Pakistan to Offload 500,000 Tons of PASSCO Wheat as ECC Tackles Surplus Stocks

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Pakistan’s top economic decision-making body, the Economic Coordination Committee (ECC) of the Cabinet, has approved a major strategy to offload 500,000 metric tons of wheat held in government warehouses by the Pakistan Agricultural Storage and Services Corporation (PASSCO) — a move aimed at tackling surplus stocks, cutting storage costs, and stabilizing domestic wheat prices.

This decision — announced during an ECC meeting chaired by Federal Finance Minister Senator Muhammad Aurangzeb — comes as policymakers attempt to address logistical challenges in managing accumulated wheat reserves, balance food security needs, and relieve financial burdens on the federal exchequer.

The Challenge of Surplus Wheat Stocks

Over the past year, Pakistan has seen a buildup of stockpiled wheat in storage facilities managed by PASSCO, a government-owned entity responsible for storing and managing agricultural produce — particularly wheat — for national food security purposes.

These stocks have grown due largely to prior import programs and domestic procurement strategies. Some of this wheat has remained in storage longer than necessary, resulting in increasing storage and carrying costs, and in some cases, concerns about deterioration in quality. Analysts have flagged that maintaining such elevated inventories is both expensive and economically inefficient.

ECC’s Decision: Competitive Bidding and Strategic Allocation

To address this, the ECC approved the disposal of 500,000 metric tons of PASSCO wheat through competitive bidding. The idea behind selling the wheat through a transparent bidding process is to generate revenue, reduce stockpile levels, and minimize the cost of prolonged storage.

In addition to the open-market disposal, the ECC also approved the **allocation of 300,000 metric tons of PASSCO wheat to the Food and Consumer Protection Department of the Government of Punjab. This allocation is meant to ensure that flour mills in Punjab have sufficient supply, helping keep wheat flour prices stable and ensuring uninterrupted availability for consumers.

However, critics note that this plan entails selling wheat at rates below the government’s original procurement cost, a decision that could translate into fiscal losses. According to reporting, the federal government may incur losses of around Rs20.5 billion to Rs22 billion as a result of the subsidized sale, due to the gap between import and storage costs and the discounted selling price.

Why Surplus Stocks Matter

Pakistan’s wheat stocks have become a contentious economic issue for several reasons. Large quantities of imported wheat — much of it brought in during the 2021-22 period — remain in PASSCO warehouses, where storage capacity constraints, spoilage risks, and carrying costs have raised concerns among policymakers.

A recent audit by the Auditor General of Pakistan highlighted mismanagement in past wheat import cycles, noting that excessive imports occurred despite sufficient domestic production — leading to “significant financial losses.” While this report focused on earlier periods, it underscores how policy decisions have contributed to today’s surplus inventory dynamics.

Moreover, the federal government has recently stepped back from active wheat procurement in some years, signaling a shift toward retaining only emergency stocks and leaving routine supplies management more to provinces and the private sector. This evolution reflects factors including IMF-linked economic reforms and changing policy priorities.

PASSCO’s Changing Role

Central to this situation is PASSCO itself. Established in 1973 to safeguard Pakistan’s agricultural produce and maintain strategic reserves, the corporation has historically played a key role in food security.

However, ongoing debates about its financial viability and operational efficiency have led authorities to begin winding down PASSCO’s operations. Decisions such as selling off large wheat stockpiles, settling employee liabilities, and potentially restructuring storage management reflect broader changes in how the government aims to handle strategic reserves going forward.

Price Stability and Consumer Impact

One of the government’s stated goals in offloading surplus wheat is to stabilize flour prices in the domestic market. By redistributing portions of PASSCO’s wheat to Punjab — a key breadbasket province — authorities hope to smooth out fluctuations in supply that can lead to price spikes and shortages.

This strategy also seeks to bridge gaps between supply and demand at local levels, especially as provinces manage milling and distribution networks. Adequate supply to flour mills, officials argue, will help protect consumers from abrupt price increases that can have broader inflationary effects on the cost of living.

Economic and Fiscal Considerations

Although selling off surplus wheat may reduce immediate storage costs, there are financial trade-offs. Subsidized sales below procurement cost mean that the federal government absorbs short-term losses, a point of criticism among economists and fiscal watchdogs. They argue that better forecasting, more efficient inventory management, and improved market integration could prevent similar surpluses in the future.

Moreover, the ECC’s decision comes at a time when Pakistan is grappling with broader economic challenges, including currency volatility, inflationary pressures, and external financing needs. Decisions on commodity management thus carry implications beyond the agriculture sector, affecting fiscal stability and macroeconomic confidence.

Looking Ahead

The ECC’s approval of the 500,000-ton wheat disposal marks a significant policy step toward addressing an ongoing challenge in Pakistan’s food supply chain. While the immediate focus remains on reducing surplus stocks and stabilizing market prices, long-term solutions will require better coordination between federal and provincial authorities, improved storage infrastructure, and strategic planning that avoids future excess buildup.

As policymakers implement these measures, observers will be watching closely to see whether the benefits — in terms of price stability and logistical relief — outweigh the fiscal costs associated with selling wheat below acquisition value. Balancing food security imperatives with economic realities remains central to Pakistan’s agricultural policy discourse in the months ahead.