BUDGET 2026-27: Farmers look to budget with growing fears, fading hopes

PAKISTAN’S farmers are awaiting the next budget with growing fears and fading hopes. Their concerns this year are fundamental, as the government — amid pressure for reform — continues experimenting with subsidies, procurement prices, input-cost liberalisation and agricultural trade.

The cost of this trial-and-error has become an existential problem for farmers and the agricultural sector.

The agriculture sector’s fading hopes are a direct result of the government’s inability — or unwillingness — to adopt a long-term policy direction and muster the political will needed for its implementation.

Deregulation of agricultural inputs has led to a continuous rise in production costs, which the government hesitates to pass on to consumers because of political consequences.

Wheat policy reversals, deregulated input costs and controlled output prices are curtailing farm profitability

Consequently, farmers and agri-sector experts alike agree the government should make a clear decision this year, develop a consistent policy framework, and commit resources to it in the coming budget.

Iqrar Ahmad Khan, former vice chancellor of the University of Agriculture Faisalabad and author of the Punjab government’s last agricultural policy, supports the farmers’ demands.

“After all, this is going to be the third budget of this government; it must decide where it wants to take the sector. If it wants to regulate agricultural inputs and trade, it should do so clearly. If it plans to deregulate, it must do so unambiguously. But it must make the direction clear.

“If deregulation is the preferred path, as appears to be the case, then the government should stop interfering in the market on behalf of different stakeholders — whether farmers, consumers, traders or manufacturers — at different levels and times, and let the market find its own equilibrium.”

Citing policy somersaults on wheat — the national staple around which much of the agricultural economy revolves — farmers explain how an inconsistent mix of liberalised and controlled policies is proving ruinous for growers.

Responding to lenders’ demands, the federal and provincial governments withdrew from the wheat procurement process two years ago.

But after a crippling price crash last year, the Punjab government lured commercial wheat buyers into the market by promising to share their financial burden and ensure profitability. Within weeks, as the entire model began to collapse, the province reverted to old tactics: raiding farmers’ stocks, seizing wheat shipments on roads and using administrative power to build up the reserves of private buyers.

In the process, it incurred farmers’ wrath twice over — first by withdrawing from the wheat market and then by seizing their produce to rescue a failing liberalisation model. Such somersaults have become routine and now define the government’s handling of the entire agricultural sector.

Structural weaknesses

Beyond pricing and procurement issues, many believe the crisis in agriculture is also rooted in structural weaknesses that successive governments have failed to address.

Dr Asif Ali, vice chancellor of Nawaz Sharif Agriculture University, argues that since landholdings in Pakistan are already highly fragmented — and continue to be divided with each passing generation — the government needs to mitigate the effects through cluster farming and crop zoning.

These clusters could then be linked with providers of quality agricultural inputs, including seed, fertiliser and pesticides, which could also conduct training programmes for farmers. Such a model would help improve the marketing of agricultural produce as well.

He further points out that nearly 65pc of farmers own less than five hectares of land. For such small landholders, most forms of mechanisation are either financially unaffordable or commercially impractical. He suggests the government announce measures in the budget to establish farm machinery rental centres, enabling small farmers to access equipment without bearing the full cost of ownership.

A question of survival

While some experts focus on structural reforms, farmers’ representatives insist the most immediate issue remains economic survival.

Khalid Khokhar of the Pakistan Kissan Ittehad advocates making agriculture profitable on an urgent basis, arguing that it is no longer economically viable. He suggests the creation of a pricing commission to calculate the cost of production for each crop every year, add a 25pc profit margin and announce the price before the crop reaches the market.

“Either put a cap on the cost of inputs or remove the cap on the price of outputs,” he warns. “Otherwise, farmers may soon be pushed out of business and existence.”

Running dry

Water sector remains the most critical challenge facing agriculture. According to data from the Indus River System Authority, water shortages remained in double digits in six of the last 10 years, touching nearly 30pc in 2022-23. Not a single year during this period was free of a water deficit.

Naeem Hotiana, a farmer from central Punjab, points to a stark funding gap: the outgoing Wapda chairman demanded Rs400 billion annually to complete ongoing water projects but received only Rs35 billion — less than 10pc of the required amount.

“The irrigation system was originally designed for 65pc land utilisation, whereas the current cropping intensity in Punjab has already crossed 150pc. Now combine the realities of limited surface-water availability, shrinking groundwater reserves and barely one-tenth of the required investment being provided, and imagine the situation that is emerging. Doesn’t it scare one out of one’s senses?”

He warns the situation will worsen as environmental pressures mount. “Climate change, which is already testing the limits of existing water supplies, only deepens the anxiety.”

Published in Dawn, June 2nd, 2026

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