Challenges in Pakistan's Agricultural Exports

Agriculture is the backbone of Pakistan’s economy, contributing 19% to the national GDP and employing 38% of the total workforce, according to the Pakistan Bureau of Statistics (2024). The sector is not only a vital source of livelihood for millions, especially in rural areas, but also a critical pillar of the country’s exports. However, in recent years, Pakistan’s agricultural sector has come under mounting pressure from the ripple effects of global trade wars and rising protectionism. In 2023 alone, Pakistan’s agri-exports declined by 14%, falling to $4.8 billion, as per the State Bank of Pakistan (2024). This alarming contraction underscores the vulnerability of the sector to external shocks and shifting global trade dynamics.

Major export destinations are implementing increasingly stringent trade barriers. The European Union’s new carbon tax regulations are making it more expensive for Pakistani exporters to sell high-emission goods like rice and cotton. India has imposed high tariffs on basmati rice exports, further squeezing market access. Meanwhile, China’s strict phytosanitary standards have restricted shipments of citrus and mangoes due to compliance issues. These measures, though driven by national and environmental interests, have severe economic consequences for Pakistani farmers, who already face high input costs and infrastructure deficits.

To navigate this complex environment, Pakistan must adopt a multi-pronged approach. Investing in digital traceability systems can enhance transparency and compliance with international standards, making Pakistani goods more competitive. Promoting climate-smart certifications can open doors to premium global markets focused on sustainability. At the policy level, diversifying export destinations through regional trade alliances, such as with Central Asian and ASEAN countries, can help reduce overdependence on volatile markets. Without such adaptive strategies, Pakistan risks losing its agricultural competitiveness and further exacerbating rural poverty. The time to future-proof the sector is now.

The Global Tariff Landscape and Pakistan’s Agri-Exports

The global tariff landscape has increasingly turned hostile for Pakistan’s agricultural exports, with rising protectionism and environmental conditionalities creating significant hurdles in key markets. One of the most pressing challenges comes from the European Union, Pakistan’s second-largest trading partner. The EU’s introduction of the Carbon Border Adjustment Mechanism (CBAM), set to be fully implemented by 2026, imposes 20–35% additional tariffs on carbon-intensive imports. Given that Pakistan’s textile sector, comprising 60% of national exports, heavily relies on coal-powered processing units, it stands to lose as much as $500 million annually due to these levies, according to the Trade Development Authority of Pakistan (2024). Compounding this is the EU Deforestation Regulation (EUDR), which mandates that imports such as palm oil and soybeans must be sourced from deforestation-free supply chains. Unfortunately, the absence of digitized land records among Pakistan’s smallholder farmers poses a serious compliance issue, threatening their access to the European market altogether.

Meanwhile, across the border, India has strategically employed agri-trade policies that adversely affect Pakistani exports. In 2023, India levied a 20% export tax on its basmati rice, flooding global markets and driving down prices. As a result, Pakistan’s own basmati rice exports declined by 18%, causing a loss of $380 million, as reported by the Rice Exporters Association of Pakistan. Furthermore, India’s $1.3 billion annual subsidy to its cotton farmers continues to distort international prices, making it nearly impossible for Pakistani cotton producers to remain competitive. This unfair pricing advantage has already translated into a $200 million loss in potential trade for Pakistan (International Cotton Advisory Committee, 2023).

Ironically, even China, Pakistan’s closest strategic and economically, has imposed stringent non-tariff barriers that hinder agricultural exports. In 2022, Chinese authorities halted Pakistani mango imports citing unverified pest concerns, despite Pakistan investing $12 million in advanced fumigation technologies. This single restriction led to a 30% drop in the country’s $65 million mango export industry, as noted by the Horticulture Exports Development Company. Additionally, ongoing delays in customs clearance at Chinese ports cause spoilage of perishable goods like citrus fruits, further discouraging exporters. These multifaceted trade constraints highlight the urgent need for Pakistan to develop resilient, diversified, and standards-compliant export strategies to remain competitive in the evolving global trade environment.

Case Study: Punjab’s Rice Farmers vs. Global Tariffs

A 2023 survey of 200 basmati rice farmers in Punjab’s Sheikhupura and Gujranwala districts sheds light on the real-world consequences of global tariff policies on Pakistan’s agricultural producers. Prior to the imposition of India’s 20% export tariff on basmati rice, these farmers reported an average profit of ₨. 150,000 per acre in 2022. However, by 2023, that figure had declined sharply to ₨. 98,000 per acre, a 35% reduction in income, due to suppressed international prices and increased competition from Indian exporters. Alarmingly, only 12% of the surveyed farmers had shifted to higher-yield hybrid seed varieties, citing lack of capital and technical support as major constraints. Meanwhile, 88% of respondents reported dependence on government subsidies as a means of survival, underlining the fragile financial state of smallholder farmers and their vulnerability to external market shocks.

