Boosting farm competitiveness

2026-03-16 - 05:13

Pakistan’s agriculture sector is increasingly operating on a knife’s edge. With diminishing resilience and declining cost competitiveness, even a single shock — be it adverse weather, a spike in input prices, or a decline in crop prices — can easily turn farming into a loss-making venture for growers. For the past four years, our farmers’ woes and challenges have remained unending, with new problems emerging at frequent intervals. A decline in global crop prices, rising agricultural input costs in Pakistan — despite a downward trend in international prices — the growing impact of climate change, and the withdrawal of support prices and government subsidies are key factors that have severely undermined the viability of farming and eroded the cost competitiveness of several agricultural commodities in export markets. The latest blow came with the Rs55 per litre increase in diesel prices, announced on the night of March 6. Diesel is used not only in tractors, but also in irrigation pumps, and in the transport system that moves crops from farms to markets. Notably, high energy prices not only raise fuel costs but also push up the prices of several other agricultural inputs as well, including fertilisers. All of this will drive up production costs. Given this situation, the long-term sustainability of Pakistan’s agriculture sector is increasingly in question, especially in a world where global petroleum prices are expected to remain volatile and periodically high, having crossed the $100 per barrel mark several times in the past. In view of the evolving landscape of the agriculture sector, Pakistan is in dire need of the right technologies to enhance its agricultural resilience Amid these pressures, to ensure the survival of farming, it is crucial to explore solutions that lower production costs, particularly tractor operations, which are highly exposed to fluctuations in diesel prices and account for a significant portion of the overall cost structure of crops. It is worth noting that diesel-powered tractors form the backbone of farming in Pakistan, which carry out multiple operations including land preparation, fertiliser and pesticide application, water pumping, crop harvesting and threshing, and transporting produce to grain markets or storage facilities. Globally, a transition is underway. Much like electric cars, buses and motorcycles, electric tractors are emerging as a viable alternative. Although electric tractors currently cost 50–100 per cent more upfront than diesel tractors, they promise significantly lower operating costs while also reducing greenhouse gas emissions and noise pollution — benefits that align with the objectives of Sustainable Development Goal 13 (Climate Action). Pakistan, however, appears to be looking the other way. The New Energy Vehicles Policy 2025–2030 appears heavily tilted toward urban mobility. While the policy incentivises two and three wheelers, passenger cars, light commercial vehicles, and buses and trucks, it completely overlooks tractors and provides no roadmap or any incentives for electrifying tractors — despite the fact that agriculture remains one of the country’s largest consumers of diesel with 714,447 tractors in operation (as of FY25), a far higher number than 169,700 buses and 321,900 trucks. Some argue that electric tractors are commercially manufactured globally in the small tractor segment (under 50 HP) mostly, and are therefore primarily used as compact utility tractors in orchards, greenhouses, poly-houses, and small farms. Unlike the US, Europe, Brazil, Russia, and Ukraine — where larger tractors in the 80–150 HP range dominate due to larger farm sizes — Pakistan’s agriculture relies largely on smaller tractors of around 50 HP, which also represent the largest share of tractor sales. This makes electric tractors far more relevant to local farming conditions than many assume. Interestingly, widespread adoption of solarised tubewells across Pakistan is another development that quietly strengthens the case for electric tractors. Over the past few years, these systems have helped farmers reduce their dependence on expensive grid electricity and diesel-powered pumps. These could create a readily available, low-cost source of power to charge electric tractors — a small but significant shift that could reshape the economics of farming. Yet, despite this clear advantage, the higher upfront cost compared with diesel tractors remains the most significant barrier to adoption. It is an acknowledged fact that new technologies almost always come at higher prices, which is precisely why governments and development agencies around the world incentivise their adoption — particularly those that boost productivity, enhance cost competitiveness, and promote a cleaner environment. In Pakistan, this approach has been evident in the promotion of other electric vehicles, where a reduction in duties and taxes has successfully encouraged uptake. In Punjab, the government is offering a subsidy of up to Rs1 million on 10,000 diesel-powered tractors that are already widespread and, in many districts, even in excess. A wiser approach would be to redirect these funds toward promoting electric tractors. Such an initiative could modernise farming and save billions in foreign exchange currently spent on diesel imports. In view of the evolving landscape of the agriculture sector, Pakistan is in dire need of the right technologies to enhance its resilience against input price shocks and sustain the viability of farming. However, it is the government’s responsibility to identify, introduce, and promote such solutions; otherwise, the country risks undermining both its food security and agricultural exports. 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, March 16th, 2026