Pakistan’s agriculture sector encountered a challenging period in the fiscal year 2022-23. Adverse weather conditions, including heavy monsoon rains in July-August 2022, caused significant damage to two key sub-sectors: crops and livestock. As a result, the sector’s growth rate was a mere 1.55%, a notable drop from the 4.40% recorded in the previous fiscal year.
The recently released economic survey of Pakistan reveals the spill-over effect of the agriculture sector’s struggles on related industries and services. Domestic food production fell below required levels, leading to a historic surge in essential food item prices. The damage inflicted on the agriculture sector is estimated to be around Rs800 billion ($3.725 billion).
To address the food demand and alleviate the situation, the government swiftly authorized the fast-track import of essential food items from neighboring countries. The Rabi season of 2022-23 presented significant challenges for farmers in Sindh and Balochistan, the regions most affected by flooding.
In response to the difficulties faced by flood victims and to revive the agriculture sector, the government introduced the Kissan Package 2022.
The economic survey points out a decline of 3.20% in important crops. Cotton and rice, in particular, suffered extensive damage due to the floods. Cotton production plummeted by 41.0%, resulting in 4.910 million bales compared to the previous year’s 8.329 million bales. Similarly, rice production saw a decline of 21.5%, reaching 7.322 million tonnes (MT) compared to 9.323 MT the previous year. However, the decline in important crops was somewhat offset by growth in wheat (5.4%), sugarcane (2.8%), and maize (6.9%) production.
Wheat production reached 27.634 MT, sugarcane production stood at 91.111 MT, and maize production amounted to 10.183 MT, compared to 26.209 MT, 88.651 MT, and 9.525 MT, respectively, in the previous year.
There was a 0.23% increase in the production of other crops, mainly attributed to a 53.15% increase in oilseed production. The decline in cotton production led to a 23.1% decrease in cotton ginning, which contributes 0.97% to the agriculture sector and 0.22% to GDP.
Despite these challenges, the livestock sector, accounting for 62.68% of the agriculture sector and 14.36% of GDP, showed growth at a rate of 3.78% compared to 2.25% in the previous year. The fishing sector, with a share of 1.39% in agriculture value addition and 0.32% in GDP, recorded a growth rate of 1.44% compared to 0.35% in the previous year. The forestry sector, representing 2.23% of agriculture value addition and 0.51% of GDP, grew at 3.93%, primarily due to increased timber production.
Water availability during the Kharif season of 2022 decreased to 43.3 million-acre feet (MAF) compared to 65.1 MAF in the previous season. However, water availability during the Rabi season of 2022-23 increased by 7% to reach 29.4 MAF compared to the previous Rabi season.
The production of fertilizers saw a decrease of 8.3% during FY2023 (July-March) compared to the same period in FY2022. Additionally, fertilizer imports decreased by 26.2%, resulting in an 11.2% decrease in the total availability of fertilizers. The offtake of fertilizer nutrients also declined by 15% due to high prices in the international and domestic markets.
In terms of lending, agricultural institutions disbursed Rs1,222 billion, 67.2% of the annual target and 27.5% higher than the previous year. The outstanding agricultural loan portfolio increased by Rs80.2 billion, reaching Rs712.9 billion by March 2023, indicating a 12.7% growth. The number of outstanding borrowers reached 3.04 million.
Facing these challenges, the government aims to enhance the Public Sector Development Programme (PSDP) to over Rs1.15 trillion in the upcoming year. Investments in education, IT, and green energy will be prioritized. The finance minister remains optimistic about the future, targeting GDP growth of 3.5% and a commitment to sustainable development goals.
While the Pakistani government has made progress in stabilizing the economy, persistent challenges such as inflation, currency depreciation, and political instability must be addressed. Long-term economic growth and stability for Pakistan require sustained efforts from the government and stakeholders.
Published in PakWeb, June 9th, 2023.
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