| Sumario: | Despite agriculture’s central role in Pakistan’s economic growth, the sector continues to struggle with decades old structural issues and its performance is weak. Spending on subsidies for water, fertilizer, electricity, and wheat procurement reached US$1.25 billion in Punjab alone, far more than the funding provided for research and development. Inefficient and fragmented value chains, high post-harvest losses and transport costs, limited access to formal markets, dependence on subsidies, and underdeveloped storage and processing infrastructure are among the significant problems affecting agriculture. The deep-rooted traditional system, characterized by reliance on commission agents and the weak implementation of market reforms both restrict farmers’ bargaining power, especially for smallholder farmers. Moreover, although on average the country’s population is food secure in terms of caloric sufficiency, limited dietary diversity and inadequate access to nutritious foods cause widespread malnutrition.
Regardless of these issues, some positive changes have been introduced. The recent rollback of wheat procurement and the minimum support price policy presents both challenges and opportunities as long-sought reconsideration of crop choices and promotion of higher value or climate-resilient alternative crops now seems possible. Market reform under the Punjab Agriculture Marketing Regulatory Authority (PAMRA), created as an initiative of the World Bank’s SMART program, presents another opportunity, particularly as the notified areas for central markets have been dropped, creating an opening for more competition. Although implementation remains slow, the Authority has begun paving the way for market modernization. However, this transition must be supported by improvements in market access, development of an improved and well-managed storage network, and well-functioning price mechanisms to protect food security and farmer incomes.
In addition to the marketing, value addition, and productivity challenges identified above, climate change will also create constraints and challenges for agri-food development and transformation in Pakistan. The sector faces likely increases in extreme events, particularly flooding, as well as longer-run chronic effects of heat on yields and labor productivity in agriculture, rising salinity and land drying, and increasing crop water requirements even as other demands for water increase.
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