Agricultural Protectionism in Pakistan: A Critical Analysis

Agriculture remains the backbone of Pakistan’s rural economy, anchoring livelihoods, food security, and social stability across vast segments of the population. As reported by the Pakistan Bureau of Statistics, the sector employs approximately 37.4 percent of the national workforce and contributes nearly 22.9 percent to gross domestic product (Pakistan Economic Survey 2023–24). Beyond these macroeconomic indicators, agriculture shapes rural culture, household welfare, and intergenerational employment patterns. For smallholders, tenants, and landless laborers alike, farm performance directly determines income security, access to education and health services, and resilience to economic shocks. Consequently, policy interventions in agriculture carry consequences that extend well beyond production statistics and trade balances.

Among the most enduring and contested interventions is agricultural protectionism. Through instruments such as import tariffs, export restrictions, price supports, subsidies on inputs, and state procurement programs, successive governments have sought to shield domestic producers from volatile international markets. These measures are often justified on the grounds of food self-sufficiency, income stabilization for farmers, and protection of nascent agro-industries. In a country frequently exposed to global commodity price fluctuations, climate stress, and foreign exchange constraints, protectionist policies have been perceived as tools of economic sovereignty and rural support.

However, the outcomes of such policies are complex and often uneven. While certain crop producers may benefit from guaranteed prices or restricted imports, protectionism can distort market signals, discourage diversification, and impose hidden costs on consumers and taxpayers. Moreover, prolonged insulation from competition may reduce incentives for productivity growth, technological adoption, and sustainable resource use. This paper critically examines Pakistan’s agricultural protectionist framework in its contemporary context, evaluating whether these policies have genuinely promoted inclusive and sustainable rural development or whether they have unintentionally limited the long-term potential of Pakistan’s agrarian economy.

Evolving Policy Context: From Protection to Reform Pressure

Pakistan’s agricultural policy has evolved through cycles of state control, partial liberalization, and renewed intervention, reflecting shifting political priorities and external economic pressures. In the decades following independence, agriculture was heavily regulated through administered prices, public procurement, input subsidies, and trade controls. These protectionist measures aimed to ensure food security, stabilize farm incomes, and support industrialization by providing cheap raw materials. However, by the late 1970s, growing fiscal imbalances, inefficiencies in public enterprises, and stagnant productivity prompted calls for reform.

The 1980s and 1990s marked a turning point, as Pakistan embarked on structural adjustment programs under the guidance of international financial institutions. These reforms promoted market liberalization, reduction of subsidies, deregulation of agricultural trade, and a greater role for private actors. While liberalization improved efficiency in some segments, its implementation was uneven and often reversed due to political resistance, food price sensitivities, and concerns over farmer welfare. As a result, Pakistan entered the 2000s with a hybrid policy regime, neither fully liberalized nor coherently protected.

Today, this duality has become more pronounced. A 2024 International Monetary Fund (IMF) country report identifies weak governance, policy inconsistency, and persistent state intervention as key factors distorting market signals and undermining productivity growth. Price controls, ad hoc export bans, and commodity-specific subsidies continue to create uncertainty for farmers and investors alike. At the same time, the World Bank’s Pakistan Development Update (April 2024) underscores declining export competitiveness as a structural driver of recurring balance-of-payments crises. High production costs, limited value addition, and inward-looking policies have constrained Pakistan’s ability to integrate into global agricultural markets.

Within this context, rural protectionism faces increasing scrutiny. While intended to safeguard farmers, many protective measures now appear misaligned with the realities of climate stress, resource scarcity, and global competition. The tension between short-term political stabilization and long-term structural reform defines Pakistan’s current policy landscape, setting clear limits on the effectiveness of traditional protectionist approaches in delivering sustainable rural development.

Contemporary Manifestations of Protectionism in Pakistan’s Agriculture

Agricultural protectionism in Pakistan continues to operate through a combination of trade barriers, fiscal subsidies, administered prices, and direct market interventions. Although these instruments are often justified as mechanisms to stabilize farmer incomes and ensure food security, their contemporary application reveals significant economic and institutional challenges.

