The traditional vision of agriculture as the growing of crops in a field is no longer sufficient; it is a modern industry connected to a broad economic value chain of inputs and services.
The whole process from seed to fertiliser, machinery, irrigation, storage, transport, processing, and marketing is linked. Farmers are strongly linked to several industries that provide them with diesel, tractors and pesticides and quality seed, and they are also strongly linked to the industries that process cotton into cloth, provide ginning services, export cotton, supply wholesalers and retail outlets. This is the reason agriculture must be treated as an industry to boost productivity, job creation, investment and stimulate economic development in rural areas.
From 2020 to 2025, Pakistani farmers faced a deepening crisis as climate shocks and soaring input costs squeezed their livelihoods. What began as a margin issue quickly became a systemic economic struggle. As farmers grapple with the ripple effects of the ongoing US-Iran war into 2026, the crisis has shifted from a farm-level problem to a national supply-chain emergency.
Pakistan’s rising diesel prices created serious difficulties for farmers in 2025, and the pressure has continued into 2026 due to the US-Iran war and its impact on global fuel markets. In 2025, as fuel prices continued to rise, farmers first tried to control their production costs. The impact was felt most strongly in cotton and wheat farming because diesel made field preparation, irrigation, harvesting, and transport more expensive. Tractor use was reduced, tube-well pumping became more selective, and many farmers cut down on crop area or input intensity.
The biggest problem was that diesel made farm operations more expensive, while crop prices did not rise at the same pace. As a result, farmers’ profitability continued to fall and many of them shifted into a defensive mode. The 2025 price hike also pushed farmers toward the solarisation of agricultural tube wells as a long-term cost-saving response.
When farm-level costs increase, the expense of moving crops to the market also rises. This puts pressure on the prices of cotton, wheat, vegetables, and other agricultural commodities. When transportation becomes expensive, wholesale prices rise and retail prices also rise. So, 2025 was mainly a year of cost pressure and supply pressure. Farmers were trying to protect their production, the market was adjusting its margins, and consumers were facing inflation.
The situation in 2026 is even more sensitive because the year is still ongoing and the fuel issue has not yet fully settled. Farmers continue to face fuel costs as a persistent challenge. The impact of diesel prices is still being felt in both cotton and wheat farming. Cotton growers remain under pressure as irrigation and field operations become increasingly expensive, while wheat growers face higher sowing, harvesting, and transport costs. This uncertainty is more stressful than before, as farmers are not only absorbing last year’s losses but also struggling with the volatility of the current year. In cotton, the expected yield remains under pressure due to rising input costs and higher irrigation expenses.
2025 pushed farmers in Pakistan into a defensive mode, while 2026 is still keeping them in survival mode. In 2025, they tried to save costs, and in 2026, they are still trying to balance cost, output and market prices under pressure
The farmers’ response in 2026 has also changed. In 2025, they mostly adjusted their farming practices. In 2026, however, the demand for relief, subsidy, and policy support has become much clearer. Farmers are no longer only trying to cut costs; they are also calling for diesel subsidies, cheaper agricultural fuel and targeted support. Because production costs have increased for both cotton and wheat, farmers have become more cautious in planning for the next season. This shows that the issue is no longer temporary; it has become a recurring economic challenge. When fuel prices repeatedly put pressure on farmers, planning weakens, investment for the next season declines and crop output is affected.
From a market perspective, the effect of 2026 is broader than in 2025. In 2025, the market mainly felt the pressure of production cost, but in 2026 this pressure has spread further into inflation and supply-chain instability. When diesel becomes expensive, food movement, mandi logistics, storage, and retail distribution all become costlier.
In the cotton value chain, ginning, transport, and market linkages face pressure, while in the wheat supply chain, grain transport and flour-mill costs rise. As a result, ordinary consumers also face higher prices. Household grocery bills increase, vegetable and basic food prices rise, and overall market uncertainty grows. In this way, fuel costs stop being only a farmer’s problem and become a broader economic issue.
If 2025 and 2026 are compared directly, the difference is clear. In 2025, farmers slowed down their farming after seeing the rise in diesel prices, reduced input use, and adopted a cautious strategy to avoid losses. Farmers of both cotton and wheat kept their operations at only the level necessary. In 2026, the same farmers are still under pressure, but now the issue is no longer only adjustment. They are also demanding relief, subsidy and policy intervention. In 2025, farmers tried to protect their operations, while 2026 is an ongoing year in which farmers are still dealing with fuel pressure, market uncertainty, and inflation.
The classic cobweb cycle is now in full effect: soaring costs depress output, which tightens supply and drives up market prices. In 2025, the increase in diesel costs hit the cost side, affecting output decisions. Farmers reduced the area or kept operations limited. This effect was evident in both cotton and wheat because higher costs led to more cautious production. In 2026, the same cycle continues, but now market dynamics and policy demand have also become part of it. When output is cautious, supply becomes tighter, and when supply becomes tighter, market prices rise. This increases pressure on farmers, traders, and consumers alike. When benefits decline, investment in the next season weakens, making the next cycle even stronger.
For Pakistan’s rural economy, this issue is not just about fuel -- it is about livelihoods. When diesel becomes expensive, every step of farming becomes costlier, affecting household budgets, debt repayment, and preparation for the next season. In 2025, this pressure was more of an economic adjustment, but in 2026 it has turned into an ongoing economic uncertainty. That is why it is important to show that 2025 and 2026 cannot be viewed in the same way. The impact of diesel price hikes on major crops such as cotton and wheat was direct and evident in production, market prices, and farmers’ incomes.
In the end, it can be said that 2025 pushed farmers in Pakistan into a defensive mode, while 2026 is still keeping them in survival mode. In 2025, they tried to save costs, and in 2026, they are still trying to balance cost, output and market prices under pressure. This comparison not only shows the difference between two years; it also shows how fuel prices create a long economic chain that continues to affect agriculture well beyond a single season.
The writer is a research assistant at the Sustainable Development Policy Institute (SDPI).
© 2026 SDPI. All Rights Reserved Design & Developed by NKMIS WEB Unit