This case study illustrates that while policy debates around tariffs often focus on macroeconomic trends, the brunt of such decisions is borne by rural communities that lack the resources to adapt quickly. To remain competitive amid rising protectionism, Pakistan has attempted to diversify its export strategies. For instance, in response to EU environmental regulations, the country is promoting solar-powered ginning units and pursuing Geographic Indication (GI) tags to boost value-added branding. In the wake of India’s tariff war, exporters have increasingly sought alternative markets in Iran and Iraq. Meanwhile, phytosanitary trade barriers imposed by China have triggered cold chain investments and efforts toward bilateral inspection agreements. However, these countermeasures are still in early stages and face structural hurdles such as weak infrastructure and policy delays. Without sustained investment and farmer-level support, market diversification alone may not be enough to shield Pakistan’s agri-export sector from the growing web of global tariffs and non-tariff barriers.

Pathways to Resilience: How Pakistan Can Fight Back

To build resilience against global trade shocks and rising protectionist barriers, Pakistan must adopt a multi-pronged strategy rooted in innovation, sustainability, and regional collaboration. One promising pathway is digital traceability, which allows agricultural products to be tracked throughout the supply chain. The Hingol Mango Traceability Project in Balochistan serves as a pioneering example. By using blockchain technology, the project enables mangoes to be digitally tagged from farm to market, ensuring compliance with stringent EU phytosanitary and sustainability standards. This not only boosts transparency and quality assurance but also allows traceable produce to command up to 20% higher prices in international markets, according to a 2023 World Bank report.

Another essential strategy is the promotion of climate-smart certifications. In Punjab, the Carbon-Neutral Rice Pilot introduced eco-friendly farming techniques such as alternate wetting and drying (AWD) and laser land leveling. Farmers participating in this pilot are eligible for international eco-certifications, which attract environmentally conscious importers. As a result, participating farmers have seen up to a 15% increase in their export value, as reported by the FAO (2023). Scaling such pilots across more districts could significantly improve the export potential of Pakistan’s rice and other crops.

Additionally, strengthening regional trade alliances offers an avenue for circumventing EU and Indian tariff walls. The Economic Cooperation Organization (ECO) presents an underutilized platform for enhancing trade with Iran, Turkey, and Central Asian states. By harmonizing standards and reducing logistical bottlenecks, Pakistan could tap into $1 billion in new agricultural export opportunities, as projected by the ECO’s 2024 trade outlook. These regional markets, less influenced by Western regulatory barriers, offer a more accessible and politically feasible space for expansion.

Policy Recommendations

To mitigate the adverse effects of global tariffs and protectionist trade practices, Pakistan must pursue a robust policy response that combines international advocacy, market diversification, and grassroots-level empowerment. At the global level, Pakistan should actively engage with the World Trade Organization (WTO) to challenge non-tariff barriers (NTBs) that unfairly target its agricultural exports. Filing disputes through the WTO’s Dispute Settlement Body, particularly against phytosanitary restrictions and trade-distorting subsidies, can help level the playing field and protect national trade interests.

Domestically, the creation of an Export Diversification Fund would empower small and medium-sized enterprises (SMEs) to explore non-traditional markets, such as Africa and ASEAN countries. By offering targeted subsidies, marketing support, and logistical assistance, the fund can reduce Pakistan’s overdependence on EU and Indian buyers, making its agri-export sector more resilient to geopolitical shocks. Furthermore, fostering farmer-trader alliances through cooperatives can help eliminate middlemen who exploit producers by offering below-market prices. Initiatives like the Sindh Mango Growers Association demonstrate how cooperatives can pool resources, aggregate produce, and negotiate directly with buyers, both local and international, ensuring fairer prices for farmers. Collectively, these policy interventions can enhance export competitiveness, increase farmer incomes, and insulate Pakistan’s agricultural sector from external vulnerabilities.

Conclusion

Pakistan’s agricultural export sector stands at a critical crossroads, caught in the crosshairs of rising global protectionism, shifting trade alliances, and stringent environmental regulations. As major export destinations such as the EU, India, and China implement new tariffs and non-tariff barriers, Pakistani farmers, particularly smallholders, face mounting economic uncertainty. Declining profits, unstable market access, and limited capacity to adapt to compliance demands are eroding the competitiveness of a sector that employs over a third of the country’s workforce and contributes significantly to rural livelihoods. The case of Punjab’s basmati rice farmers, whose incomes dropped 35% due to India’s trade maneuvers, underscores the human cost of geopolitical trade battles.

However, this crisis also presents an opportunity for transformation. Embracing digital traceability, climate-smart certifications, and deeper regional integration can unlock new markets and improve export value. Forward-looking policy reforms, such as WTO engagement, export diversification funds, and support for farmer cooperatives, are essential to help Pakistani agriculture navigate this volatile global landscape. But these strategies must be matched by long-term investment in infrastructure, farmer education, and quality standards. By acting now with a comprehensive and adaptive trade strategy, Pakistan can not only withstand current trade shocks but also position itself as a resilient and sustainable agricultural exporter in the global economy.

References: Pakistan Bureau of Statistics; European Commission; Rice Exporters Association of Pakistan; World Bank; FAO; International Cotton Advisory Committee; SBP

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 ayeshaghouri644@gmail.com

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