The US-Iran war has had a severe negative impact on Pakistan’s agricultural sector, causing a rise in input costs, shortages of fuel and fertilisers, trade disruptions, and aggravated inflation. However, the country’s heavy dependence on agriculture has turned the apparent rural concern into a major national problem. The farm sector supports livelihoods of over 40 per cent of the population and contributes over 20 per cent to the GDP
It will not be an exaggeration to say that Pakistan’s farmers are facing an existential threat after the suspension of the Strait of Hormuz hit the agriculture sector very hard, which was already reeling under the pressure from climate shocks, water scarcity, and economic fragility. The disruption of global supply chains has sent the prices of fuel, pesticides, fertilisers, and hybrid seeds spiralling.
The Islamabad government has been widely criticised for failing to shield farmers from the ill-effects of the US-Iran war, as the angry farmers have complained about late, inadequate and ineffective response, resulting in weaker support amid skyrocketing input costs and plummeting yields. This has a direct relation with the food availability in the country. While it is devastating for farmers, it is painful for the urban population as well.
Farmers are getting frustrated as farming has become unprofitable due to higher expenses on labour, transport, and crop inputs. Rural anger in Pakistan has intensified as farmers believe the government's response was too late and focused more on protecting urban political interests. The deeper fear among the rural communities may not be about farm losses or lower crop production but the belief that they were abandoned by their own people sitting in Islamabad.
The disruption caused by the Middle East conflict affected the farm sector of many countries, but Pakistan’s was the worst-impacted. The Islamabad government was neither ready with precautionary plans to handle such an emergency nor did it act swiftly when the US-Iran war caused havoc.
Pakistan was too vulnerable to the global disruption shocks, so it had to hike fuel prices significantly soon after the war broke out. Diesel prices went up by 87 per cent to PKR 520 from PKR 280 within a month. It damaged the agriculture sector as irrigation, transport, and mechanised farming are heavily diesel-dependent.
It displayed the government’s inadequate commitment to protecting farmers from external shocks, and failed miserably to respond with sufficient conviction, relief measures, or long-term planning. Policymakers left farmers to absorb most of the burden, ignoring the devastating impact the sharp rise in fuel prices could have on poor farmers.
The prices of urea and diammonium phosphate (DAP) also increased significantly, causing a reduction in usage by almost a quarter, as poor farmers could not afford these expensive fertilisers. Despite the country producing these fertilisers locally, the government failed to ensure prices remained under limits and supply was uninterrupted. The assurances and promises faded into thin air as no concrete measures were taken.
Pakistan’s structural weaknesses amplified the pain of farmers and other stakeholders. The heavy reliance on imported energy and input materials made Pakistan highly susceptible to exogenous shocks. The successive governments’ failure to anticipate emerging risks from global energy shocks and implement required preventive measures has cost farmers dearly. It did not develop contingency plans or provide safeguards for the vulnerable sectors, especially the farm sector.
Several expert agencies, including Pakistan’s central bank, have warned about the declining food output and farm remuneration due to declining use of inputs and climate stress. The delayed and slack decision-making, inconsistent policies, and poor institutional coordination forced farmers and rural communities to bear the brunt of the Gulf crisis. Islamabad could not afford to be careless in such volatile conditions that can directly hurt the sector that feeds its population.
There has been a direct impact of distress in agriculture and lower crop yield on the country’s economy and food security. The common households in Pakistan are already feeling the heat of high food inflation. The short-term subsidies announced by the government under pressure cannot really offset the severe negative impact of high fuel prices and expensive fertilisers on the farm sector.
In short, the impact of rising fuel and fertiliser prices on the agriculture sector did not remain limited to farmers. There are higher chances that Pakistan’s fragile economy will be impacted further, as the food shortage and inflation would lead people to spend more money on survival and less on other goods and services, such as education, healthcare, and consumer goods, among others. This is set to weaken broader economic activity.
