Market Reforms & Financial Pressure—Can Pakistan's Agriculture Withstand the Shocks?
Key Financial Strains & Sectoral Collapse
Pakistan’s agricultural sector is facing a disastrous downturn. According to the Pakistan Kissan Ittehad (PKI), farmers have incurred a staggering Rs 2.2 trillion in wheat losses between May 2024 and May 2025—about 23% of the crop sector’s GDP contribution. Major crops are underperforming: wheat production dropped to 28.98 million tonnes, down 8.9%; maize declined by 15.4% to 8.24 million tonnes; and sugarcane lagged behind last year’s levels at 84.24 million tonnes. The total agriculture growth rate plummeted from 6.25% to just 0.56% since July 2024—highlighting a sector on the brink.
Trade Balance Worsens
Despite a small dip in raw food exports (from $6.23 billion to $6.16 billion), the import bill surged to nearly $7 billion in the first 10 months of the latest fiscal year. This widening gap is placing severe stress on Pakistan’s foreign reserves. Compounding the issue, domestic growers face an uneven playing field—seed cotton is taxed at 18% GST, while imported cotton is GST-free
Call for Market-Based Reforms
In response to these threats, State Bank Deputy Governor Saleem Ullah advocated for moving beyond price support schemes to adopt market-driven mechanisms that foster natural economic dynamism. Subsidies, he proposed, should target only the most vulnerable farmers, while the broader sector must adapt to market signals. This reformist stance was mirrored by Sindh’s officials at the Agri Conference & Expo 2025, who called for investments in precision agriculture, sustainable irrigation, and agri-tech; they also mentioned enabling farmers’ access to subsidized machinery and affordable loans