Agriculture Sector of Pakistan

Introduction:

Agriculture constitutes the largest sector of our economy. Majority of the population directly or
indirectly is dependent on this sector. It contributes about 24 percent of Gross Domestic Product
(GDP) and accounts for half of employed labour force and is the largest source of foreign
exchange earnings.

Agriculture is considered the backbone of Pakistan's economy, which relies heavily on its major
crops. Pakistan's principal natural resources are arable land and water. Agriculture accounts for
about 18.9% of Pakistan's GDP and employs about 42.3% of the labour force. The most
agricultural province is Punjab where wheat & cotton are the most grown. Mango orchards are
mostly found in Sindh and Punjab provinces, making it the world's fourth largest producer of
mangoes.

Farmers rely on diesel to fuel their tractors, and consequently, an increase in diesel prices will
further exacerbate their hardships.

Pakistan is a net importer of petroleum products, and any depreciation in the value of the rupee
against the dollar has also led to higher prices for both petrol and diesel, which are extensively
used by the general population.

Crops

The most important crops are wheat, sugarcane, cotton, and rice, which together account nearly
more than 75% of the value of total crop output.

Pakistan's largest food crop is wheat. As of 2018, According to ministry of agriculture,,, Pakistan
wheat output reached 26.3 million tonnes. In 2005, Pakistan produced 21,591,400 metric tons of
wheat, more than all of Africa (20,304,585 metric tons) and nearly as much as all of South
America (24,557,784 metric tons), according to the FAO. The country had harvested more than
25 to 23 million tons of wheat in 2012.

Pakistan has also cut the use of dangerous pesticides dramatically.

Pakistan is a net food exporter, except in occasional years, when its harvest is adversely affected
by droughts. Pakistan exports rice, cotton, fish, fruits (especially Oranges and Mangoes), and
vegetables and imports vegetable oil, wheat, pulses and consumer foods. The country is Asia's
largest camel market, 2nd-largest apricot & ghee market & 3rd-largest cotton, onion and milk
market.

Livestock

According to the Economic Survey of Pakistan, the livestock sector contributes about half of the
value added in the agriculture sector, amounting to nearly 11% of Pakistan's GDP, which is more
than the crop sector.

Fishery

Fishery and fishing industry plays an important role in the national economy. With a coastline of
about 1046km, Pakistan has enough fishery resources that remain to be fully developed. It's also
a major source of export earnings. Aquaculture is a rapidly developing industry. Punjab Province
has demonstrated rapid growth in fish farming. GIFT Tilapia culture has been introduced
recently in Pakistan (especially Punjab).

Forestry

About only 4% of land in Pakistan is covered with forest. The forests are a major source of
food, lumber, paper, fuelwood, latex, medicine as well as utilised for purposes
of wildlife conservation and ecotourism.

Current Situation

The agriculture sector in Pakistan experienced below-average performance during the fiscal year
2022-23, primarily due to a heavy monsoon spell in July-August 2022 that caused significant
damage to two key sub-sectors, namely crops and livestock. As a result, the sector only achieved
a growth rate of 1.55%, compared to the 4.40% growth recorded in the previous fiscal year.
According to the recently released economic survey of Pakistan, the damage in the agriculture
sector had a spill-over effect on the industry and its allied services sectors. Domestic production
fell below the required levels, leading to a historic increase in the prices of essential food items.
The total damage inflicted on the agriculture sector amounts to approximately Rs800 billion
($3.725 billion).
To address the domestic demand for food items, the government swiftly responded by allowing
the fast-track import of essential food items from neighbouring countries. The Rabi season of
2022-23 presented significant challenges for farmers in Sindh and Balochistan, which were the
most affected areas due to flooding.
In an effort to alleviate the hardships faced by flood victims and revive the agriculture sector, the
government introduced the Kissan Package 2022.
The economic survey highlighted a decline of 3.20% in important crops. Cotton and rice, in
particular, suffered extensive damage from the floods. Cotton production plummeted by 41.0%,
resulting in the production of 4.910 million bales, compared to 8.329 million bales the previous
year. Similarly, rice production saw a decline of 21.5%, reaching 7.322 million tonnes (MT)
compared to 9.323 MT last year. However, the decline in important crops was somewhat
compensated by growth in wheat (5.4%), sugarcane (2.8%), and maize (6.9%) production.
Wheat production reached 27.634 MT, sugarcane production stood at 91.111 MT, and maize
production amounted to 10.183 MT, compared to 26.209 MT, 88.651 MT, and 9.525 MT,
respectively, in the previous year.
There was a 0.23% increase in the production of other crops, mainly due to a 53.15% increase in
oilseed production. Cotton ginning, which contributes 0.97% to the agriculture sector and 0.22%
to GDP, declined by 23.1% due to the decrease in cotton production.
Livestock, accounting for 62.68% of the agriculture sector and 14.36% of GDP, grew at a rate of
3.78% compared to 2.25% in the previous year. The fishing sector, with a share of 1.39% in
agriculture value addition and 0.32% in GDP, recorded a growth rate of 1.44% compared to
0.35% in the previous year. The forestry sector, representing 2.23% of agriculture value addition
and 0.51% of GDP, grew at 3.93% compared to 4.07% last year, primarily due to increased
timber production.
The overall domestic production of fertilisers during FY2023 (July-March) decreased by 8.3%
compared to the same period in FY2022. Additionally, fertiliser imports decreased by 26.2%,
resulting in an 11.2% decrease in the total availability of fertiliser during FY2023 (July-March).
The off take of fertiliser nutrients also saw a decrease of 15%, primarily due to high prices of
Phosphatic and Potash fertilisers in the international and domestic markets.
During FY2023, the government provided subsidies in the form of cheap natural gas and
budgeted subsidies for two urea plants and imported urea. Agricultural lending institutions
disbursed Rs1,222 billion, which is 67.2% of the overall annual target and 27.5% higher than the
amount disbursed during the same period last year (Rs958.3 billion). The outstanding portfolio
of agricultural loans increased by Rs80.2 billion, reaching Rs712.9 billion by the end of March
2023, indicating a 12.7% growth compared to the previous year. The number of outstanding
borrowers reached 3.04 million in March 2023.
In the face of these challenges, the government aims to enhance the Public Sector Development
Programme (PSDP) to over Rs1.15 trillion in the upcoming year, with a particular focus on
investments in education, IT, and green energy. The finance minister expressed optimism about
the future, aiming for GDP growth of 3.5% and a commitment to achieving sustainable
development goals.
Although the Pakistani government has made strides in stabilising the economy, challenges such
as inflation, currency depreciation, and political instability persist. It will require sustained
efforts from the government and stakeholders to ensure long-term economic growth and stability
for Pakistan.
Breaking the Cycle

However, for the revival of the agricultural sector, certain key policy initiatives need to be
implemented. According to the PBC report, the country must enhance its crop yield to at least
regional averages. To achieve this, a crucial starting point would be amending the Seed Act to
provide regulatory and legal support for private seed companies to develop superior seed
varieties that can maximize output.

Further, expansion of cultivated land of fruits and vegetables backed by a reliable cold chain
infrastructure would serves as a lucrative revenue stream as well as a method of preserving
water. Additionally, it is crucial to provide farmers with greater protection against risks such as
floods and exploitation by middlemen. Furthermore, the conversion of farm products into higher
value-added goods through processing can serve as a means of amplifying the sector's output.