Revitalising agriculture: A path to sustainable growth
At present, the agricultural sector in Pakistan is facing a three-pronged crisis marked by declining cotton output, over-taxation, and lack of support for sustainable agriculture. In this respect, analysts warn that any action or inaction by the government would weaken the economic security and export potential of the country. Instead, it needs integrated policies and sustainable interventions to revitalize agriculture and enhance food security while also providing protection to the natural resources of Pakistan from climate risks.
Pakistan’s economy is also expected to carry on FY2024-25 from where it had left due to recoveries in its industrial and services sectors but, of course, less on account of the agricultures, as the growth was majorly driven through this sector in FY 2023-24. As mentioned in the State Bank of Pakistan Annual Report about the State of Pakistan’s Economy for FY2023-24, “The most recent data regarding kharif (summer) crops indicates that the agricultural sector would fail to carry its expansionist momentum into FY25”.
Preliminary estimates for the first two months till September 1, 2024, indicate that cotton arrivals have fallen by 59.7% year on year, and so far, this does show growing anxiety in the sector’s prospects. However, the SBP stated that “high frequency indicators suggest further improvement in macroeconomic conditions in FY25” while real GDP growth is expected to be in a range of 2.5% to 3.5% from 2.5% in FY24.
At nearly 50% down cotton production, the alarm bells are being rung by ginners, and reliance of textile exporters on imported yarn is increasing day to day. Farmers are mulling alternative crops for next season. The delayed response by the government to this situation is risking the issue from turning into a huge crisis for the agriculture sector and also for Pakistan’s primary export industry.
This cotton downfall coincides with increasing demand owing to India’s decreasing trade with Bangladesh, which is facing political and economic instability. Pakistan’s late reaction in this regard only questions its preparedness to face the shifting global dynamics and issues in the local agriculture sector.
Exporters have acute shortages of capital, literally being tied up in delayed sales tax and duty drawback refunds. Farming on cotton is reportedly now “significantly less profitable than crops like sugarcane, maize, rice, and sesame,” for which it neither gets support pricing nor input subsidies. A market structure in the form of a physical marketplace for this mainstay of Pakistan’s export industry remains absent, adding to the misery of farmers.
Meanwhile, middlemen and commission agents continue to nibble away at growers’ margins. Cotton production and acreage levels have been stagnating, questioning the government’s tendency not to sanction support prices or subsidies and also address the problem of middlemen. As yet, no answers have been found.
Ever since the Pakistan Cotton Ginners Association (PCGA) has been strongly pushing the government to understand that production and increase in cotton is something of a “national responsibility, as it will go direct to the core of potential export and general growth of economic structure.” In addition, the Task Force on Agriculture has been involved with the FPCCI and the FBR over tax burden in the sector as it mentions that tax burden has “severely impacted” the viability of the industry. Successive governments have unfortunately neglected the agricultural sector, which has eroded its natural comparative advantage and turned Pakistan from a one-time net agricultural exporter into a chronic importer. The crisis now even threatens the much-prized export sector, yet the government seems unable to find effective remedies.
While regenerative agriculture is still in its infancy in Pakistan, it is becoming increasingly critical because the country’s population has already crossed 240 million and is facing greater pressures on food security along with economic factors. It is among the most vulnerable countries to climate change and resource scarcity. According to the World Resources Institute, it may become one of the most water-stressed countries by 2040. It is thus essential to apply sustainable interventions to ensure food security, conserve resources, and reduce climate impact. Although smallholder farmers, multinational corporations, and NGOs are currently working to revive traditional practices like crop rotation and organic farming, large-scale adoption of regenerative techniques is still in the minority.
The government has introduced climate-smart initiatives, but there is no regenerative agriculture policy or incentives for transition; most farmers struggle with such practices. Small-scale farmers, more so, lack access to the needed technology and infrastructure to implement these innovations. The key takeaway for Pakistan is to build an environment in which broader technology adoption, coupled with government support and policy reform, will allow it to realize its full agricultural potential.
If Pakistan commits to sustainment and technological improvement practices, it will surely demonstrate agriculture as a leading potential force in the next ten years, increasing yield results using innovation and productivity derived from existing land. Pakistani resources can be sustained over regions using the same productivity measures or enhanced resource efficiency.
With strategic reforms and commitment to adopting regenerative agricultural practices, Pakistan has a chance to regain its regional leadership in sustainable agriculture. This is possible through the provision of incentives, technology, and policy support, which would boost productivity, reduce import dependency, and create a resilient agricultural sector. Collective national effort could transform the agricultural landscape of Pakistan into a model of resource-efficient and climate-smart farming practices in the region.