Pakistan’s FY27 budget is largely a run-of-the-mill exercise for the agriculture sector. It is purely based on a simplistic incremental approach. It lacks innovative or even notable initiatives that could serve as catalysts to boost crop production, which grew by only 1.44pc in FY26 after negative growth in FY25. Such weak performance remains well below Pakistan’s population growth rate of 2.55pc. The budget appears to overlook the widening gap between crop production and the country’s growing food requirements.

Due to the war in Iran, FY27 is likely to prove challenging for the agricultural sector worldwide, including in developed economies. The war has caused a steep rise in oil prices, significantly increasing the cost of crop production and logistics. It has also disrupted fertiliser manufacturing and supply chains in the Middle East. Moreover, the rise in oil and gas prices has led to higher fertiliser prices.

Farmers in several countries, particularly those dependent on imported fertiliser, are likely to either skip the next crop or reduce fertiliser application to a minimum level. The natural outcome of these developments will be a decline in food production, ultimately triggering food inflation worldwide. Pakistan will not be an exception. For a country with a poverty rate of over 44pc, such a situation would be particularly disastrous. In the current budget, the government appears to have failed to recognise this looming threat, with little on offer to help farmers increase crop production, except for subsidised Rs300bn in agricultural credit for smallholders.

Published in Dawn, The Business and Finance Weekly, June 15th, 2026