In a troubling convergence of environmental and economic challenges, Pakistan’s agricultural sector faces a dire situation as climate change impacts crop yields. At the same time, the tractor industry teeters on the verge of collapse. This combination of factors could have far-reaching consequences for the country’s economy.
Rising temperatures and increasingly frequent heatwaves, attributed to climate change, are already taking a toll on Pakistan’s rice production. The extreme heat conditions during the Kharif season have led to a one-third reduction in rice yields, particularly in Sindh province. Rice is a staple crop and a significant export commodity.
The crisis began in June 2024 with the implementation of a 10% sales tax on tractors, previously exempt from such tariffs. The Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) has sounded the alarm, announcing that the industry is on the verge of a complete shutdown due to prolonged delays in releasing General Sales Tax (GST) refunds by the Federal Board of Revenue (FBR) and complications arising from a new GST regime under Statutory Regulatory Order (SRO) 563.
In this fragile agricultural landscape, the tractor industry plays a critical role. Tractors are essential for efficient farming, enabling farmers to till the soil, plant crops, and harvest more effectively. However, the tractor industry in Pakistan is currently on the edge of shutdown due to heavy taxation and financial strain. If this industry collapses, the repercussions for agriculture, particularly in the face of climate change, could be severe.
Without access to affordable tractors, farmers will face significant challenges in managing their fields, especially under the stress of climate change. The inability to till soil promptly, plant crops on time, or harvest efficiently will further exacerbate the decrease in crop yields caused by rising temperatures. This will not only impact the availability of staple foods like rice but also deepen the food security crisis in Pakistan.
Moreover, the shutdown of the tractor industry will likely lead to increased costs for farmers who may have to rely on outdated or less efficient farming methods. This, in turn, could reduce their competitiveness and income, trapping them in a cycle of poverty and making it even harder to adapt to the ongoing impacts of climate change. Farmers, already battling the effects of rising temperatures, droughts, and floods, would be pushed further into despair.
The consequences of these combined challenges extend beyond the agricultural sector. Pakistan’s economy heavily relies on agricultural exports, particularly rice. In the fiscal year 2023-24, rice exports reached a record high, with a 62% increase in volume and an 83% increase in value compared to the previous year. However, this positive trend is now under threat.
As farmers struggle with both climate-related challenges and potential loss of mechanization, the quantity and quality of rice production could decline significantly. This would not only impact domestic food security but also severely affect Pakistan’s export capabilities, leading to a decrease in foreign exchange earnings and further economic instability.
The crisis calls for immediate and coordinated action from the government, industry stakeholders, and agricultural experts. The government is squeezing the breathing space of farmers, rather killing them bit by bit. The state must know if the farmers are weakened, it should forget about the country’s food security, poverty reduction, industrial development, and stability.
The interplay between climate change and the potential collapse of the tractor industry in Pakistan could lead to a catastrophic scenario for the country’s agriculture sector. This would severely undermine food production, threaten the livelihoods of farmers, and worsen the already precarious situation of food security across the nation. The state must recognize the pain of its farmers and act swiftly to prevent the collapse of the tractor industry. Failure to do so could push the country further into economic instability and food insecurity, with dire consequences for the nation’s future.

Published Date: August 28, 2024