Agriculture and Energy in Pakistan

Pakistan relies on food and energy imports to meet its demand, although the country is a major producer and exporter of some agricultural products globally. Power shortages create a bottleneck for consumption and economic growth. Pakistan is highly vulnerable to climate change impacts, as frequent natural disasters already negatively impact farming and exacerbate water scarcity problems. The government is encouraging investment into mining in order to tap into the country’s natural resources.

Agriculture: vulnerable to climate change-induced natural hazards

Agriculture plays a vital role in the Pakistani economy, as the sector (including agriculture, hunting, forestry and fishing) accounted for 20.4% of Gross Value Added (GVA) and absorbed 40.6% of total employed population in 2016. Pakistan is a global major producer of several crops, such as cotton, sugar cane and wheat. Nevertheless, Pakistan is a net food importer, as domestic production has not been enough to meet large and rising local demand. In 2016, imports of animals and animal products, vegetable products and foodstuffs made up 12.5% of total goods imported.

Risks:

• Agricultural output has been declining, as Pakistan’s average farm size continues to decline and productivity remained relatively low.
• Climate change impacts represent a major risk to agricultural production in Pakistan, as natural hazards, such as flash floods, landslides and droughts, are increasing.

Opportunities:

• As urbanisation is occurring rapidly in Pakistan, there will be growing demand for high-value perishable products such as fruits, vegetables, dairy, and meat.

Energy: power shortages undermine economic growth

Demand for energy has been rising rapidly in Pakistan, amidst population and economic growth. In 2016, Pakistan was the seventh largest energy consumer in Asia Pacific. The country is a net energy importer, with imports of mineral fuels, oils and distillation products accounting for 22.8% of total goods imported in 2016. The population has low access to electricity, and a large share of households still uses biomass for cooking and heating.

Risks:

• Prolonged power shortages create a major bottleneck for economic growth in Pakistan. Electricity generation has been insufficient, as the sector faces several problems including power generation theft, insufficient collection rates, deficient natural gas supply, and an older transmission network.

Opportunities:

• The government is encouraging private (including foreign) investments into Pakistan’s energy sector. China, for example, has been a major investor for Pakistan’s new coal-fired, nuclear and wind power plants.
• Since access to electricity is rising gradually, Pakistani consumers will experience growing demand for basic household durables.

Download the new report “Natural Resources: Pakistan” for further information about agriculture and energy as well as insights on water, pollution and mining of metals and minerals in Pakistan.