Farm sector on autopilot
The federal government recently unveiled the country’s economic performance for the first quarter (July–September) of fiscal year 2024-25. Sadly, the agriculture sector failed to sustain last year’s momentum, registering a mere 1.15 per cent growth, far lower than the 8.09pc achieved during the same period last year. The disappointing performance is primarily due to a sharp contraction in the crop subsector, which exhibited a negative growth rate of 5.93pc compared to a positive 16.11pc in Q1FY24.
Pakistan’s agriculture sector, according to experts and economists, has been operating on autopilot, a trajectory completely lacking course correction through comprehensive planning, coherent policies, and strategic direction. The Q1 performance unequivocally validates their concerns.
Over the last 10 years, Pakistan’s agriculture sector has achieved an average annual growth rate of just 2.94pc, marginally exceeding the country’s population growth rate of 2.55pc. If we exclude the impressive yet anomalous 6.25pc growth recorded last year, the remaining nine-year average falls to a mere 2.57pc.
The poor performance of the agriculture sector (livestock, crops, forestry, fisheries) stems primarily from the erratic performance of the crop sub-sector, which exhibits sharp positive and negative fluctuations in growth. Such high variability, particularly the most recent one, can be attributed to three key factors.
Lack of well-defined government policies and false past promises are leading the agri sector down a difficult path of negative growth
First, in the absence of well-defined government policies (especially the pricing policy) and state incentives (support prices and subsidies), crop selection and its acreage are left entirely to the whims of farmers. Their decisions, however, are heavily influenced by the previous year’s profitability, determined by crop yields and prices, shaped by national and international market dynamics.
Past experiences clearly demonstrate that farmers respond positively whenever the government offers the right incentives to boost specific crops. For instance, in 2023, the government announced a support (intervention) price of Rs8,500 per 40kg for cotton to reduce imports. This got farmers motivated, and in a single year, cotton exhibited an extraordinary 108pc increase — from 4.9 million bales in 2022-23 to 10.5m bales in 2023-24.
Likewise, to avert a potential wheat crisis in the country, the government announced a support price of Rs3,900 per 40kg, which encouraged farmers to expand wheat acreage and invest in agricultural inputs. This resulted in a record wheat harvest of 31.4m tonnes in FY24.
Unfortunately, the government failed to honour the announced prices for both cotton and wheat and consequently, farmers had to sell their produce at significantly lower market rates. However, all this proves at least two facts: that the government can achieve production targets for any crop if it provides the right incentives to farmers and that farmers’ unsystematic choices — driven primarily by short-term gains — cause wide variations in the annual production quantity of crops. Notably, consistent production is a prerequisite for ensuring food security and stabilising agri-imports and exports.
Past experiences clearly demonstrate that farmers respond positively whenever the government offers the right incentives to boost specific crops
Second, the vulnerability of our crops to climate change has significantly increased over the past two decades. In 2024 alone, the yields of maize, sesame, cotton, and rice were severely affected by rising temperatures, heat waves, and erratic rainfalls.
The government has failed to adequately promote adaptation and mitigation measures to address these challenges. Neither could it enhance farmers’ knowledge of climate change nor promote appropriate technologies, particularly new high-yielding and climate-resilient seed varieties. On the other hand, farmers have not made concerted efforts to cope with the adverse effects of climate change. Capacity issues and limited access to technological solutions have been the largest challenges for them.
Third, in 2024, the government’s refusal to procure wheat at the announced support price triggered a vicious chain reaction affecting subsequent crops. A vast majority of cash-strapped farmers did not apply agricultural inputs in the required quantities at the right time. This ultimately resulted in low crop yields that are reflected in the Q1 figures.
A few months ago, the Punjab government launched the Kissan Card to strengthen agricultural credit. Through this, small farmers can get interest-free loans of up to Rs150,000 for in-kind procurement of seeds, fertilisers, and pesticides. However, its outreach is just limited to 500,000 smallholders — less than 10pc of total farms — and therefore, its impact on sector development is not significant.
In conclusion, the agriculture sector is not evolving in response to new technological advancements, market demands, and environmental factors. All of this results in suboptimal performance. Therefore, it is high time to chalk out national priorities for the sector, including a list of prioritised crops based on their comparative advantage and potential for food security, value addition, employment generation, import substitution, and exports.
However, to motivate farmers to grow these crops on the required acreage with relatively higher yields, it is essential to formulate conducive policies and provide crop-specific targeted subsidies rather than distributing tractors and solar tubewells — widely available technologies. Failing this, the agriculture sector will continue to operate on autopilot, with no clear direction and predictable outcomes.
Khalid Wattoo is a farmer and a development professional, and Dr Waqar Ahmad is a former Associate Professor at the University of Agriculture, Faisalabad.
Published in Dawn, The Business and Finance Weekly, January 13th, 2025