Pakistan’s cotton output has fallen by more than half from its peak, a decline that is now costing the economy an estimated $2-3 billion a year in additional imports and lost export earnings, according to a report titled Seeds of Growth released on Wednesday by the Overseas Investors Chamber of Commerce and Industry (OICCI).
The report is based on inputs from leading OICCI member companies operating in the agriculture sector. It says regulatory delays and inconsistent policy rather than a lack of technology or investment are the main reasons Pakistan’s agricultural output continues to trail regional competitors, despite the sector contributing about 23 per cent to GDP and employing 37pc of the workforce.
Cotton output has dropped from around 14 million bales at its peak to an estimated 6.85m bales in 2025-26, 34pc below the government’s own target of 10m bales, the report highlights. It attributes the decline to climate shocks, pest infestation, poor seed quality and a blanket ban on certain pesticide ingredients that was imposed without a science-based transition plan. Since the textile sector relies on domestic cotton and accounts for 60pc of export earnings, the report says restoring output to 8-9m bales would ease pressure on foreign exchange reserves.
A similar pattern is holding back maize, the report argues. Hybrid seed has already tripled per-acre yields over three decades, but the National Biotechnology Policy, approved last month by the federal cabinet, is yet to be implemented. The report says this is delaying the introduction of biotech corn hybrids that could unlock what it describes as a potential USD billion in maize grain and silage exports.
OICCI Secretary General M. Abdul Aleem welcomed the cabinet’s approval of the biotechnology policy but said its impact would depend on what happens next. The cabinet’s decision on biotech maize is progress, and we recognise it, he said. However, until the policy is notified and rolled out, the yield gains, the export potential, and the investor confidence it is meant to unlock remain on paper. That is the pattern across this report more broadly. The direction of policy is often right; it is the pace of execution that is costing this sector billions in financial terms.
The report also flags weaknesses in potato, dairy and tobacco. Less than 5pc of potato output comes from certified processing-grade seed, it says, while Pakistan’s average yield of 20-23 tonnes per hectare remains well below the 30-35 tonnes achieved elsewhere. In dairy, only 10pc of milk is processed, and roughly 20pc of total production is lost due to inadequate cold chain infrastructure, despite Pakistan ranking among the world’s top five milk producers. Tobacco production costs have more than doubled over three years, the report says, while an undocumented segment of the industry, concentrated in Khyber Pakhtunkhwa and Azad Jammu and Kashmir, continues to operate outside the tax net.
On fertilizer, the report says nitrogen-based urea continues to dominate farmer use, while potash offtake, needed for balanced soil nutrition, stood at just 7,000 tonnes in March despite a year-on-year rise of nearly 40pc.
The report links these gaps to Pakistan’s ability to retain foreign investment. OICCI member companies have introduced best international practices including seed technology, crop protection tools and precision farming systems not otherwise available domestically. It argues that further investment will depend on whether the regulatory environment becomes more predictable.
The report recommends that regulators introduce time-bound approval processes for seed varieties and pesticide registration. Other recommendations include a national strategy to reduce post-harvest losses, an enforcement unit to address seed counterfeiting, and expanded credit access for smallholder farmers, who make up close to 90pc of landholders with less than 12 acres.