Urgent Fertilizer Subsidy Reforms in Pakistan

Pakistan’s agricultural sector, which contributes 23% to GDP and employs 37.4% of the labor force (World Bank, 2024), faces a critical challenge: soil degradation due to imbalanced fertilizer use. Decades of urea-centric subsidies have encouraged the excessive application of nitrogen fertilizers, while neglecting the need for essential micronutrients like zinc, boron, and potassium. This practice has not only reduced soil fertility but also exacerbated climate vulnerabilities, threatening food security and rural livelihoods. According to the Pakistan Agricultural Research Council (PARC, 2023), nearly 68% of agricultural soils now suffer from nutrient imbalances, with zinc and boron deficiencies alone responsible for reducing average crop productivity by 20–25%.

Recent fertilizer subsidy reforms introduced in Punjab, Sindh, and Khyber Pakhtunkhwa (KP) offer promising insights. Soil-test-based recommendations, voucher systems, and targeted subsidies have helped improve micronutrient adoption by 15–22% across pilot districts. Additionally, urea overuse has declined by 18% where farmer education programs were combined with digital advisory services. These localized successes highlight the potential for scaling reforms nationwide. However, significant challenges remain. Weak regulatory enforcement, dealer profit-maximization behaviors, low farmer awareness, and policy fragmentation between federal and provincial authorities continue to undermine consistent progress.

Moving forward, evidence-based reforms are essential. Reallocating subsidies from urea toward balanced, blended fertilizers containing micronutrients can address soil health more holistically. Scaling up mobile soil-testing labs, integrating digital extension platforms, and providing climate-resilient fertilizer safety nets for smallholders would further strengthen reform efforts. Additionally, harmonizing federal and provincial policies is critical to ensure consistency and accountability.

Sustainable fertilizer use is not just an agronomic issue, it is central to Pakistan’s climate resilience, food security, and rural economic stability. By realigning incentives and empowering farmers with better tools and information, Pakistan can transition toward a healthier, more productive agricultural future.

National Soil Crisis: The Cost of Urea-Centric Policies

Pakistan’s fertilizer subsidy system has historically favored urea, which accounts for 76% of total fertilizer subsidies (Ministry of National Food Security, 2023). While urea boosts short-term yields, its excessive and imbalanced use has gradually depleted soils of essential micronutrients, leading to long-term productivity losses and declining agricultural resilience. Over the decades, this urea-centric approach has disrupted the natural nutrient cycles of Pakistan’s farmlands, creating conditions that undermine both food security and rural livelihoods.

Recent soil health assessments paint a grim picture. Approximately 72% of agricultural soils are zinc-deficient, resulting in wheat and rice yield reductions of 15–20% (PARC, 2023). Similarly, 58% of soils exhibit boron deficits, with devastating effects on cotton and fruit production, particularly in Sindh’s cotton belt where yields have fallen by 30% (Sindh Agriculture Department, 2023). Moreover, 34% of soils in Punjab and Sindh have lost their water-holding capacity, making farmlands increasingly vulnerable to drought (Pakistan Meteorological Department, 2023). Organic matter levels, critical for soil fertility, have dropped below 0.5% on nearly 45% of farmlands, accelerating erosion and compounding these vulnerabilities (FAO, 2023).

Climate change is amplifying these challenges. The catastrophic floods of 2022, which caused ₨. 300 billion in agricultural damage (NDMA, 2023), exposed the fragility of nutrient-depleted soils. Recovery was notably slower, by nearly 20%, in flood-affected regions suffering from severe micronutrient deficiencies, prolonging food shortages and increasing rural poverty. Farmers like Aslam Khan from Swat vividly capture the ground reality, stating, "Urea gives quick yields but kills the soil’s future."

Addressing Pakistan’s national soil crisis requires a shift away from the short-termism of urea subsidies toward a balanced, soil-health-centered approach. Without urgent action, declining soil quality will continue to threaten Pakistan’s agricultural sustainability, climate resilience, and economic security.

Reform Pilots: Lessons from Across Pakistan

Reform pilots across Pakistan offer valuable lessons on how targeted agricultural interventions can boost productivity, improve farmer incomes, and encourage sustainable practices. One notable example is Punjab’s Soil Health Card Initiative (2020–2023). Under this program, farmers received personalized soil health cards based on individual farm testing, providing customized fertilizer recommendations. The results were significant: zinc adoption rose from 2% to 21% in pilot districts such as Lahore, Faisalabad, and Multan. Despite facing erratic rainfall patterns, wheat yields improved by 12%, showcasing the potential of informed input used to stabilize production. Furthermore, the initiative helped curtail excessive fertilizer application, with urea overuse declining by 15%, ultimately saving farmers ₨. 1.2 billion in input costs (Punjab Agriculture Department, 2023).

