Pakistan’s agriculture sector is showing early signs of a positive start to fiscal year 2026-27, supported by an expansion in the cultivated area of major Kharif crops and stronger access to agricultural financing. According to the September 2026 Monthly Economic Update and Outlook, higher acreage under rice and sugarcane, along with encouraging early cotton arrivals, is providing a favourable base for growth in important crops. These crops account for a significant share of agricultural crop value added, making developments in their cultivation and output important for the overall performance of the agriculture sector and the wider economy during FY2027.
The increase in agricultural financing is another factor supporting farming activity at the beginning of the fiscal year. Agricultural credit disbursements reached Rs271.9 billion in July FY2027, representing a 16.4 percent increase compared with Rs233.7 billion during the same month a year earlier. Improved access to financing can support farmers in meeting expenses related to seeds, fertiliser, machinery and other agricultural inputs. The rise in credit disbursement therefore coincides with the increase in cultivated acreage and provides additional financial support for production activities during the Kharif season.
Input utilisation has also shown mixed but relevant trends during the opening months of the Kharif season. Urea offtake during Kharif 2026 from April to August stood at 2,755 thousand tonnes, which was 2.9 percent higher than the corresponding period of Kharif 2025. The increase suggests stronger demand for one of the key fertiliser inputs as farmers cultivated larger areas. At the same time, DAP offtake was recorded at 417 thousand tonnes, down 24.5 percent compared with Kharif 2025. The contrasting movement in urea and DAP use indicates that fertiliser demand has not increased uniformly across all major inputs.
The agriculture sector has also recorded growth in mechanisation during the initial months of FY2027. Tractor sales increased 4.7 percent to 2,294 units during July and August FY2027. Higher tractor sales can provide an indication of continued investment in farm mechanisation, particularly as farmers and agricultural businesses seek to improve the efficiency of cultivation and related field operations. In addition to domestic tractor sales, imports of agricultural machinery and implements were recorded at $29.2 million during the period, reflecting continued demand for equipment used in agricultural activities.
The increase in cultivated area for major crops remains one of the key indicators highlighted in the economic update. Rice and sugarcane have recorded higher acreage, while early cotton arrivals have also provided an encouraging signal for crop activity. Since these crops carry substantial weight within agricultural crop value added, their performance during the Kharif season will have an important bearing on the sector’s overall contribution to economic growth. The combination of larger sown areas and improved access to financing could help support higher production if weather conditions and other factors remain favourable.
The data also shows that agricultural activity is being supported by several components at the same time, although performance across individual inputs remains uneven. Credit expansion, increased urea offtake, higher tractor sales and agricultural machinery imports point towards greater activity in several areas of the farming economy. Meanwhile, the decline in DAP offtake remains a contrasting development that will require consideration when assessing overall input demand during the season.
According to the September 2026 Monthly Economic Update and Outlook, these developments provide a sound basis for a stronger Kharif harvest and a positive contribution from agriculture to economic growth in FY2027. The assessment comes at the beginning of the fiscal year, meaning the final outcome will depend on crop yields, weather conditions, input availability, financing, commodity prices and other agricultural factors during the remainder of the season. For now, however, the early indicators point towards increased cultivation activity and stronger financial support for farmers compared with the corresponding period of the previous fiscal year.
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