Agriculture under threat

Business Recorder

4 days ago

Quoting official data for January-June 2025, the news flashed on the print media, stating that Pakistani farmers endured collective losses of over Rs1.26 trillion. Ironically, like all losses in the public and private sector, this loss may well pass through as another loss — unattended and unaddressed. What's makes the loss to farmers different is that it has consequences on the food security of the people. It cannot be allowed to pass unattended. The subject needs to be escalated for wider public awareness and its emerging consequences.
The most significant blows came from rice and maize, together accounting for a staggering Rs1 trillion in damages. Export figures paint an equally grim picture – a drop of over USD 1 billion in total agro-export value compared to the same period in 2024. Among export volumes of major crops, maize fell by 70 percent, banana by 69 percent, mango by 40 percent, and onion and garlic by 31 each.
The reasons cited for this catastrophe are:
government's apathy, flawed policies and unchecked input costs. All this put together is pushing the farming sector towards uncertainty, if not collapse.
Equally, concerning is the large-scale manufacturing (LSM) sector, which has taken an unprecedented dip.
For decades, Pakistan's economy has relied on two foundational sectors: agriculture and large-scale manufacturing (LSM). Today, both are facing a parallel and perilous decline. This is no longer a cyclical slump — it is a structural unravelling that threatens long-term economic and fiscal viability.
Consider the cotton sector. Once the pride of Pakistan's agricultural landscape and the backbone of its textile exports, cotton output has shrunk dramatically. From producing over 13 million bales annually in the 1990s, we are now barely managing 5-6 million. Despite having ideal soil and climate, Pakistan today imports cotton — a reversal driven by years of policy neglect, substandard seeds, pest infestations, and water mismanagement.
Farmers are increasingly abandoning cotton due to low profitability, weak extension services, and the absence of technological upgrades. The introduction of BT cotton failed due to poor regulation, lack of certified seeds, and counterfeit inputs. Meanwhile, crops like sugarcane and rice — favoured by powerful lobbies — have pushed cotton out of key zones despite being more water-intensive.
The collapse of cotton has hit the textile value chain hard — from ginning to spinning to garment manufacturing. But the textile industry is not alone. The broader manufacturing sector is also under extreme stress. LSM has contracted significantly in recent years. In FY24, key sub-sectors like textiles, steel, cement, and chemicals reported production declines of over 10 percent.
Multiple headwinds are battering the industrial sector: soaring energy tariffs and unreliable gas supply, high interest rates have choked working capital access, exchange rate volatility and import restrictions disrupted supply chains. Most critically, an inconsistent industrial policy has eroded investor confidence.
Many industrial units are now running at 50–60 percent capacity, and some have completely shut down. Special Economic Zones under CPEC remain underutilized. Exporters face delays in refunds, rising compliance costs, and declining competitiveness globally. Meanwhile, regional competitors like Bangladesh and Vietnam continue to eat into Pakistan's export market share.
The decline of agriculture and manufacturing is not just an economic concern; it's in fact a strategic threat. These sectors provide employment, support exports, and ensure food and industrial security. Their erosion means rising rural poverty, urban unemployment, trade deficits, and reduced fiscal space.
Some of the basics which can be done to revive the two sector could be the following:
The government must prioritize a National Cotton Revival Plan;
Industrial policy must shift from firefighting to long-term planning. Policymaking must become predictable and institutionalized. This includes rationalized energy pricing for exporters and SMEs, a revival of markup support and concessional financing, speedy tax refunds and policy consistency;
The government must build agro-industrial linkages. Cotton belts should be linked with integrated textile parks to reduce logistics costs and increase value addition; and
Technology adoption is non-negotiable. Digitalizat-ion of industrial processes and SME support for automation can improve productivity.
Copyright Business Recorder, 2025