagine India dismantling minimum support price (MSP)-based procurement operations in wheat and rice? Or the government…\n","protected":false},"author":2,"featured_media":146912,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3090],"tags":[51,9409,1700,42805,43696,63177,6026,63175,26635,63176,16,15],"class_list":{"0":"post-146911","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-current-affairs","10":"tag-economy","11":"tag-express-explained","12":"tag-imf-loan-to-pakistan","13":"tag-minimum-support-price","14":"tag-pakistan","15":"tag-pakistan-agriculture","16":"tag-pakistan-economy","17":"tag-pakistan-vs-india-economy","18":"tag-uk","19":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114602736589992607","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/146911","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=146911"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/146911\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/146912"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=146911"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=146911"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=146911"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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