Pakistan’s agriculture sector is grappling with a deepening crisis, which is likely to worsen in the coming years. The prices of agricultural commodities have been on a consistent downward slide in international markets, and so have they in local markets.
Meanwhile, agricultural input prices in Pakistan continue to rise. This growing imbalance — rising production costs amid government claims of easing inflation, coupled with shrinking farm incomes — raises serious concerns about the long-term viability of farming in the country.
Global food inflation, triggered during the Covid-19 pandemic, is gradually subsiding. A review of the World Bank’s commodities price data over the past three years highlights this downward trend. Maize price, which stood at $319 per metric tonne (MT) in 2022 (annual average), has now dropped to $214 per MT in 2025 (Jan-March average). Similarly, the price of wheat has declined significantly, falling from $430 per MT in 2022 to $258 per MT in 2025.
The coarse variety of rice, which was priced at $524 per MT in 2023 and rose to $557 per MT in 2024, has now decreased to $409 per MT. Cotton has also witnessed a steady decline, dropping from $2.86 per kg in 2022 to $2.09 in 2023, further sliding to $1.91 in 2024, and maintaining this rate in early 2025. However, global sugar prices have remained stable. It was around $0.41 per kg in 2022 and hovering at the same level in early 2025.
But this story does not end with Pakistan’s five major crops. The prices of edible oilseeds have also seen a sharp decline. Likewise, in the horticulture sector, farmers have been forced to sell much of their vegetables at throwaway prices. A recent and glaring example is that of onions and tomatoes, where growers struggled to recover even their production costs.
Despite a global decline in input prices, the cost of agricultural inputs in Pakistan continues to rise, driven largely by heavy taxation, a depreciating rupee, and rampant profiteering by manufacturers
The situation could potentially worsen in the future. The World Bank’s Commodity Markets Outlook (April 2025) projects a 10 per cent drop in global food prices this year, with further reductions likely in 2026, which will bring prices to their lowest level in six years.
Notably, while the prices of major crops are falling, the costs of key agricultural inputs such as fertilisers, pesticides, and diesel have also been on a downward trend over the past three years in global markets.
For instance, the price of urea — the most widely used fertiliser — peaked at $925 per MT in April 2022 but has since dropped to $394 per MT. Likewise, the price of diammonium phosphate (DAP) — the second most used fertiliser — has fallen from $938 per MT to $615 MT over the same period. Potash has seen an even more dramatic decline, plunging from $1,202 to $336 per MT. Petroleum prices have also eased, decreasing from $86 per barrel in January 2022 to $61.7 in May 2025. Likewise, pesticide prices have also experienced a downward trend.
Ironically, despite this global decline in input prices, the cost of agricultural inputs in Pakistan has continued to rise. This surge is largely driven by heavy taxation, the depreciation of the Pakistani rupee, and rampant profiteering by manufacturers and suppliers of inputs.
Over the past three years, prices of fertilisers, pesticides, seeds, and tractors have doubled in the country. Meanwhile, electricity tariffs for tubewells have tripled, while diesel prices have surged by 70pc.
The combination of falling crop prices and rising input costs has significantly eroded farmers’ purchasing power. Tractor sales have dropped to just 25,143 units in 2024-25 (July-April), compared to 39,838 units during the same period last year. For context, Pakistan produced 58,880 tractors in 2021-22. This decline is particularly alarming given that the country’s level of farm mechanisation remains extremely low.
Likewise, high prices of DAP have already led to under-application of phosphate fertilisers. As a result, the nitrogen-to-phosphate usage ratio in Pakistan has skewed to 3.8:1, compared to the recommended ratio of 2:1, impacting the crop yields negatively.
Media reports reveal that the government plans to raise the federal excise duty to 10pc on key ingredients of fertilisers in the upcoming budget — at a time when fertiliser prices in Pakistan are already significantly higher than those in India and Bangladesh. Any further increase is likely to reduce fertiliser application even more, undermining both crop productivity and national food security.
In recent years, farmers’ distress driven by falling crop prices and rising production costs has been further compounded by two major challenges: climate change and the widespread sale of substandard seeds and pesticides.
Last year, farmers loudly protested the poor-quality paddy (rice) seed supplied by seed companies, yet no meaningful action was taken by the government. Instead, the blame was conveniently shifted to climate change.
This year, the seed mafia once again inflicted heavy losses — this time on spring maize growers — by selling substandard hybrid seeds that resulted in poor pollination and weak grain-setting. These recurring incidents raise a serious concern about the effectiveness of the government’s seed regulatory framework and the performance of relevant oversight agencies.
In conclusion, Pakistan’s agriculture sector is now characterised by high production costs, low yields, growing vulnerability to climate change, and heavy taxation — particularly after the recent hike in agricultural income tax rates to as high as 45pc. The sector is rapidly losing its competitiveness and inching towards a full-blown crisis, which is likely to have devastating consequences not only for agriculture but also for Pakistan’s largely agri-dependent economy.
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, May 19th, 2025
