Wheat prices hit 5-month high of over 3,000 per 40 kg

The price of wheat has increased to a 19-week high of PKR 710 per 10 kilograms, putting further inflationary pressure on people.

The price of a 40kg wheat bag has increased to PKR 2,839, while some local market sources are quoting the rate of PKR 3,000 to 3,050 per 40kg. It translates into a per kg price of PKR 71 to 76.

While the higher prices are set to further strain the masses under inflation, the sharp uptick is expected to serve as a strong incentive for farmers ahead of the next sowing season. The price rebound is timely, given that the farmer sentiment had weakened due to depressed returns in the previous crop cycle.

The agriculture sector has witnessed a sharp slowdown in FY25, with growth declining to just 0.6% compared to 6.4% in FY24. The sector was affected by adverse climate conditions, water shortages, lower crop prices, and rising input costs.

The yield of important crops saw a major decline in the previous fiscal year, including wheat, whose production declined by 8.9%. During the outgoing season, farmers incurred a loss of PKR 10,695/acre compared to earnings of PKR 13,572 per acre in the season before, as per Fauji Fertilizer Company’s briefing.

According to a report of Topline Securities, the losses were due to the government’s decision to remove the support price — which ensured the growers receive an adequate rate for their produce — under the IMF program, alongside high costs of fertilizer, seeds, and electricity.

The wheat prices currently are 43% lower than the previous peak of PKR 1,256 per 10kg, according to the PBS data. The previous high in wheat prices was due to exorbitant support prices and smuggling to neighboring countries.

Sugar prices

The hike in wheat price followed a similar steep surge in the cost of sugar.

The price of sugar has skyrocketed from PKR 138 to 140 per kg in January to PKR 180 per kg in August, according to data released by the Pakistan Bureau of Statistics last week. The rate was well above the government-mandated ex-mill price of PKR 165 per kg.

The combined effect of rising wheat and sugar prices is expected to boost farmers’ incomes in the next crop cycle. Improved profitability should restore confidence, improve income, and provide a much-needed uplift for the rural economy of Pakistan, said a report of Topline Securities.

Stronger rural incomes will not only stabilize the agriculture sector’s contribution to GDP but also support domestic consumption.

This price recovery can also incentivize higher production of key crops, which in turn would reduce reliance on imports and strengthen food security.

Impact on economic growth

Over the last two years, farm economics have suffered significantly due to higher input costs and lower crop prices.

Topline Securities noted that the uplift of the rural economy will complement the existing growth prospects of the economy.

In a recent press briefing, Atlas Honda said that the sale of two-wheelers is currently being driven by urban buying as the rural economy is struggling.

"We believe this inflection in crop prices will further uplift the sales of the above-mentioned sectors, including motor bikes [2 wheelers]", the vehicle manufacturer said.