Wheat and sugar prices rebound lifts rural economy hopes

Rising wheat and sugar prices in Pakistan are expected to improve farmer incomes and provide a timely boost to the struggling rural economy.

Wheat prices in Pakistan have climbed to a 19-week high, reaching Rs710 per 10kg (equivalent to Rs2,839 per 40kg) in wholesale markets, with some local sources quoting rates as high as Rs3,000–3,050 per 40kg. The sharp rebound is seen as a much-needed incentive for farmers who faced losses during the last crop cycle due to weak profitability. Farmer sentiment had deteriorated after depressed returns in the previous season, when many growers reported net losses instead of profits.Pakistan’s exports up by 14% during July-May 2021

The agriculture sector, which remains central to Pakistan’s economy, recorded a severe slowdown in fiscal year 2025, expanding by only 0.6% compared to 6.4% growth in FY24. The downturn was driven by extreme weather events, water shortages, high input costs, and weaker farm-gate prices, which significantly eroded farm economics. According to industry data, production of major crops fell by 13.5% year-on-year, with wheat output down by 8.9%.

During the outgoing season, farmers faced losses of Rs10,695 per acre, compared to earnings of Rs13,572 per acre in the previous cycle, according to a briefing by Fauji Fertilizer Company. The central bank has estimated that wheat production in FY25 could fall by nearly 11%, as low profitability discouraged sowing. However, the current price surge is expected to encourage greater cultivation in the upcoming Rabi season, potentially reversing the downward trend.

One factor behind farmer losses has been the withdrawal of support prices by the government under commitments made with the International Monetary Fund. Combined with rising costs of fertilizer, seeds, and electricity, this eroded returns for growers across major crops.

Alongside wheat, sugar prices have also soared, rising from Rs138–140 per kg in January 2025 to around Rs180 per kg last week, according to Pakistan Bureau of Statistics data. The market rate now stands well above the government’s fixed ex-mill price of Rs165 per kg, signaling tighter supply and stronger demand.

Analysts say that higher wheat and sugar prices are set to boost rural incomes in the next crop cycle. Improved farm profitability is expected to restore farmer confidence, raise rural consumption, and provide an important uplift for the broader economy. Stronger rural incomes could also help stabilize the agriculture sector’s contribution to GDP while reducing the country’s dependence on food imports. A revival in farm economics would improve food security and lessen pressure on foreign exchange reserves.

While the current price of wheat remains 43% below its previous peak of Rs1,256 per 10kg, reached during an earlier period of elevated government support prices and cross-border smuggling, the recent uptrend still represents significant relief for farmers. Adding to optimism, urea prices—a major input cost—are expected to stay subdued in the short term due to ample domestic inventories.

Stronger farm incomes are likely to spill over into other sectors of the economy, including construction, consumer goods, and transportation. Historically, rural prosperity has translated into higher demand for motorcycles, small cars, and clothing. At a recent analyst briefing, Atlas Honda management noted that sales of two-wheelers are currently being driven by urban buyers, as rural purchasing power remains weak. Market observers believe that the recovery in crop prices could soon translate into a revival in rural demand for motorbikes and other consumer products.

Over the past two years, Pakistan’s rural economy has endured significant strain from a combination of higher input costs and weaker crop prices. The present turnaround in wheat and sugar markets could therefore mark a critical inflection point. If sustained, the rebound has the potential to underpin broader economic growth by supporting rural incomes, strengthening domestic consumption, and encouraging higher farm output in the upcoming sowing season.

As policymakers prepare for the next crop cycle, the rural economy’s trajectory will play a decisive role in determining Pakistan’s overall growth outlook. For millions of farmers across the country, the recent price recovery offers a rare sign of optimism after a prolonged period of hardship.