Pakistan’s Agriculture Policy Failure: The Country That Went From Food Exporter to Food Importer

A sector that employs 38% of Pakistan’s workforce, contributes roughly 24% of GDP, and irrigates its fields from one of the world’s largest canal systems has been a net food importer for over a decade. The cause is not geography. It is policy.

By Mehmood ul Hasan Qadir
Economist & Financial Analyst | Dubai, UAE

Executive Summary

• Pakistan became a net food importer in 2013 and has remained one ever since — periodically importing the same crops it grows, at foreign exchange cost, from markets it once supplied.
• The wheat yield gap stands at 4,000 kg/ha in Punjab and 4,424 kg/ha in Balochistan — not a soil problem, but a fifty-year policy failure documented by the Zarai Taraqiati Bank.
• In FY2024–25, Pakistan’s five major crops fell a combined 13.5%. Cotton declined 30.7%. Wheat came in 10% below the government’s own target of 33.58 million tons.
• Agricultural R&D investment has ranged between 0.11% and 0.63% of agricultural GDP over two decades — the lowest in South Asia and the primary driver of yield stagnation.
• The government’s sudden withdrawal of the wheat minimum support price ahead of the 2024–25 season — without notice, transition support, or market alternatives — directly reduced planted area and contributed to the shortfall.
• Pakistan’s 8.5 million smallholder farm households have no access to crop insurance, commodity futures, or organised wholesale markets — making price liberalisation a void, not a reform.
• The next crop shortfall is not a risk. It is a forecast.

The Opening

Pakistan became a net food importer in 2013 and has remained one ever since. The country that once exported wheat, cotton, and rice across Asia now periodically imports the same crops it grows — at foreign exchange cost, from markets it once supplied.

The reversal was not forced by land scarcity or population growth alone. Pakistan’s wheat yield gap — the difference between what its farms produce and what modern agronomic practice can achieve — stands at 4,000 kilograms per hectare in Punjab and 4,424 kilograms per hectare in Balochistan, according to crop yield gap analysis by the Zarai Taraqiati Bank. A country operating at those gaps is not failing because of its soil. It is failing because of what has been done — and not done — to its agricultural policy for fifty years.

The Policy Architecture That Produced Decline

Pakistan’s agricultural policy since the 1960s has been built on three instruments: minimum support prices for key crops, input subsidies for fertiliser and water, and government procurement of surplus grain. Each instrument was introduced with defensible intent. Together, they have produced a sector that is simultaneously over-regulated on price signals and under-invested in everything that determines long-term productivity.

Support prices — most consequentially for wheat and sugarcane — were designed to guarantee farmer incomes and ensure national food security. In practice, they locked millions of smallholders into two low-value crops at the expense of crop diversification. PIDE research is explicit on the mechanism: “biased policies — input subsidy and support price — towards these crops discouraged farmers to shift from low value to high value crops.” Pakistan’s agricultural export basket has remained concentrated in a handful of commodities not because its farmers lack the capacity to grow other crops but because its price policy made switching irrational.

R&D investment, the foundation of sustained agricultural productivity growth, has ranged between 0.11% and 0.63% of agricultural GDP over the past two decades — among the lowest rates in South Asia. The World Bank’s agricultural productivity assessment identified Pakistan as having the lowest total factor productivity growth rate among regional comparators including Bangladesh, China, India, and Sri Lanka. Yield growth that did occur was driven by input intensification — more fertiliser, more water, more area — rather than by genuine efficiency gains. That model has exhausted itself. Groundwater depletion is accelerating. Arable land is under pressure from urbanisation. The yield gap between research station results and actual farm outcomes runs between 40% and 80%, according to PIDE estimates — an extraordinary distance between what Pakistani agriculture can do and what it actually produces.

The 2024–25 Collapse

The 2024–25 cropping year exposed the accumulated structural fragility in a single season. Pakistan’s five major crops — wheat, cotton, rice, sugarcane, and maize — fell by a combined 13.5%, according to Friday Times analysis of PBS data. Cotton declined 30.7%. Maize fell 14.7%. Wheat production, estimated at 28.42 million tons against a government target of 33.58 million tons, came in 10% below target — the largest shortfall in recent years.

The proximate causes included drought conditions and above-average temperatures across Punjab’s wheat belt. But the policy dimension cannot be separated from the meteorological one. Punjab’s government withdrew the minimum support price for wheat ahead of the 2024–25 planting season — without prior announcement, without transition support, and without alternative market mechanisms in place. The USDA Foreign Agricultural Service documented the consequence directly: “The sudden change in policy occurred without any prior announcement nor consultation with farmers. Government procurement has always been a major part of wheat marketing in Pakistan.” Area planted in wheat fell to 9.1 million hectares, down from the previous season, as farmers responded rationally to the absence of price certainty.

The government’s position was itself a product of IMF programme conditionality. The Fund required the removal of market-distorting commodity interventions as part of fiscal consolidation. The demand was analytically sound: Pakistan’s wheat procurement and support price system had generated a surplus so large in FY2023–24 that domestic prices collapsed and farmer incomes fell anyway. The IMF was not wrong about the distortion. The failure was the absence of any sequenced transition — removing subsidies before building the market infrastructure that was supposed to replace them.

By FY2025–26, the USDA forecast wheat production at 27.5 million tons, a further 13% decline from the record 31.6 million tons of FY2024. Imports of up to 1.7 million metric tons were projected to cover the shortfall, with the government in negotiations with Russia and Kazakhstan for government-to-government procurement deals. A country that was among the world’s top wheat producers as recently as 2024 was arranging emergency grain imports twelve months later.