Historically, high import tariffs on staple commodities such as wheat and sugar, at times reaching 60 percent, shielded domestic producers from external competition. While this insulation offered short-term relief, it also raised domestic prices and weakened incentives for efficiency and innovation. Recognizing these limitations, the government introduced the National Tariff Policy 2023–28, signaling a gradual shift from blanket protectionism toward a development-oriented tariff structure. As outlined in the Strategic Trade Policy Framework 2023–28, the new approach aims to rationalize tariffs, reduce anti-export bias, and enhance competitiveness across agriculture-linked industries. However, the transition remains incomplete, and legacy tariff structures continue to influence key food markets.

Subsidies represent another dominant pillar of protectionism but impose a heavy fiscal burden. Input subsidies on fertilizers, electricity, irrigation, and seeds are politically sensitive and difficult to withdraw. The Pakistan Economic Survey 2023–24 reports that power sector subsidies alone exceeded PKR 976 billion in the previous fiscal year. For the current year, total subsidies are budgeted at PKR 1.077 trillion, diverting scarce public resources away from infrastructure, research, and social services. While subsidies lower production costs, they often disproportionately benefit larger farmers and encourage inefficient resource use.

Minimum Support Prices (MSPs) and public procurement systems further shape market outcomes. Although MSPs aim to guarantee farmer incomes, evidence from PIDE (2023) indicates that procurement inefficiencies allow larger landowners and intermediaries to capture most benefits, while smallholders remain exposed. Moreover, MSPs discourage crop diversification and reinforce monocropping patterns.

Finally, ad hoc import bans such as restrictions on vegetable imports in 2023 illustrate reactive protectionism. As SDPI research shows, such interventions disrupt supply chains, increase price volatility, and undermine market confidence, often harming both consumers and agro-processors.

Multifaceted Impacts of Protectionism on Rural Pakistan

The cumulative effects of agricultural protectionism in Pakistan extend well beyond price stabilization and income support, shaping rural employment structures, food affordability, environmental sustainability, and long-term competitiveness. While the sector employs a large share of the population, the quality and inclusiveness of these livelihoods remain deeply compromised. Data from the Labour Force Survey 2020–21 show that most agricultural workers are engaged in vulnerable or informal employment, characterized by low wages, seasonal instability, and limited social protection. Protectionist instruments such as subsidies and Minimum Support Prices (MSPs) have not translated into broad-based income gains; instead, they are disproportionately captured by large landowners with better access to procurement channels and political influence. The IMF (2024) explicitly identifies subsidies and regulatory privileges as key contributors to widening income and wealth inequalities, reinforcing structural disparities within rural Pakistan.

Food security outcomes further reveal the contradictions of protectionism. Although MSPs are designed to incentivize staple crop production, Pakistan’s continued reliance on wheat imports, 3.5 million metric tons in 2023 according to the USDA Foreign Agricultural Service, demonstrates persistent supply shortfalls. At the consumer level, tariffs, import bans, and market interventions contribute to price distortions and volatility. Rural food inflation averaged 30.7 percent in FY 2024 (Pakistan Bureau of Statistics), eroding purchasing power among low-income households and undermining nutritional security, particularly for women and children.

Environmental consequences are equally severe. Protectionist incentives favor water-intensive monocropping, especially sugarcane and rice. The Pakistan Council of Research in Water Resources (PCRWR, 2023) warns that the country is approaching absolute water scarcity, a risk exacerbated by policy-driven crop choices. Sugarcane alone consumes nearly 40 percent of irrigation water while occupying only 4 percent of cropped area (WWF Pakistan), representing a profound misallocation of natural resources.

