Pakistan's economy has experienced structural changes and transformation over time.

The aggregate share of various commodity-producing sectors, including agriculture, mining and quarrying, manufacturing, construction, electricity, and gas distribution, which was estimated to be 51.4 per cent in 1990/91, declined to 46.7 per cent in 2009/10.

The relative shares have also changed within the commodity-producing sectors. The contributions of agriculture and industry, estimated to be 25.8 and 25.7 per cent, respectively, in 1990/91, dropped to 21.5 and 25.2 per cent, respectively, by 2009/10. As a result, the economy has been transformed from an agricultural to a diversified economy. The gross domestic product (GDP) share of the livestock sub-sector during the last 10 years has averaged around 11.3 per cent; the GDP share of the crop sub-sector decreased from 13.1 per cent in 1999/2000 to 9.4 per cent in 2009/10.
According to a UN agency study the changes in relative shares of various sub-sectors of agriculture, notwithstanding the extent to which they are
prone to annual fluctuations, reflect the dynamics of the sector's structural transformation and technological change. The performance of the crop sub-sector in general and of cereals (wheat, rice, maize, and so on) in particular, have far-reaching implications for combating rural poverty and improving food security prospects in the country.

Agriculture in Pakistan - comprising the sub-sectors of crops, livestock and poultry, fisheries, and forestry - contributes 21.5 per cent to the GDP, making it the country's second-largest sector. The principal source of employment, it was responsible for 24.26 million of the 53.82 million people employed in 2010. Agriculture (and the textile value chain that it is a part of) contributes 60-65 per cent to the foreign exchange earnings from trade in merchandized goods. Agriculture provides livelihoods to 68 per cent of the rural population and supplies markets for the goods and services of other sectors with key inputs. Textiles, sugar, flour, rice, and feed mills, the manufacturing sector's main components, depend on agriculture for their raw materials. Thus, the economic health and performance of agriculture and its allied sub-sectors holds the key to overall economic development. Its performance is also crucial in combating poverty and improving the country's food security and nutrition. However, agriculture, heralded as an engine of growth during the 1960s and 1970s, has not performed consistently, especially during the last two decades. In the recent past, its performance has been erratic, making it vulnerable to the vagaries of climate change and other natural factors. Agriculture's annual growth rate is marked by wide variations, ranging from 5.2 per cent in 1992/93 to 11.72 per cent in 1995/96 (Pakistan, MOF 2010). Its recent performance has not been smooth either. Indeed, the crop sector's varying and poor performance - three years of negative growth between 2006 and 2010 - has been noted by observers. However, the agriculture sector as a whole experienced positive growth in the period 2006-10, riding on the solid performance of the poultry and livestock sub-sector.

Major cereals cultivated in Pakistan include wheat, rice, maize, millet, sorghum (jowar), and barley. The area under these cereals averaged 12.483 million hectares (ha) per year between 2006 and 2010, with production averaging 31.983 million metric tons. Wheat, rice, and maize, the most important food grains (cereals) in Pakistan, are also the staple food crops. Together, these three crops command 94 per cent of the area under cereals and make up 98 per cent of the annual production of all cereals.

Wheat is the largest crop in terms of area: It is planted over 9 million hectares each year and accounts for 69 per cent of the total production of cereals. Wheat cultivated under both irrigated and rainfed conditions is grown throughout Pakistan. In the 2008-10 period, its average annual production was 22.77 million tons. Pakistan, famous for the long-grain aromatic basmati rice that it produces and exports, is the world's fifth-largest rice exporter, after Thailand, India, Vietnam, and the United States. Hovering around 2.9 million tons, its rice exports, which also include a substantial quantity of coarse rice, account for 9 per cent of the world's exports. Annually sown over an average area of 2.79 million hectares, rice has accounted for 21 per cent of the area under food grains and its production has averaged 6.47 million tons in the recent past. The area under maize, the third most important food grain after wheat and rice in Pakistan, has expanded to more than 1 million hectares, and production has increased to reach an average of 3.49 million tons in the period 2008-10. Though maize is traditionally raised as a summer crop from indigenous seed, hybrid maize planted in the spring with yields averaging 8-9 tons per hectare has revolutionized maize production in some of the irrigated districts of the Punjab province. As a result, the share of maize in the value added by major crops has increased from 3.15 to 5.09 per cent, and its contribution to the total output of food grains has risen from 6.6 to 10.5 per cent.

The cultivation of these cereals provides raw material for wheat flour and rice milling and for the feed and starch industries. Since rice is a major export and wheat an important import, their performance has affected not only the food security situation in the country but also the course of international trade and the balance-of-trade situation. Maize cultivation is a source of raw material for several industrial products, such as corn oil, starch, corn flour, and livestock and poultry feeds. More than 50 per cent of the area under these crops is reported to be on farms operating less than 12.5 acres each.
The marketing of farm inputs and outputs has become a major problem for farmers in Pakistan. Farm input supplies are irregular, characterized by shortages and high prices at critical times. Pakistan has a long and varied history of intervening in farm input and output markets, going back decades.
Most significantly, in the wake of economic reforms launched during the 1980s, it has withdrawn from most of the commodity markets except wheat. In other commodity markets, intervention is by and large notional and without much practical involvement. The rolling back of the public sector from markets has certainly saved public funds, but the savings have come at a cost. Some of the cost, in terms of higher prices and variability stemming from the uncertain economic environment and supply, is borne by consumers, and some, in terms of lower producer prices at harvest, is borne by farmers, especially small and medium farmers, whose farms account for more than 50 per cent of the area under cereals.

The devolution of decision making in agriculture, food, livestock, and related sub-sectors to the provinces under the 18th constitutional amendment (and subsequent establishment of the federal-level Ministry of Food Security and Research with its National Food Security and Research Division) have reduced clarity in terms of the public sector's role and responsibilities in relation to agriculture. While the many challenges facing the agriculture sector continue, the ability to address these with concerted science-based interventions seems less clear at this moment.

Poor agricultural performance has serious implications for food security and foreign exchange earnings, as well as for the health of the manufacturing sector and the overall economy. Farm production, with its many forward and backward linkages in the economy, exerts a powerful influence on the prospects of on and off-farm employment, incomes, livelihoods, and well-being for the multitudes of farm households.

As the problems confronting the farm sector become more complex over time in Pakistan, the public sector's capacity to address them has nose-dived, seriously aggravating the situation. Poor performance in the crop sector, inter alia, may in many cases be attributed to the inadequacy of the support system for agriculture and its failure to develop and deliver new technologies and modern inputs. Distortion in input and output markets is also a contributor. Another important factor in this context is disconnection between research and extension agencies on one hand, and farmers and agricultural extension departments on the other.

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