Pakistan’s agricultural sector demonstrate resilience in 2024

Pakistan witnessed notable increases in fertilizer consumption and sales from July 2023 to June 2024, bolstered by growing farmer demand, reports the State Bank of Pakistan’s latest annual review. This uptick in fertilizer use persisted even amid rising prices, a testament to the sector’s resilience and enhanced agricultural practices.

Fertilizer off-take statistics reveal a 5.8% increase in urea usage during the Kharif cropping season and a 1.6% rise in the Rabi season of 2024. More dramatically, Diammonium Phosphate (DAP) usage surged by 54.2% in Kharif and 21.7% in Rabi. Despite these increases, DAP consumption during Kharif remained below the 10-year average, influenced by historically high prices.

The report indicates a decrease in international fertilizer prices in 2024 from the peak observed in 2022, attributed to diminished global demand and a drop in key raw material costs, mainly natural gas. While international prices fell, domestic fertilizer costs remained elevated due to initially reduced affordability among farmers and the supply constraints influenced by global geopolitical factors.

Significant fluctuations were noted in the prices of imported 2024, particularly influenced by export restrictions from major suppliers like China and Russia, affecting phosphates and ammonia, respectively. These restrictions contributed to a sharp 20.2% rise in domestic DAP prices during the Rabi season.

Agriculture in Pakistan also saw robust growth during 2024, recovering from the subdued performance of the previous year marred by flood-related damages. Record harvests of wheat and rice, along with a revival in cotton production, contributed to this growth, counterbalancing lesser yields in maize and sugarcane. The expansion in cultivated land and improved crop yields were supported by favorable weather conditions, better availability of agricultural inputs, and proactive government policies, including support prices and enhanced credit facilities to farmers.

However, the agricultural outlook is cautious. Uneven rainfall patterns—a likely consequence of climate change—pose ongoing risks to sustained agricultural productivity.