The most pressing challenge facing Pakistan’s agriculture sector today is the high cost of crop production, which has increased manifold in recent years due to rising prices of agricultural inputs — electricity, petroleum products, fertilisers, and pesticides. Without tackling this, the government’s goal of fostering agricultural growth and curbing inflation by keeping food prices affordable will remain unattainable.

The issue came into sharp focus when the Punjab Government imposed highly unrealistic district-specific wheat prices of Rs2,800 to Rs3,050 per 40kg in July 2024, falling well below the farmer’s production cost of over Rs3,000 per 40kg.

For this reason, farmers often advocate for subsidies on agricultural inputs. However, given the current fiscal constraints and the strings attached to the ongoing International Monetary Fund programme, the country can hardly provide direct or indirect subsidies to farmers.

Yet, despite these challenges, reduction in overall and per-unit production costs is possible through strategic interventions aimed at improving the efficiency of agricultural inputs, boosting crop yields, and minimising crop losses.

Costly structural inefficiencies need to be addressed lest the agriculture sector falls behind on export competitiveness

Farmers often use costly inputs inefficiently, leading to substantial waste. Fertilisers, for instance, are typically applied by broadcasting or flooding, causing much of it to leach away or evaporate. Ironically, these fertilisers are frequently misaligned with the crop needs regarding nutrient type, timing, and quantity. Hardly one per cent of farmers soil test in Pakistan, contrary to India, where soil testing is conducted regularly under the Soil Health Card Scheme.

Likewise, irrigation, water-use efficiency, and crop water productivity — quantity produced per unit of water — are significantly lower in Pakistan compared to other countries, mainly due to low yields, flood-irrigation practices, and limited adoption of land laser levelling. Farmers often lack the knowledge, skills, and necessary gadgets to assess crop irrigation needs precisely. Moreover, conveyance losses in farmer-managed watercourses are high due to poor de-silting and inadequate weed removal.

Similarly, most farmers still rely heavily on indiscriminate pesticide use rather than adopting integrated pest management practices. They lack knowledge of economic threshold levels, proper spray machine pressure, nozzle types, and droplet sizes, often resulting in ineffective pest and disease control that drives up production costs and crop losses.

Another dimension of high production costs is the massive crop losses during the production, harvest, and post-harvest stages. Lodging — particularly in wheat and rice — is high, severely affecting yields. It highlights the need for dwarf (short stature) varieties amidst the growing threat of climate change. Additionally, most of our crop varieties are medium-to-long-duration, which raises production costs and enhances vulnerability to climate-related risks.

Moreover, scrap-like combine harvesters from the 1980s and 1990s are still widely used for wheat and rice (paddy) harvesting, causing significant crop losses — reaching up to 20pc in some cases. Poor calibration and improper machine settings are other contributing factors.

Despite challenges, reduction in production costs is possible through strategic interventions aimed at improving the efficiency of agricultural inputs

So, there is a long list of inefficiencies on the part of farmers, and the real challenge is addressing these to reduce production costs and increase yields.

First, there is a requirement to enhance the supply and adoption of imported or locally developed short-duration, climate-resilient, high-yielding, and short-stature crop varieties through appropriate policy measures backed by institutional and financial support.

Second, agricultural extension services (farmers’ advisory services) primarily provided by provincial agriculture departments through thousands of field assistants and agriculture officers have bitterly failed to deliver impactful results, as evidenced by their poor geographic coverage, effectiveness, efficiency, and impact. Therefore, there is a dire need to revamp these services, which are currently hampered by fundamental flaws in their concept, design, and implementation.

Third, the cost of production is increasing due to shrinking farm sizes. Smallholders are unable to invest in tractors and other farm machinery due to large capital investments and the risk of their underutilisation. Resultantly, rental services have expanded in recent years but are increasingly becoming unaffordable for smallholders.

To promote affordable mechanisation in today’s evolving rural landscape, cooperatives — preferably ones managed by professionals and operating on commercial principles rather than relying on social capital — are needed.

Fourth, regenerative agriculture is another approach that warrants attention. It revolves around minimum tillage, crop diversification, crop rotation, water stewardship, relay and inter-cropping, and biodiversity preservation, all of which help reduce costs associated with land preparation, irrigation, fertilisers, and pesticides. Cultivation of perennial forages and ratooning crops that allow multiple production cycles without replanting should be promoted under it.

In conclusion, the challenge lies in driving structural reforms, promoting the right technologies, and fostering attitudinal changes. Without these, Pakistan’s agricultural produce risks losing export competitiveness and affordability in local markets due to higher production costs.

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, November 11th, 2024