Agriculture remains one of Pakistan's most important economic sectors. It contributes approximately 24 per cent to national GDP, employs nearly 37 per cent of the labour force, and provides livelihoods directly or indirectly to more than 100 million people. The sector underpins national food security, supplies raw materials to industry, and generates valuable export earnings. Yet the Pakistan Economic Survey 2025–26 presents a concerning picture of a sector under increasing stress.
While overall GDP growth recovered to around 3.7 per cent, agriculture grew by only 0.56 per cent. More importantly, this modest growth masks serious weaknesses in crop production. Major crops declined by approximately 13.5 per cent, while the livestock sector grew by nearly 4.7 per cent and prevented overall agricultural growth from turning negative. The message is clear: Pakistan's agriculture is becoming increasingly dependent on livestock while crop production faces mounting challenges.
The Survey highlights a sector squeezed by rising production costs, declining crop performance, water scarcity, climate change, weak market systems, and growing geopolitical uncertainties. Viewed collectively, these trends suggest that agriculture is approaching a critical transition point.
Signal 1: Major Crops Are Losing Momentum
The most immediate concern emerging from the Economic Survey is the decline in major crops. Wheat production fell from approximately 31.8 million tonnes in the previous year to around 28.9 million tonnes, representing a decline of nearly 9 per cent. Cotton production dropped by roughly 30 per cent, while maize production declined by approximately 15 per cent. Sugarcane production also fell by around 4 per cent.
These declines are not merely statistical fluctuations. They continue a broader pattern that has become increasingly evident over the last decade. Cotton provides perhaps the clearest example. Pakistan produced approximately 13–14 million bales during the early 2010s. Today, production frequently remains below 6 million bales. The country has consequently become a major importer of cotton despite operating one of the world's largest textile sectors.
The implications extend far beyond agriculture. Cotton alone supports a textile industry responsible for roughly 60 per cent of Pakistan's export earnings. Continued decline therefore affects not only farmers but also industrial growth, employment, and foreign exchange earnings. Similarly, wheat yields remain considerably below attainable potential. National average wheat yields generally range between 3.0 and 3.2 tonnes per hectare, whereas research trials and progressive farmers frequently achieve 5–7 tonnes per hectare under comparable agroecological conditions. This persistent yield gap indicates substantial unrealised productivity potential.
Signal 2: The Economics of Farming Are Becoming Increasingly Difficult
Agricultural performance cannot be understood without examining production economics. Over the last decade, farmers have experienced unprecedented increases in input costs. A 50-kg bag of urea that cost approximately Rs 1,700 ten years ago now costs around Rs 4,500–4,800. DAP prices have increased from roughly Rs 3,500 per bag to more than Rs 11,000–13,000 during recent seasons. Diesel prices have increased from around Rs 100 per litre to more than Rs 260 per litre. Labour costs have more than doubled in many regions.
At the same time, output prices have remained volatile and often fail to keep pace with rising production costs. The wheat crop of 2024–25 illustrates this challenge. Many farmers entered the season facing high fertiliser and irrigation costs, only to encounter weak market prices at harvest. In several regions, growers reported selling wheat at prices insufficient to recover production costs. Such outcomes reduce incentives for future investment and contribute to declining confidence within the farming community.
The shrinking profitability window has become one of the most serious threats to agricultural sustainability. A modest reduction in yield due to heat stress, delayed irrigation, pest infestation, or market disruption can now convert a profitable enterprise into a financial loss.
Signal 3: Water Has Become the Binding Constraint
Pakistan's agricultural future will increasingly be determined by water rather than land. At independence, per capita water availability exceeded 5,600 cubic metres annually. Today, it has fallen below 900 cubic metres, placing Pakistan among the world's water-scarce countries. During the same period, the population increased from approximately 34 million to more than 240 million. Agriculture consumes more than 90 per cent of national freshwater withdrawals, making it particularly vulnerable to water shortages.
Despite possessing one of the world's largest irrigation systems, overall irrigation efficiency remains below 45 per cent. Estimates suggest that 35–40 per cent of irrigation water is lost before reaching crops through conveyance losses, seepage, evaporation, and inefficient field application.
Groundwater extraction has become the invisible engine supporting agricultural production. Millions of tube wells now supplement canal irrigation. However, declining groundwater tables are increasingly reported across central Punjab and other intensively cultivated regions. The rapid expansion of solar-powered tube wells may further accelerate groundwater depletion if extraction is not managed carefully. While solarisation reduces energy costs and greenhouse gas emissions, it may unintentionally encourage unsustainable pumping. Pakistan's future agricultural growth will therefore depend less on expanding water supplies and more on increasing water productivity—producing more crop per drop.
