Financial Resurgence of Agri Economy in Pakistan

Agriculture is the quintessence of Pakistan’s economy as it provides employment to more than 40% of the national labor and is the source of livelihood for more than 68% of the rural population. Even though it is the most neglected sector in the country. Resultantly, despite the agricultural fertility, we are importing agricultural products (i.e., wheat, sugar, etc.).

Policy Issues

There is a long list of financial, non-financial, and policy issues affecting agriculture and farmers, making the country uncompetitive in international markets and badly impacting the local consumers. However, this article will cover some of these issues and others will be discussed sometime later.

High cost of production, low average yield, non-availability of state-of-the-art technology, lack of interest by government and private sector, substandard seeds, fertilizers, pesticides,  funding, and financial constraints for the farmers are some of the main issues worsting the situation. The entire value chain of Agri products is based on outdated practices. Stakeholders involved in the value chain are either unaware of the latest practices or unwilling to accept them due to a lack of information, capacity-building issues, or financial constraints. The ancient and archaic practices not only lessen the yield and quality of the Agri products but also cause low returns of the investment, which discourages private investors from investing in the agriculture sector.

Water is one of the vital ingredients of agriculture, but despite scarcity and paucity of water, the efficiency of water utilization in the country is incredibly low compared to international standards. “DW reports that Pakistan has the world’s fourth-highest rate of water use. Its water intensity rate – the amount of water in cubic meters used per unit of GDP – is the world’s highest. This suggests that no economy is more water-intensive than Pakistan’s”.

Unplanned Urbanization and colonization are swallowing the fertile agricultural land. Resultingly, the gap between the demand and supply of food items is widening day by day. If the government will not take serious action on a war footing basis, it will not only endanger food security in the future but also devastate the services and industry sectors.

Measures to recuperate the agriculture sector. 

There is a long list of measures to rehabilitate and acclimatize the agricultural sector in the country. However, only three measures are discussed below.

Shifting from subsidies to research and development

Despite giving subsidies on agricultural products, fertilizers, pesticides, etc., the government should invest in Agri research and development activities. Initiatives should be taken to develop new varieties, seeds, and breeds, local production of the latest Agri machinery and equipment, capacity building of farmers and stakeholders, and establishment of agricultural schools, incubation & training centers. Furthermore, the scope and mandate of the existing agriculture universities and research centers should be redefined and aligned with international best practices.

Restriction of Construction and development activities on the agricultural  land   

Government should take firm policy measures to control the construction of residential and commercial societies and towns on agricultural and fertile land. Government should encourage and incentivize vertical construction instead of horizontal expansion.

Water scarcity  

Many modern irrigation methods like sprinkler irrigation systems, drip irrigation systems, pot irrigation systems, etc., are being used in developed countries.  These systems utilize irrigation water very effectively and efficiently to produce standardized quantity and quality of crops.  However, these systems are much more expensive and small, and middle-level farmers cannot afford them.  Therefore, the government should provide water irrigation systems and other latest Agri gadgets at subsidized rates.  Further, the government should encourage alternate irrigation systems by providing different incentives and other benefits.


Last but not least, the agricultural sector is the backbone of Pakistan’s economy. The government should take policy measures on a war footing basis to revamp the agriculture sector of the country.  It will ensure a sustainable food supply for the nation and boost the performance of the industry and service sectors

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Usman Rasheed & Co Chartered Accountants is a leading financial advisory and audit firm in Pakistan, having offices in Islamabad, Quetta, Lahore, Karachi, Peshawar & Gilgit. The firm is providing Audit, Tax, Corporate, Financial, Business, Legal & Secretarial Advisory services and other related assistance to local and foreign private, public and other organizations working in Pakistan

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