Sindh’s Post-Flood Subsidy Redistribution in 2023 demonstrated the importance of adaptive policy responses to climate disasters. After the devastating floods, the government redirected input subsidies toward critical micronutrients like boron and zinc, particularly in Badin and Thatta. Boron use rose by 18%, contributing to a 14% increase in cotton yields. Importantly, urea overuse dropped by 22% on flood-affected farms, indicating a shift toward more balanced nutrient management. Complementary farmer training programs played a crucial role, as 40% of participants reported adopting balanced fertilization techniques (Sindh Agriculture University, 2023).

Khyber Pakhtunkhwa (KP) showcased an inclusive approach through its Women-Centric Subsidy Program launched in 2022. By providing 5,000 female farmers with subsidized access to micronutrients, the program achieved notable success. Maize yields increased by 25% in Dir and Swabi, and household incomes rose by 18%, significantly enhancing food security and women’s empowerment in these regions (KP Women’s Agriculture Wing, 2023). Together, these pilots highlight that localized, data-driven, and socially inclusive reforms can transform Pakistan’s agricultural landscape and build long-term resilience.

Barriers to Nationwide Adoption and Way Forward

While provincial pilot programs have demonstrated promising outcomes, scaling these successes nationwide faces significant structural barriers that must be addressed urgently. One major hurdle lies in dealer profit incentives. Urea sales continue to offer 25% higher margins compared to micronutrients, creating a strong disincentive for fertilizer dealers to promote balanced nutrient solutions (World Bank, 2024). Additionally, the widespread black market for urea, estimated at ₨. 50 billion annually (FBR, 2023), undermines the effectiveness of subsidy reforms, making it difficult to ensure that fertilizers reach intended beneficiaries or are used appropriately.

Awareness gaps among farmers remain another critical obstacle. Only about 30% of farmers are aware of the benefits of micronutrients like zinc and boron (World Bank, 2024). In the absence of proper knowledge dissemination, farmers continue to overapply urea, which not only deteriorates soil health but also leads to declining yields over time. Misinformation and entrenched practices further delay the adoption of modern, balanced fertilization techniques.

Policy fragmentation compounds these challenges. Provincial subsidy programs often operate in isolation from federal agricultural policies, leading to duplication, inefficiencies, and confusion among farmers. Inconsistent fertilizer pricing mechanisms across provinces further distort the market, making it harder to align national objectives with local realities.

Moving forward, a comprehensive strategy is needed. Soil-test-linked subsidies should be expanded nationwide, with at least 40% of urea subsidies redirected toward micronutrients and organic fertilizers. Punjab’s successful soil health card initiative should serve as a blueprint. Establishing a National Blended Fertilizer Policy could incentivize the use of NPK-Zn-B blends through tax exemptions and enhanced dealer commissions, while promoting slow-release fertilizers to minimize nutrient leaching. Digital advisory tools like Khud Kisan and Sindh Soil must be scaled up and integrated with AI-based soil analysis for precision farming. Additionally, expanding weather-indexed insurance and creating disaster-responsive subsidy programs will climate-proof Pakistan’s fertilizer strategy and ensure resilient rural economies.

Conclusion

The urgent need for fertilizer subsidy reforms in Pakistan cannot be overstated. Decades of urea-centric policies have depleted soil health, reduced crop productivity, and heightened agricultural vulnerability to climate change. Recent provincial pilots in Punjab, Sindh, and Khyber Pakhtunkhwa demonstrate that balanced nutrient management, supported by targeted subsidies, soil testing, farmer education, and inclusiveness, can significantly improve yields, reduce input costs, and enhance rural livelihoods. However, scaling these successes nationwide requires dismantling entrenched barriers, including distorted dealer incentives, farmer awareness gaps, black-market urea trade, and policy fragmentation between federal and provincial levels.

A transformative pathway forward must prioritize reallocating subsidies toward blended and micronutrient fertilizers, institutionalizing soil health diagnostics, promoting climate-resilient products, and leveraging digital tools for precision farming. Harmonized national policies and climate-proof safety nets will be vital to ensuring equitable access and sustainability. Investing in soil health is investing in Pakistan’s future food security, rural prosperity, and climate resilience. With the right reforms, Pakistan can rebuild its agricultural foundation, empowering farmers to achieve higher productivity while safeguarding natural resources for generations to come. Timely, coordinated, and inclusive action is essential to secure a thriving, sustainable agricultural economy.

References: FAO; IFPRI; NDMA; PARC; World Bank; Ministry of National Food Security; Sindh Agriculture Department; Pakistan Meteorological Department; Punjab Agriculture Department; Sindh Agriculture University; KP Women’s Agriculture Wing

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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