The Water Dimension

No analysis of Pakistan’s agricultural policy failure is complete without confronting water. Approximately 90% of Pakistan’s food production depends on the Indus Basin Irrigation System — one of the world’s largest contiguous canal networks, according to the SBP Annual Report FY2024–25. That system is under compounding stress from groundwater depletion, canal infrastructure deterioration, inefficient water distribution, and climate variability that is increasing the frequency of both drought and flood events.

Pakistan’s water productivity — the agricultural output generated per unit of water consumed — is among the lowest in the world. Flood irrigation, which wastes substantial volumes of water through evaporation and seepage, remains dominant across Punjab and Sindh. Drip and sprinkler irrigation, standard in comparable middle-income agricultural economies, covers a negligible fraction of cultivated area. The government’s irrigation budget allocation — roughly 10% of the agriculture budget — has not funded the system modernisation that water stress requires.

The Indus Waters Treaty with India, signed in 1960, adds a geopolitical dimension that is not resolvable through domestic policy. Any deterioration in the treaty’s operational framework — increasingly a concern as India pursues upstream infrastructure projects — would directly threaten the water volumes Pakistan’s canal system depends on.

Key Data Table

Sources: Pakistan Bureau of Statistics; USDA FAS Grain and Feed Annual 2025; Friday Times, June 2025; PIDE Research; ZTBL Crop Yield Gap Analysis; SBP Annual Report FY2024–25; World Bank Pakistan Development Update April 2025

What the Productivity Data Does Not Resolve

The structural argument for removing Pakistan’s support price and procurement system is valid. These instruments have distorted crop choice, consumed fiscal resources, created storage inefficiencies, and insulated farmers from market signals that would otherwise drive productivity improvements. The IMF’s position on deregulation is analytically defensible.

What the productivity argument does not resolve is the transition problem. Pakistan’s 8.5 million smallholder farm households — the majority of whom cultivate fewer than five acres — have no access to crop insurance, commodity futures, organised wholesale markets, or institutional storage that would allow them to absorb price risk in a deregulated environment. Removing the support price without building those market structures first does not create a functioning agricultural market. It creates a void into which middlemen and informal traders move, typically at the expense of the farmer.

Vietnam’s rice sector transition, India’s agricultural market reforms, and Brazil’s soy sector development all required years of institutional market-building before price liberalisation became effective. Pakistan has attempted price liberalisation without the institutional preconditions. The 2024–25 crop collapse is partly the result.

Closing

Pakistan’s agriculture policy problem is not primarily technical. The knowledge of what is required — investment in R&D, water productivity improvements, crop diversification, market infrastructure, and extension services — has been documented in World Bank, PIDE, and government reports for at least three decades. The 2025 wheat crisis, the 2024–25 crop collapse, and twelve consecutive years as a net food importer are not evidence of ignorance. They are evidence of a political economy in which the interests that benefit from the existing system — large landowners who receive subsidised inputs, sugar mill owners who depend on regulated cane prices, provincial governments that avoid taxing agricultural income — are better organised than the interests that would benefit from reforming it. Until that balance shifts, the next crop shortfall is not a risk. It is a forecast.

Sources

• Pakistan Bureau of Statistics. Crop Production Data FY2024–25. Islamabad: PBS, 2025.
• Federal Committee on Agriculture. FCA Meeting Report: Rabi 2024–25 Review. Islamabad: Ministry of National Food Security and Research, April 2025.
• USDA Foreign Agricultural Service. Pakistan: Grain and Feed Annual 2025. Washington DC: USDA FAS, March 2025. https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain+and+Feed+Annual_Islamabad_Pakistan_PK2025-0003.pdf
• USDA Foreign Agricultural Service. Pakistan: Grain and Feed Update. Washington DC: USDA FAS, September 2025.
• Friday Times. “A Perfect Storm: The Collapse of Pakistan’s Crop Production.” June 10, 2025. https://www.thefridaytimes.com/10-Jun-2025/a-perfect-storm-the-collapse-of-pakistan-s-crop-production
• PIDE. “Issues and Strategies to Revitalize the Agriculture Sector of Pakistan.” Islamabad: Pakistan Institute of Development Economics, 2020. https://pide.org.pk/blog/issues-and-strategies-to-revitalize-the-agriculture-sector-of-pakistan
• Zarai Taraqiati Bank Limited. Crop Yield Gap Analysis Pakistan 2020. Islamabad: ZTBL, 2020. https://www.ztbl.com.pk/wp-content/uploads/Documents/Publications/Research-Studies/CropYieldGapAnalysis.pdf
• State Bank of Pakistan. Annual Report FY2024–25, Chapter 2: Economic Growth. Karachi: SBP, 2025. https://www.sbp.org.pk/reports/annual/aarFY25/Chapter-02.pdf
• World Bank. Pakistan Development Update: Reimagining a Digital Pakistan. Washington DC: World Bank, April 2025. https://thedocs.worldbank.org/en/doc/e414b36ae736660edf8f0f3cb597b1e9-0310012025/original/Pakistan-Development-Update-Report-April-2025-FINAL.pdf
• Grain Central. “Pakistan Likely to Resume Wheat Imports.” April 15, 2025. https://www.graincentral.com/news/pakistan-likely-to-resume-wheat-imports
• FAO GIEWS. Pakistan Country Brief. Rome: Food and Agriculture Organisation, August 2025. https://www.fao.org/giews/countrybrief/country.jsp?code=PAK
• Ministry of Finance. Economic Survey of Pakistan 2024–25, Agriculture Chapter. Islamabad: Finance Division, 2025. https://www.finance.gov.pk/survey/chapter_25/2_Agriculture.pdf