Rising tensions in the Middle East and closure of the Strait of Hormuz, a major trading route, has halted oil tanker traffic through the Strait, and has disrupted energy production in the Middle East. This disruption increased oil and LNG prices and has opened the floodgates for a double-digit inflation in many countries.
Bloomberg Economics has reported that a 1 percent decrease in oil supply will increase oil prices by approximately 4 percent while the recently published studies at PIDE by Abida (2026) and by Satti and Naeem (2026) suggest that inflation in Pakistan will hover in a range of 15 to 20 percent if oil price in international market pass USD 120 per barrel. This will adversely, though disproportionately, affect services, industry and agriculture sectors and will change the patterns of consumption and production in many developing countries, including Pakistan.
Pakistan, the fifth most populous country in the world, though predominantly an agrarian economy, it imports USD 10 billion worth of food items, including edible oils, pulses, sugar and tea from abroad. Pakistan’s food import bill in the first seven months of the current fiscal year surged 19 percent from USD 4.613 billion in 2024 to USD 5.502 billion in 2025. The unabated population growth rate and decreasing agriculture productivity at home can expose a large section of Pakistan’s population to stunting, poor nutrition intake and high domestic food prices. Over 40 percent of children under the age of five in Pakistan suffer from stunting. This means that approximately 11 million children under the age of five in Pakistan are chronically malnourished, resulting in impaired physical and cognitive development. The grownups in Pakistan are also underfed and under-nourished. Rising food prices, especially after the Middle East crisis, have made it difficult for 80 percent of the Pakistan population to afford protein and milk based balanced diet.
The recently published Household Integrated Economic Survey (HIES) 2024–25 of Pakistan reports that households in Pakistan spend a large share of their income, 37 percent, on food, followed by 26 percent on housing, water, gas and electricity. Households in Pakistan spent 43 percent of their income in 2005 on food but increase in electricity, transport housing prices reduced households spending on food. This highlights the long-standing issue of access to nutritious food and shows that Pakistan, a country with a big land mass and abundant water resources, has failed to feed its bulging population. The current crisis in the Middle East and increase in energy prices is going to further complicate this situation. Energy is a key input in farming operations, distribution and other agriculture-related activities, and, therefore, the rise in energy prices in the wake of the current Middle East crisis will push food prices up. This can adversely affect the food expenditure and the nutrition intake in low-to-middle income households in Pakistan.
Therefore, to address the food security and nourishment problem, Pakistan’s agriculture needs to address two of its important and perennial problems by controlling the rising cost of agri production and boosting agriculture productivity. Pakistan can invoke CPEC 2.0 to address these issues and can learn from ongoing and unfolding agriculture reforms in China. China agriculture sector boomed, it employed a huge number of people and it reduced China’s dependence on imported food production. Per capital quality food consumption in China, a country of 1.4 billion people, reported a significant increase.
Pakistan’s agriculture sector remains significantly dependent on fossil fuels, rendering itself vulnerable to external energy shocks. China has revolutionized green energy and is the leader in renewable energy. Pakistan should use CPEC 2.0 to encourage technology transfer and investment in solar and wind energy production at home to provide its agriculture with cheap and stable supply of energy on one hand and to reduce Pakistan’s import bill on the other. Indigenous production and exploration of alternative sources of energy under CPEC 2.0 can reduce food prices and household expenditure on food and thus can decrease stunting and under-nourishment.
The agriculture sector of Pakistan faces several persistent challenges. Many of the key crops have yields lower than international averages and the farmers face limited access to high quality seeds, efficient irrigation systems, and modern farming technologies. For example, Pakistan’s per hectare wheat output is 3,100 kg while per hectare output of wheat in China is 5,900 kg while the highest per hectare output of wheat is reported in Lincolnshire (UK), which is 17,950 kg. The second phase of the China-Pakistan Economic Corridor (CPEC 2.0) can play a key role in addressing these challenges and can increase Pakistan’s agriculture productivity by new seed policy, building model farms and by working on Luban Workshops. Furthermore, lack of proper and efficient storage, cold-chain, and food processing facilities are contributing factors towards post-harvest losses.
CPEC 2.0 can be harnessed to strengthen agriculture sector productivity and sustainability through collaboration in areas related to capacity building of farmers, exchange of germplasm resources, transfer of technology, improvement in fisheries sector, establishing Foot-and-Mouth Disease-free zones, and strengthening market information systems.
Programmes such as China-Pakistan Joint Agricultural Technology Laboratory, Provision of Agricultural equipment and tools, China-Pakistan Joint Agricultural demonstrations, and Pakistan Agricultural Vocational Training are currently under development and are expected to provide support to improving productivity of agriculture sector. This can increase Pakistan’s reliance on domestic agriculture production and decrease the volume of import of staple food commodities.
History suggests that geopolitical instabilities and disturbances in global energy markets repeat themselves. Therefore, in a world of recurring geopolitical tensions and increasingly uncertain global environment, establishing an energy efficient, sustainable and resilient agriculture sector with a diversified production portfolio under CPEC 2.0 is essential for ensuring long-run food security and reducing its vulnerability to external energy shocks.
Copyright Business Recorder, 2026
The writer is a Research Associate at the Centre of Excellence–China Pakistan Economic Corridor (CPEC) at PIDE. She can be reached at nidaraza@pide.org.pk
The writer is a Professor of Economics at the Pakistan Institute of Development Economics (PIDE). He can be reached at: hasanatsyed@pide.org.pk