With the evolving landscape of Pakistan’s agriculture sector — characterised by shrinking farm sizes, declining government subsidies, and escalating agricultural input costs — the foremost challenge facing farmers today is the economic viability of farming.
At the macroeconomic level, the country needs to enhance its agricultural exports to reduce the widening trade deficit and to ease pressure on foreign exchange reserves. Yet, the competitiveness of these exports is gradually eroding, primarily due to high production costs.
As a result, Pakistan’s agricultural exports are struggling in the competitive global arena and during FY26, several commodities experienced a downward trend. A recent example is rice — the country’s largest agricultural export. The government had to provide a subsidy, worth billions of rupees, to enable exporters to compete internationally, particularly with India. Despite this support, rice exports declined considerably in FY26.
As far as Pakistan’s agricultural competitiveness is concerned, it will remain constrained unless the core issues of rising production costs and low farm productivity are addressed. The continued fragmentation of landholdings is further diminishing farmers’ operational efficiency, leading to higher transaction costs in the procurement of inputs and the sale of produce.
By acting as value chain integrators, private enterprises can enhance coordination, improve efficiency, and facilitate smallholder integration into local and export supply networks
Unfortunately, the government is not undertaking the strategic interventions that can address structural constraints, including poor seed quality, the persistence of obsolete agricultural practices, and expensive agricultural inputs, which restrict farmers from applying recommended inputs in the required quantities.
Instead, government’s responses have largely been short-term and fragmented, focusing on subsidised loan schemes and the dishing out of tractors, tubewells, and agricultural implements to a few thousand farmers — less than one per cent of the total farming population. Civil works such as constructing model agricultural malls, new research centres, and other infrastructure are also notable government interventions, but these are not a panacea for these deep-rooted issues.
Such a declining and weakening government role in the agriculture sector has created a significant institutional vacuum in recent years. While the government remains irreplaceable in providing policy direction and regulatory oversight, farmers’ cooperatives could have served as an effective mechanism for collective action and the realisation of economies of scale. Regrettably, traditional cooperative models have largely failed in Pakistan for multiple reasons.
In this context, and in line with experiences from many other countries, the private sector — both national and multinational — can assume a more constructive and transformative role across all segments of agricultural and livestock value chains. By acting as lead firms or value chain integrators, private enterprises can enhance coordination, improve efficiency, and facilitate smallholder integration into local and export supply networks.
In fact, Pakistan needs innovative private sector–led business models, based on a win–win approach, that can effectively address the challenges faced by farmers, particularly those arising from their small-scale operations.
A compelling example of how out-of-the-box business models can transform rural livelihoods while generating substantial commercial returns is Suguna Foods, India’s largest poultry company and the 10th largest in the world.
Suguna’s success is built on a contract farming model in which the company provides day-old chicks, feed, medicines, and technical expertise, while farmers contribute housing and labour. The company also manages marketing — traditionally the weakest link for farmers — and guarantees a purchase price, thereby significantly reducing farmers’ market risk. Through this approach, Suguna has developed a fully integrated poultry supply chain that is serving both domestic and international markets with great success.
Interestingly, Suguna Foods started as a small trading and contract-based operation without owning feed mills or hatcheries. Over time, the company expanded its infrastructure and capabilities and transformed into a vertically integrated value chain leader. To date, Suguna has partnered with more than 40,000 farmers across 15,000 villages in 18 Indian states.
Beyond agricultural transformation, such business models also offer a strategic solution to rural unemployment by fostering youth entrepreneurship with minimal investment and low business risk.
This model offers significant potential for replication across other agricultural and livestock value chains in Pakistan. A similar, though limited, approach has been adopted by PepsiCo in Pakistan for its Lay’s potato chips to secure consistent raw material supplies. However, this engagement was limited to medium and large farmers only.
Against this background, the key question is whether Pakistan’s private sector is prepared to develop inclusive business models. The answer, unfortunately, is no. Instead, it largely gravitates towards speculative practices and rent-seeking, as witnessed in the wheat sector.
During the last harvest season, the private sector merely rented storage facilities to stockpile wheat purchased at Rs2,000–2,300 per maund (40 kg) and sold it nearly 10 months later at prices exceeding Rs4,000. Although these activities generated extraordinary profits, they represent short-term, opportunistic investments with little or no long-term impact on agricultural development or the welfare of small and medium-sized farmers.
For businesses based on inclusive business models to take root and expand, the country requires an enabling business environment backed by stable, long-term policies and a predictable monetary and fiscal regime. Without these fundamentals, private investment will continue to chase quick gains, which leaves farmers marginalised and further deepens rural poverty across the country.
Khalid Wattoo is a development professional and a farmer, and Dr Waqar Ahmad is a former Associate Professor at the University of Agriculture, Faisalabad.
Published in Dawn, The Business and Finance Weekly, April 20th, 2026