ISLAMABAD: The agriculture and food sectors have received a much smaller share of climate-related funding than the energy sector in the federal budget for 2026-27, despite being highly exposed to climate change, according to Sustainable Development Policy Institute (SDPI) head Dr Abid Qaiyum Suleri.
In an opinion article published on Wednesday, Dr Suleri said the Finance Division had allocated Rs70.462 billion for climate adaptation, nearly 18 per cent less than the previous year. Another Rs124.067bn has been earmarked for mitigation and Rs19.490bn for supporting activities. These figures do not include subsidies.
Of the Rs476bn in subsidies classified as “favourably green”, the energy sector received Rs423bn, compared with Rs19bn for food and Rs21bn for agriculture.
This means energy received more than 10 times the combined amount allocated to food and agriculture. The budget classifies energy support as directly favourable to climate goals, while support for food and agriculture is considered indirectly favourable.
Dr Suleri noted that the figures cover federal spending only, while provinces are responsible for much of the expenditure on agriculture, irrigation and local infrastructure. However, he argued that the federal share for food and agriculture remained too small given the sectors’ exposure to climate-related shocks.
The vulnerability of agriculture was demonstrated by the 2022 floods, which caused around $3.7 billion in damage to crops, livestock, food and fisheries, according to a joint assessment by Pakistan and its development partners.
Climate-related disasters can affect the entire food system. Heatwaves reduce crop yields and milk production, droughts affect water and fodder supplies, while floods destroy seeds, standing crops, roads, markets and storage facilities. Such disruptions reduce food supplies and contribute to higher prices.
According to Dr Suleri, energy projects generally attract climate finance more easily because their output can be measured and the projects can generate revenue to repay loans. Agricultural adaptation projects, however, spread their benefits across large numbers of farmers and often do not generate enough direct income to repay commercial financing.
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He said a drainage channel, for example, could protect crops across an entire village without generating sufficient revenue to cover its cost. The government, however, would eventually have to spend money on disaster relief, reconstruction and food imports if such infrastructure was not built.
Dr Suleri said viewing agriculture as part of the wider food system could create more opportunities for climate adaptation financing. This could include water management, seed research, rural roads, drainage, storage and post-harvest cooling.
The Asian Development Bank estimates that Pakistan loses around $2bn worth of food after harvest each year, with losses reaching 20 to 40 per cent in some supply chains. Climate financing could help reduce losses caused by heat, floods and drought.
Reducing post-harvest losses could also make healthy food more affordable, he said. Citing a United Nations estimate, Dr Suleri said 63 per cent of Pakistan’s population, or around 161 million people, could not afford a minimum healthy diet in 2025.
When prices increase or incomes decline, low-income households tend to reduce spending on milk, eggs, pulses, fruits and vegetables. Better cooling, storage and transportation could keep more perishable food available, reduce prices and enable farmers to sell a larger share of their produce.
Dr Suleri said federal ministries were responsible for dealing with international climate funds, while provinces managed irrigation, agricultural extension and much of the rural infrastructure. Since projects are implemented largely at district level, he suggested combining projects across neighbouring districts to create programmes large enough to attract federal financing.
He also called for different financing mechanisms for different climate risks.
Public funds and grants should support projects that benefit large communities, including climate data systems, agricultural extension, seed research, flood protection and rural roads. Concessional loans could be used for shared storage, efficient irrigation, processing and cooling facilities.
Insurance could cover clearly defined weather-related risks if claims were settled quickly, while commercial borrowers could rely on market-based financing without subsidies.
The ADB has also recommended an agribusiness investment fund, green bonds, viability gap funding and a project preparation facility. It has called for wider use of credit guarantees and warehouse receipt financing so farmers can borrow against stored produce instead of being forced to sell immediately after harvest.
Dr Suleri said SDPI was working on expanding alternative financing mechanisms so public money could be directed towards projects that could not generate sufficient revenue through user charges.
He also called for changes in bank lending practices that exclude tenants and many women because of requirements for land as collateral. Lending based on earnings, group guarantees or leased equipment could improve access to finance, he suggested.
“Underfunding” food systems was no longer an option if Pakistan was serious about food security, Dr Suleri concluded, stressing the need for coordinated action by both federal and provincial governments.
