By Abdul Ghani

Pakistan’s agricultural credit disbursement is expected to exceed Rs3 trillion in FY2025-26 for the first time, reflecting growing financial support for farmers and the government's efforts to improve agricultural productivity, food security and rural development, according to the Pakistan Economic Survey 2025-26 released by the Ministry of Finance.

The survey highlights agricultural financing as a key instrument for modernizing the farm sector, enabling farmers to invest in quality inputs, mechanization, irrigation systems, livestock development and climate-resilient agricultural practices.

According to the survey, financial institutions are expected to disburse Rs3.062 trillion in agricultural credit during FY2025-26, compared with Rs2.577 trillion in the previous fiscal year, representing a projected increase of 19%.

The expansion in agricultural lending reflects continued efforts by banks and financial institutions to increase outreach to farmers and agribusinesses across the country.

The survey notes that improved access to finance played an important role in supporting agricultural activity during a year marked by weather-related challenges, including the floods of 2025.

Agriculture grew by 2.89% during FY2025-26 despite flood-related disruptions, with financing helping farmers maintain production, purchase inputs and invest in productivity-enhancing technologies.

According to the survey, institutional credit supports a broad range of agricultural activities, including crop cultivation, livestock development, fisheries, poultry farming, farm mechanization and value-added agribusiness operations.

Farm financing has become increasingly important as production costs continue to rise and farmers require greater investment in technology, improved inputs and modern farming practices.

The survey highlights that specialized banks, commercial banks, Islamic banks and microfinance institutions continued to expand their agricultural lending portfolios, increasing access to formal finance for both small and large farmers.

Production loans remained a major component of agricultural financing, helping farmers purchase seeds, fertilizers, pesticides and other essential inputs required for crop production.

Development financing also supported investment in tractors, harvesters, tube wells, livestock farms, storage facilities and modern agricultural equipment to improve long-term productivity.

The survey notes that agriculture remains one of the largest sectors of the economy and a major source of employment. Expanding access to finance is therefore viewed as critical for improving productivity, strengthening food security and sustaining agricultural growth.

The livestock sector, which accounts for 62.4% of agriculture's value addition and 14.6% of GDP, also benefited from increased financing. Credit supported dairy farming, meat production, poultry operations and animal health initiatives.

According to the Ministry of Finance, improved access to agricultural credit contributes directly to food security by enabling farmers to adopt better farming practices, improve yields and expand production.

The survey highlights that fertilizer nutrient offtake increased by 11.4% during July-March FY2025-26, reflecting stronger agricultural activity and greater use of farm inputs.

Mechanization also continued to receive policy attention. The report notes that access to financing remains essential for promoting the adoption of modern machinery and reducing reliance on traditional farming methods that often limit productivity.

The survey also highlights growing efforts to support climate-resilient agriculture. Financial institutions are increasingly encouraged to facilitate investments in water-efficient irrigation systems, improved seed varieties and technologies that help farmers adapt to changing climatic conditions.

According to the report, digitalization is gradually transforming agricultural financing as well. Financial institutions are expanding digital services and technology-based solutions to improve access to credit, particularly in underserved rural areas.

The Ministry of Finance notes that strengthening agricultural finance remains a key component of broader efforts to modernize the farm sector and enhance its contribution to economic growth.

The survey indicates that increasing institutional lending to agriculture will remain important for supporting productivity, boosting rural incomes and strengthening food supply chains as Pakistan seeks to meet the needs of a growing population.

With agricultural credit expected to surpass Rs3 trillion for the first time, FY2025-26 marks a significant milestone in farm financing and reflects the growing role of formal financial institutions in supporting the development of Pakistan's agricultural economy.

Credit: INP-WealthPk