Punjab’s aggregator model for wheat buying faces backlash over pricing and guarantees

Punjab’s latest attempt to shift wheat procurement towards the private sector has run into resistance, with flour millers and farmers questioning both the design of the scheme and the benefits extended to selected companies, according to a news report. 

Under the new arrangement, 11 large firms have been appointed as aggregators and authorised to buy wheat directly from growers. The companies are expected to procure the crop at a fixed rate of Rs3,500 per maund.

The policy has become contentious because market prices are reportedly close to Rs4,000 per maund, leaving a gap of around Rs500 between the official purchase rate and prevailing rates. Critics say this makes it difficult for the aggregators to attract supplies without further state support.

Industry representatives also claim the selected firms have been offered free access to government storage, subsidised financing and protection for their profit margins. These terms have prompted comparisons with the Independent Power Producers model, with opponents arguing that private operators are being shielded from commercial risk while the eventual cost may fall on the public.

Farmers fear the new system could limit their ability to sell at market rates, while flour millers are concerned that state-backed purchasing by a small group of companies may distort supply and pricing.

The government has yet to publicly explain how the fixed procurement rate will be enforced when market prices are higher, or how much financial support will be required to keep the aggregator model viable.