New Delhi, Sep 8 (IANS) Pakistan’s food inflation reflects deep structural weaknesses in agriculture that make the country extra vulnerable to global shocks, a new report has said.

The report from Maldives Insight warned that high production costs, poor storage facilities and climate damage are turning temporary price spikes into a persistent problem with repercussions on the country's foreign exchange reserves.

Rising energy costs, limited carryover stocks and weaker output in some rainfed areas have constrained supplies, while transport costs remain high.

Wheat flour prices in June were nearly 50-75 per cent higher on an annual basis.

“When production costs remain structurally high, even a reasonably good harvest cannot guarantee affordable food,” the report said.

Agricultural exports dip when international prices and competitiveness deteriorate, while imported food and farm inputs become more expensive amid disruption in global markets.

Such a vulnerability becomes even more dangerous when foreign-exchange pressures restrict the room to absorb higher import costs.

“Wheat production had fallen by around 11 per cent during the Rabi 2024-25 season after farmers reduced the area planted, while flood-related losses and market shortages compounded the supply problem,” the publication said.

Nearly 2 lakh tonnes of wheat stocks were damaged by floods, it noted.

Pakistan has struggled for decades with inefficient irrigation, weak water management, low farm productivity, distorted commodity markets and small product base.

These weaknesses were magnified by climate shocks, leading to an economy leaving millions exposed to shortages, price spikes and declining purchasing power, despite producing substantial quantities of food.

The SBP’s August 2026 monetary policy report has now placed structural weakness in the agricultural sector and price inflation against a worsening international backdrop.

“The central bank warned that food prices could rise more than previously expected as energy, fertiliser and freight costs increase. The warning comes as global fertiliser prices have already risen sharply and the prospect of another El Niño episode threatens additional pressure on agricultural production,” the report noted.

—IANS

aar/ag