The State of Pakistan’s Agriculture 2026

The central challenge

Pakistan’s agriculture sector has no shortage of diagnoses, technical proposals or examples of successful practice. Yet improvements in productivity, competitiveness and investment have remained difficult to achieve at scale. This report commissioned by the PBC and executed by the Pakistan Agricultural Council (PAC) argues that the principal explanation lies in the political economy of reform: the distribution of benefits and costs, the influence of competing stakeholders, and the practical arrangements through which policies are implemented.

Technically sound reforms do not succeed on merit alone. They must overcome institutional resistance, reconcile commercial and political incentives, and command sustained attention from decision-makers. Crises can create openings for measures that have remained stalled for years. But a policy announcement, a new law or a subsidy scheme is not, in itself, evidence of lasting change.

What the case studies show

Five cases illustrate how the selection and execution of agricultural policy depend on the alignment of interests:

Seed regulation. Truth-in-Labelling and the tiering of seed companies faced prolonged resistance from bureaucratic and informal-market interests. A stronger food-security imperative and determined regulatory leadership helped advance reforms that had been delayed for years.

Agricultural income tax. IMF conditionality helped secure provincial legislation. The harder task is implementation: building credible records, administrative capacity and compliance in a sector with substantial informal and cash-based activity.

Wheat pricing. Fiscal pressures encouraged Punjab to move away from costly procurement and price controls, but concern over wheat and roti prices subsequently brought renewed intervention. Deregulation proved easier to announce than to sustain.

Farm mechanization. Punjab’s Green Tractor Scheme offered a visible response to farmer distress. However, equipment subsidies alone cannot create the financing, maintenance, standards and service-provider networks required for sustained mechanization.

Crop substitution. The movement from cotton to sugarcane in southern Punjab demonstrates the power of commercial incentives. Farmers responded to perceived returns and risks associated with sugar mills despite formal crop-zoning intentions.

Taken together, the cases suggest that reform is most likely to advance when a compelling problem, an influential champion and an implementable response converge. They also show why short-term political success can fall short of long-term sectoral transformation.

Who determines reform outcomes?

Provincial governments are central because agriculture is largely a devolved responsibility. With clear direction from senior leadership, they can mobilize legislation, regulatory changes and public funding rapidly. Yet speed without detailed planning and consultation can produce unintended consequences or policy reversals.

Smallholder farmers generally have limited organized influence over policy, but their collective market choices can be decisive when the economic gains are clear. Private companies and service providers contribute technical expertise, capital and delivery capability, while banks are indispensable to investment in machinery, procurement and storage. Informal traders, suppliers and service networks can either enable adoption or frustrate reforms that disregard their established role. The case studies also point to a less prominent role for multilateral institutions at several critical moments than might be expected from the scale of their sectoral engagement.

From policy approval to implementation

The findings point to a practical agenda for policymakers and business leaders. First, major reforms need accountable champions with the authority to coordinate agencies and resolve implementation barriers. Second, policy design must map who gains, who loses and which actors are needed to deliver the intended results. Third, long-term reforms should be sequenced to provide early, tangible benefits—especially for farmers—without substituting visible schemes for structural change.

Fourth, governments should treat financing, market infrastructure, regulatory predictability and private-sector participation as core elements of implementation, not as matters to be addressed after a policy is approved. Mechanization, seed quality and agricultural marketing require viable business models as well as enabling rules. Fifth, reform should recognize existing informal networks and create incentives for their gradual participation in more transparent and productive systems, rather than assuming they can simply be displaced by regulation.

A shared direction for agricultural transformation

The report identifies a wider institutional gap: the absence of a sufficiently coordinated vision linking agricultural departments, agencies responsible for investment and enterprise development, financial institutions and private business. Provincial initiative is essential, but reforms dependent on a single leader or a moment of crisis remain fragile. A shared national direction, developed with the provinces, would help align priorities while respecting devolved responsibilities.

For the Pakistan Business Council, the implication is clear. Raising agricultural productivity and competitiveness requires more than identifying the right technical interventions. It requires a reform environment in which public institutions, farmers, financial institutions and businesses have the incentives and confidence to invest, adopt and sustain change. This report offers a framework for understanding why promising measures have stalled—and how future reforms can be designed to endure.

 

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 100+) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. More information about the PBC, its members, objectives and activities can be found on its website: www.pbc.org.pk

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