Banks’ reluctance to finance new entrants slows wheat procurement in Punjab

Punjab’s wheat procurement drive for the 2026-27 season has slowed due to banks’ reluctance to extend financing to newer entrants, reducing the number of active aggregators and widening the gap against official targets, according to a news report. 

Officials said only 10 out of 35 registered aggregators are currently participating, limiting procurement capacity to around 1.8 million tons compared to the target of 3 million tons.

In response, the provincial government has convened a meeting on Monday [today] to seek higher procurement commitments from existing aggregators and address the shortfall.

Authorities said some aggregators have indicated willingness to procure up to 1 million tons each, while another has committed 0.5 million tons, as the government looks to bridge the gap through private sector participation and additional arrangements.

Procurement operations are scheduled to continue until June 15, with options including bids and government-to-government deals also being explored.

To support aggregators, the federal and provincial governments have agreed to assume price risk and ensure guaranteed offtake of unsold stock under a revised mechanism.

Officials said the government will compensate aggregators if market prices fall below agreed benchmarks, while ensuring repayment of principal before stock is released.

Aggregators are also entitled to a profit margin ranging between 10% and 16%, depending on the timeline, with a benchmark rate of Rs3,500 per 40kg.

Authorities indicated that banks may consider reducing cash margin requirements to 10% under the updated framework, while a proposal for sovereign-backed guarantees for strategic reserves is also under review.

Meanwhile, farmers have raised concerns over delays and pricing issues, stating that the Rs3,500 per 40kg rate remains difficult to implement effectively as harvesting progresses across Punjab.