Editorial

Surging cost of production

Surging production costs can hinder the competitiveness of these products in the international market

June 12, 2023

The relentless surge in production costs has reached alarming levels, skyrocketing by 100% to 150% over the past 18 months, causing distressing repercussions across the country. The agricultural sector, being highly cost-sensitive, is bearing the brunt of this particularly during what is supposed to be the covering period following the 2022 floods.

The agricultural sector plays a crucial role in ensuring food security for the nation. Increase in production costs may lead to decreased agricultural output and an overall decline in the availability of essential food commodities. This situation can potentially affect the affordability and accessibility of nutritious food for the general population, exacerbating issues of hunger and malnutrition. The impacts of this will have a spillover effect on other sectors and the overall economic landscape of the country. Increased expenses for farmers may result in higher food prices, leading to inflationary pressures. This in turn will reduce consumer’s purchasing power, impacting overall consumer spending and economic growth — all while putting lower income households in a precarious situation. This decline can also have a ripple effect on other related industries, further contributing to economic slowdown. Let us also not forget that agriculture is a vital sector for Pakistan’s exports. Surging production costs can hinder the competitiveness of these products in the international market, affecting export earnings and the country’s trade balance.

Several measures have been announced in the federal budget — like raising the limit of agri loans from Rs1,800 billion to Rs2,250 billion, tax exemptions for import of seed and combine harvesters, five-year tax holiday for agro-based industrial units with certain turnover, etc — to tackle the new-found challenges. There is need for the government to ensure that these measures are implemented so as to raise agricultural production and mitigate the effects of surging production costs in the country.

Published in The Express Tribune, June 12^th, 2023.

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COMMENTS (1)

Azeem Hakro | 1 year ago | Reply Sir our farmers do not consider agriculture as their main profession very few engage in it as their primary occupation. They often view it as a side business. In Sindh the children of even middle class landowners are not interested in farming they prefer government jobs instead. If you review the areas dedicated to wheat cotton rice and sugarcane cultivation in agriculture over the past decade you will notice that neither the cultivated area nor the yield and production have increased significantly. They have remained stagnant for the past ten years. On the other hand the population is growing rapidly. With the increasing population there is a high likelihood of food shortages in the future. Moreover the stagnant growth in agriculture can be attributed to various factors such as limited access to modern farming techniques high input costs fluctuating market prices and personal interest to adopt agriculture as profession. To address these challenges comprehensive agricultural reforms are needed including improved access to modern farming practices affordable inputs and financial support for farmers.

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