Signal 4: Climate Change Is Already Affecting Agricultural Production
Climate change is no longer a future threat; it is already affecting agricultural performance. Pakistan experienced one of the most devastating climate disasters in its history during the floods of 2022. More than 33 million people were affected, over four million acres of crops were damaged, and agricultural losses exceeded billions of dollars.
Beyond catastrophic events, gradual climatic changes are becoming increasingly evident. Average temperatures across Pakistan have increased by approximately 0.5–1.0°C over recent decades, while the frequency and intensity of heatwaves have increased substantially. These changes directly affect crop productivity. Wheat is highly sensitive to terminal heat stress. Studies indicate that every 1°C increase in temperature during grain filling can reduce yields by several percentage points. Similarly, high night-time temperatures are increasingly affecting rice productivity, while heat stress impacts fruit quality in mango and citrus orchards.
Climate change is also altering pest and disease dynamics, increasing production uncertainty and crop protection costs. Agriculture itself contributes approximately 40 per cent of Pakistan's greenhouse gas emissions, creating an additional imperative to adopt Climate Smart Agriculture practices that simultaneously improve productivity, adaptation, and mitigation.
Signal 5: Pakistan Produces More Than It Successfully Markets
The challenge facing agriculture is not only production; it is also commercialisation. Mango exports typically range between 100,000 and 125,000 tonnes annually, less than 6 per cent of total production. Citrus exports fluctuate around 350,000–500,000 tonnes despite Pakistan being one of the world's largest producers. Post-harvest losses for fruits and vegetables are frequently estimated at 20–40 per cent. The issue is therefore not simply increasing production. It is improving storage, grading, packaging, cold chains, traceability, logistics, and compliance with international standards.
Signal 6: Geopolitics Is Increasingly Influencing Agriculture
Agriculture has become increasingly exposed to geopolitical risks. Afghanistan has historically served both as a direct market and as a transit route for agricultural exports to Central Asia. Potatoes, onions, fruits, and vegetables have relied heavily on these trade corridors. Periodic border closures and trade disruptions have repeatedly demonstrated the vulnerability of this dependence. When export channels close, commodities destined for foreign markets are redirected to domestic markets, causing oversupply and price collapses.
Recent tensions in the Middle East add another layer of uncertainty. Any escalation involving Iran or major shipping routes can increase freight costs, delay shipments, raise insurance premiums, and disrupt supply chains. Such disruptions are particularly damaging for highly perishable commodities, including mangoes, citrus fruits, vegetables, and dates.
Signal 7: The Next Decade Will Require a Different Agricultural Model
The data presented in the Economic Survey suggest that the traditional model of agricultural growth is reaching its limits. For decades, production increases were achieved through greater use of water, fertilisers, land, and energy. However, water is becoming scarce, fertiliser costs are rising, climate risks are increasing, and market requirements are becoming more demanding. Future growth must therefore come from efficiency rather than expansion.
Pakistan's nitrogen use efficiency is estimated at only 30–40 per cent, meaning a substantial proportion of applied nutrients is lost to the environment. Raising NUE to 50 per cent could simultaneously increase profitability and reduce environmental impacts. Similarly, improving irrigation efficiency by even 10–15 per cent could save enormous volumes of water while maintaining productivity.
Recommendations for a More Resilient Agricultural Future
The Economic Survey points toward several priorities: First, shift from input-intensive agriculture to efficiency-driven agriculture through precision nutrient management, soil testing, and improved water management. Second, accelerate the adoption of Climate Smart Agriculture, including conservation agriculture, laser land levelling, heat-tolerant varieties, and weather-informed advisory services. Third, invest in groundwater governance and water productivity rather than continued expansion of water extraction. Fourth, strengthen agricultural markets through improved storage, cold chains, grading systems, traceability, and value addition. Fifth, diversify export markets to reduce dependence on a limited number of destinations and trade corridors. Sixth, strengthen agricultural research and extension systems capable of addressing emerging climate and resource challenges. Finally, place profitability at the centre of agricultural policy. Farmers cannot be expected to adopt sustainable technologies if agriculture itself is becoming economically unsustainable.
Conclusion: The Pakistan Economic Survey 2025–26 provides more than an annual snapshot of agricultural performance. It reveals a sector confronting multiple interconnected pressures. Declining crop production, rising costs, shrinking margins, water scarcity, climate change, export challenges, and geopolitical risks are reshaping the future of agriculture. The challenge is not simply to produce more food. It is to produce food more efficiently, more profitably, and more sustainably under increasingly difficult conditions. The choices made during the coming decade will determine whether Pakistan's agriculture remains a driver of economic growth and food security or becomes increasingly constrained by resource scarcity and climate risk.
