Addressing Land Inequality for Rural Prosperity in Pakistan

Income inequality continues to plague rural economies, particularly in developing regions where agriculture is the primary livelihood. In countries like Pakistan, India, and across Sub-Saharan Africa, deeply entrenched disparities in land ownership have led to skewed access to agricultural resources and opportunities. While large landowners often benefit from economies of scale, mechanization, and market linkages, smallholders, who constitute the majority, struggle with fragmented holdings, limited credit access, and inadequate extension services. Recent data reveal that in South Asia, the top 20% of landholders control over 70% of cultivable land (FAO, 2023), while in Sub-Saharan Africa, over 60% of farmers own less than one hectare, leading to significantly lower productivity per unit of land.

Moreover, small farm size correlates strongly with limited investment in productivity-enhancing technologies, further entrenching income disparities. In Pakistan, farms below two hectares earn 45% less per acre than large-scale farms due to lower input usage and poor market access (PARC, 2024). The resulting rural income inequality not only reduces aggregate agricultural output but also hampers national poverty reduction efforts.

To address these challenges, policies must focus on land reform, inclusive access to credit, and collective farming models that enable resource sharing among smallholders. Investments in rural infrastructure, market cooperatives, and digital extension platforms can also bridge productivity gaps. A more equitable land distribution system, paired with targeted support for small farms, can stimulate inclusive rural growth and reduce inter-farm income inequality. This paper delves into the empirical relationship between farm size and income distribution, offering policy recommendations aimed at restructuring rural economies for fairness, efficiency, and sustainability.

How Land Inequality Undermines Agricultural Productivity and Rural Prosperity

Land inequality remains one of the most entrenched structural barriers to agricultural productivity and poverty reduction in Pakistan. Despite agriculture employing over a third of the national workforce, the benefits of land ownership are highly skewed. According to the Pakistan Bureau of Statistics (2023), farms under 5 acres account for 65% of all landholdings but contribute just 30% of total agricultural output. In stark contrast, the top 2% of landowners control nearly half of all arable land, enabling them to dominate production and income flows.

This disparity is vividly reflected in productivity differentials. Large farms, defined as those exceeding 10 acres, average wheat yields of 3.5 tons per hectare, while small farms achieve only 2.1 tons. Cotton productivity follows a similar pattern, with large farms reaching 1,200 kg/ha versus just 700 kg/ha for smallholders (FAO, 2023). These gaps are not a reflection of smallholder inefficiency, but rather a symptom of systemic disadvantages. Access to reliable irrigation is limited to only 40% of small farms compared to 85% for larger ones (World Bank, 2023). Mechanization is similarly skewed, only 5% of small farmers own tractors, while 75% of large farms are mechanized (IFPRI, 2022). Access to certified seed and quality inputs is also disproportionately low among smallholders.

These structural constraints translate into stark income inequality. The average annual income for small farmers under 5 acres is just PKR 300,000, compared to PKR 1.5 million for farmers with more than 10 acres (World Bank, 2023). Small farmers are often forced into distress sales, offloading their produce immediately post-harvest at deflated prices, while large farmers store and sell at market peaks. With only 15% of smallholders connected to urban markets, they are often trapped in exploitative value chains and dependent on informal lenders charging exorbitant interest rates.

The broader implications are grim. Pakistan’s land Gini coefficient of 0.68 places it among the most unequal globally. In highly unequal regions like southern Punjab and interior Sindh, rural poverty rates exceed 50%. Landless laborers earn 40% less than tenant farmers, perpetuating a cycle of deprivation. Addressing land inequality through redistributive reforms, inclusive credit systems, and infrastructure investment is essential to unlocking agricultural productivity and rural prosperity.

Global Lessons and Strategic Pathways for Reducing Rural Inequality

Several countries have demonstrated that bold policy reforms and targeted interventions can significantly reduce rural inequality and enhance smallholder productivity. China’s land reforms in the 1980s are a seminal example. The de-collectivization of agriculture and introduction of land leasing rights empowered small farmers and boosted rural incomes by 200% within a decade (FAO, 2022). India’s PM-KISAN scheme, which provides direct cash transfers of ₹6,000 per year to smallholders, has led to a 12% increase in productivity and helped cushion input costs (NITI Aayog, 2023). In Vietnam, the rise of farmer cooperatives has transformed the post-harvest landscape. Through collective bargaining and shared logistics, these cooperatives have reduced post-harvest losses from 30% to just 10%, while enhancing farmer bargaining power in markets (World Bank, 2022).

Drawing from these success stories, Pakistan can adopt a comprehensive policy framework to address entrenched rural inequalities. Land reforms must be at the forefront, redistributing idle state-owned land to landless farmers and legally securing tenancy rights. Gender equity in land ownership should also be prioritized; currently, women own only 5% of farmland (PBS, 2023).

Financial inclusion is critical. Scaling up digital credit programs like the Kisan Card, which offers subsidized loans, and expanding mobile-based fertilizers and seed subsidies can ease smallholder liquidity constraints. Infrastructure investment is equally vital. Establishing rural cold storage networks and improving road connectivity will reduce Pakistan’s post-harvest losses, currently at 35%, and enhance market access for remote farmers (FAO, 2023).

Climate-resilient agriculture must complement these efforts. Encouraging adoption of drought-resistant seeds and drip irrigation through subsidies and training will build long-term resilience. With adoption rates below 10% and 5%, respectively (IFPRI, 2023; World Bank, 2023), these technologies remain vastly underutilized. A holistic approach, combining land reform, finance, infrastructure, and innovation, is essential to reversing inequality and driving inclusive agricultural growth in Pakistan.

Conclusion

The evidence is clear: land inequality remains one of the most significant barriers to equitable agricultural development and rural prosperity in Pakistan. With most farmers operating on less than five acres, limited access to irrigation, mechanization, credit, and markets perpetuates a cycle of low productivity and poverty. As large landholders continue to capture the bulk of output and income, the rural economy becomes increasingly polarized, undermining national efforts to reduce poverty and improve food security.

However, global examples from China, India, and Vietnam show that meaningful reforms, ranging from land redistribution and cash support to cooperative models and market infrastructure, can uplift smallholder farmers and reduce rural disparities. For Pakistan, a multi-pronged strategy is essential. Land reforms must prioritize equity and tenure security, while digital credit systems and targeted subsidies can empower marginalized farmers. Infrastructure investments and expanded market access are equally critical to unlock productivity and value addition.

Ultimately, addressing rural income inequality is not just a matter of justice but of economic necessity. A more inclusive and productive agricultural sector will generate broader-based growth, support national food security, and enable millions of rural households to break free from poverty. The path to rural resilience lies in equity, innovation, and inclusive governance.

References: FAO; IFPRI; Pakistan Bureau of Statistics; State Bank of Pakistan; UNDP; World Bank; PARC; NITI Aayog

Please note that the views expressed in this article are of the author and do not necessarily reflect the views or policies of any organization.

The writer is affiliated with the Department of Agricultural Economics, Faculty of Social Sciences, Sindh Agriculture University Tandojam Sindh, Pakistan and can be reached at sarmadeconomist65@gmail.com

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