Finally, protectionism suppresses competitiveness and innovation. By insulating producers from global price signals, it weakens incentives for efficiency, quality upgrading, and diversification. The World Bank (2024) notes stagnating agricultural productivity and Pakistan’s marginal presence in global agricultural exports. The policy focus on a narrow set of staples has come at the cost of developing high-value, export-oriented subsectors, limiting rural growth and resilience.

Toward a Smarter and More Inclusive Agricultural Policy Framework

The accumulated evidence increasingly suggests that Pakistan’s traditional reliance on broad-based agricultural protectionism has reached a point of diminishing returns. While such measures once played a stabilizing role, they now impose high fiscal, environmental, and efficiency costs without delivering commensurate gains in rural welfare. A strategic policy reorientation is therefore essential, one that replaces distortionary protection with targeted, productivity-enhancing, and equity-focused interventions.

A central pillar of this transition is the shift from blanket subsidies toward smart, targeted support. Instead of generalized subsidies on fertilizer, electricity, and water which disproportionately benefit larger farmers, public resources should be redirected toward climate-smart technologies such as drip and sprinkler irrigation, laser land leveling, and drought- and heat-tolerant seed varieties. Coupling these investments with direct income support for smallholders, as outlined in the Planning Commission’s “Pakistan 2025” framework, would enhance resilience while preserving market signals.

Equally important is an export-led diversification strategy. Continued protection of a narrow set of staples has constrained Pakistan’s agricultural growth potential. The Trade Development Authority of Pakistan (TDAP) identifies horticulture, livestock, and value-added agro-processing as sectors with strong export prospects. Realizing this potential requires addressing structural bottlenecks, particularly post-harvest losses, which exceed 35 percent for fruits and vegetables according to FAO estimates. Investment in cold-chain infrastructure, grading systems, and applied research is critical to improving competitiveness and farmer incomes.

Social protection must also be decoupled from commodity pricing. Expanding and digitizing the Benazir Income Support Program (BISP) offers a more efficient and equitable safety net than price supports that distort markets. Evidence from the BISP Annual Report 2023 shows meaningful poverty reduction at relatively low fiscal and market costs.

Finally, governance reform is non-negotiable. As emphasized by the IMF, technical policy adjustments will fail without improvements in transparency, accountability, and monitoring of subsidy and procurement systems. Only by aligning incentives, strengthening institutions, and prioritizing inclusive growth can Pakistan’s agricultural policy support sustainable rural development.

Conclusion

This analysis demonstrates that while agricultural protectionism has long been a central feature of Pakistan’s rural policy framework, its contemporary effectiveness is increasingly limited. Historically, protective instruments such as tariffs, subsidies, Minimum Support Prices, and trade controls were introduced to stabilize farmer incomes and safeguard food security in a volatile economic environment. However, in today’s context of fiscal stress, climate vulnerability, water scarcity, and global competition, these measures have produced uneven and often counterproductive outcomes. Rather than fostering inclusive rural development, protectionism has tended to reinforce structural inequalities, distort market incentives, and constrain productivity growth.

The evidence presented shows that the benefits of protectionist policies are disproportionately captured by larger landholders and intermediaries, while smallholders and agricultural laborers remain trapped in vulnerable livelihoods. At the same time, consumers face high food inflation, and environmental pressures intensify due to policy-induced monocropping and inefficient resource use. Pakistan’s stagnating agricultural exports and limited diversification further underscore the costs of inward-looking policies.

Moving forward, the challenge is not the complete withdrawal of state involvement, but its strategic redesign. A shift toward targeted support, export-led diversification, effective social protection, and stronger governance offers a more sustainable pathway for rural development. By aligning agricultural policy with efficiency, equity, and environmental stewardship, Pakistan can transform its rural economy from one dependent on protection to one driven by resilience, competitiveness, and inclusive growth.

References: IMF; World Bank; Government of Pakistan; Mordor Intelligence; BISP; Modaes; PCRWR; WWF Pakistan.

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 Institute of Agricultural & Resource Economics, University of Agriculture, Faisalabad Pakistan and can be reached at gondalashir6@gmail.com

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