Banks Cut Agri-Business Loans While Farmers Get More

Agribusiness loans contracted by Rs. 64 billion during the first half of calendar year 2026, even as agriculture advances in the domestic private sector rose and financing to the sugar industry rose sharply, according to the State Bank of Pakistan's Mid Year.

Key points

• While average refined sugar costs fell to Rs, sugarcane production rose by 6.2 percent to 89 million tons during fiscal year 2026.
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• The report indicated a mixed trend in agriculture-related financing during January through June 2026.
• 87 billion during H1CY26, mainly since financing to the energy sector rose by Rs.
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In the domestic private sector, agriculture advances rose to Rs. 723 billion by the end of June 2026 from Rs. 664 billion in December 2025, representing a rise of Rs. 59 billion during the first half of the year. In practice, the figures are documented as outstanding advances, rather than fresh loan disbursements.

Profitable SOEs Earn Rs. 423 Billion, Loss-Making Ones Lose Rs. 343 Billion in H1 FY26.

In practice, the report indicated a mixed trend in agriculture-related financing during January through June 2026. While agribusiness loans recorded a decline in the public sector advances breakdown, the broader sector-wise analysis of credit disbursement indicated that agribusiness was among the sectors that received financing during the period.

Public sector advances rose by Rs. 87 billion during H1CY26, mainly since financing to the energy sector rose by Rs. 183 billion. Nevertheless, this rise was partly offset by a Rs. 64 billion contraction in agribusiness loans. The report attributed the rise in energy financing to lending linked to circular debt.

For context, the report additionally highlighted a major rise in financing to the sugar sector. Unlike the Rs. 52 billion retirement recorded during H1CY25, the sugar sector availed Rs. 205 billion in financing during H1CY26. Notably, the growth was mainly driven by higher working capital requirements linked to climbed sugarcane production, lower refined sugar rates and the absence of refined sugar exports. It affected the sector's cash flows.

While average refined sugar costs fell to Rs, sugarcane production rose by 6.2 percent to 89 million tons during fiscal year 2026. 153 per kilogram during H1CY26 from Rs. 166 per kilogram in the same period of the previous year. Pakistan did not export refined sugar during FY26, compared with exports of 765, 734 metric tons in FY25.

Meanwhile, the report's asset quality review indicated an improvement in agribusiness-related credit risk. Overall nonperforming loans declined by Rs. While the largest reductions came from agribusiness and individual borrowers, 62 billion during H1CY26. Agribusiness nonperforming loans fell by Rs. 54 billion during the period.

While agribusiness lending in the public-sector breakdown declined, the mixed performance suggests that agriculture-related financing expanded in some areas, particularly outstanding private-sector agriculture advances and sugar-sector working capital. Stay Connected with ProPakistani.

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Taken together, the developments around banks Cut Agri-Business Loans While Farmers Get More point to a situation that is still moving, and the coming days should bring more clarity.