June 30 - July 06, 2008

Prime Minister Syed Yousuf Raza Gilani has constituted a task force on food security with multi-dimensional purposes, particularly for ensuring supply of food to vulnerable groups. Under the terms of references of the task force, it would review the production, availability, consumption of essential food commodities and also review food procurement/storage status. The task force would also examine price trends of essential food commodities in relation to international markets and assess the impact of price hike on vulnerable groups, a government notification said adding that it would also devise an action plan for promoting food security for the vulnerable groups as well, it said. The task force comprises 9 members with Sartaj Aziz as chairman while Dr. Kauser Abdullah Malik as convener and remaining as members including Secretary MlNFAL, Secretary Commerce, Secretary Industries & Production, Secretary Interior, Chairman NDMA, Chairman P & D, Punjab, Additional Chief Secretary, Balochistan, Additional Chief Secretary, NWFP, Additional Chief Secretary Sindh, Chairman PARC, Dr Hassan Akhtar Khan, former secretary P & D division, Abid Hassan, former Operation Advisor, World Bank, Shahid Hafeez Kardar, renowned economist, Afaq Tiwana, Qamar-uz-Zaman Shah, Khair Muhammad Jonejo and Farhattullah Khan.

Perhaps for the first time Pakistan spent nearly $ 4 billion on imports of food items including wheat, pulses and vegetable during July-May of the current (2007-2008) financial year. During the year the country had to face not only the shortage of wheat flour besides alarming rise in the prices of food items which ultimately resulted in the collapse of PMLQ government. It is also posing a most serious challenge to the new government as no relief is in sight. Rather it is feared that a new wave of price hike is likely to hit consumers in the near future as an impact of various budgetary measures.

Food crisis is a universal phenomenon these days and both developed and developing countries are in its grip. Global food prices surged 57% last year from a year earlier. There are a number of forces driving that price explosion. A perfect storm of food scarcity, global warming, rocketing oil prices and the world population explosion is plunging humanity into the biggest crisis of the 21st century by pushing up food prices and spreading hunger and poverty from rural areas into cities. Experts say that for the first time in the history, the impact is spreading from the developing to the developed world. More than 73 million people in 78 countries that depend on food handouts from the United Nations World Food Program (WFP) are facing reduced rations this year. The increasing scarcity of food is the biggest crisis looming for the world, according to WFP officials. At the same time, the UN Food and Agriculture Organization have warned that rising prices have triggered a food crisis in 36 countries, all of which need extra help.

"The latest report of the World Bank Agriculture for Development" has urged member countries to make more investment in Agriculture placing this sector on top of its development agenda. It is of utmost importance to avoid hunger and extreme poverty threatening the human society.

The Word Bank report says agricultural and rural sector have suffered from neglect and under investment over the past 20 year. While 75 percent of the world's poor live in rural areas, a mere 4 percent of official development assistance goes to agriculture in developing countries. According to the report, GDP growth originating in agriculture is about four times more effective in reducing poverty than GDP growth originating outside the sector. "A dynamic agriculture for development agenda can benefit the estimated 900 million rural people in the developing world subsisting on less than $1 a day, most of whom are engaged in agriculture." said Robert B. Zoellick, World Bank Group President.

"We need to give agriculture more prominence across the board. At the global level, countries must deliver on vital reforms such as cutting, distorting subsidies and opening markets, while civil society groups, especially farmer organizations, need more say in setting the agricultural agenda. "Agricultural growth has been highly successful in reducing rural poverty in East Asia over the past 15 years," said Francois Bourguignon, World Bank Chief Economist and Senior Vice President, Development Economics. 'The challenge is to sustain and expand agriculture's unique poverty-reducing power, especially in Sub-Saharan Africa and South Asia where the number of rural poor people is still rising and will continue to exceed the number of urban poor for at least another 30 years." For its part, the Bank intends to continue increasing its support for agriculture and rural development, following a decline in lending in the 1980s and 1990s. The bank has also offered financial assistance to Pakistan for development of its agriculture which had a high potential.

Pakistan has predominantly is an agriculture economy. Both Pakistani economists and international experts are of unanimous view that the country can effectively control food inflation and energise its economy by stimulating its agriculture production. There was a lot of potential in the agriculture sector which can be harnessed with little help and guidance to farmers.

They are of the view that Pakistan has one of the best endowed agriculture sector in the world having one of the largest contiguous areas, rich soil and hard working farmers who have shown their ability to absorb new technologies when presented with the opportunities to do so. With little help by the authorities to the farming community, Pakistan can feed its population easily without import of any kind of food grain thereby saving million of dollars being spent presently on such imports. With a view to improving the ratio of output to input prices and thereby stimulation agriculture production, it is necessary that the general sales tax (GST) on fertilizers and pesticides should be withdrawn, economists suggested.

A report titled "State of the Economy: Challenges and Opportunities", prepared by a team of eminent economists, including Sartaj Aziz, Shahid Javed Burki, Dr Hafiz A Pasha, Dr. Parvez Hasan, Dr. Akmal Hussain and Dr. Aisha Ghaus-Pasha, says that the most important price signal the government provides is the wheat procurement price. Wheat is the country's most important crop. The anticipated income that farmers draw from cultivating wheat significantly affects what else they grow. In determining the procurement price of wheat (the subject should continue to be handled by the federal government) the government must keep in view the level and expected trends in international prices.

The authors of the report believe that the recent rise in world wheat prices represents a secular trend caused by the increase in demand for food grains in rapidly growing populous countries such as China and India and the increasing return given for bio-fuel production by such large consumers of energy as the United States. The rise in the price of wheat has affected the prices of other food grains-commodity prices normally move in tandem-and has changed the sectoral terms of trade in the favour of agriculture. The benefit of these should be passed on, to an extent possible, to agricultural producers. For that to happen, there should not be a large difference between the government's procurement price and the price in international markets. In the context of the need to make a fiscal adjustment, increase in the price of wheat will have to be mitigated by directly helping the poor through vehicles such as the Bait-ul-Mall and Food for Work programmes, the report adds.

The report says that Pakistan has lagged seriously behind in improving the technological base of the agriculture sector. The private sector carried out very little research and development work. The little research that gets done is by the public sector but that is too widely scattered among too many government departments and agencies to be effective and does not reach the farmers. The result is that Pakistan has developed gaps between average yields and yields obtained by the "best farmers"; between the best farmers and those obtained by research institutions and those obtained by farmers in the large agricultural systems in other parts of the world. Therefore, the government role is important in closing the technology gaps. This can be done in two ways: by focusing on the development of research in agricultural universities (an approach followed by the United States) and by setting up crop or product specific research institutions (as is being done by China). The authors of the report believe that incentives should be provided to the private sector to enter the field of research and development.

Within the sector of agriculture, the report says livestock has acquired a more prominent place and modernization of livestock markets need to be promoted. The sector contributes almost half to agriculture's gross output which translates into a contribution of over 10-percent to GDP. It engages 35 million people in the rural economy and provides almost 40 percent of total income of the farming community. The sector is dominated by small operators; those owning less than two animals account for slightly more than two-fifths of the total population of cattle and buffaloes. As in the case with the crop sector, yields are low. The government estimates the yield gap-outputs of the current livestock population compared with the output obtained in more developed systems-at between 60 to 80 percent. The reason for low productivity has been identified as inadequate and poor quality feed and fodder; limited animal health coverage; widespread breeding of genetically inferior livestock; poor marketing infrastructure; shortage of trained manpower; inadequate incentives for small producers; and lack of extension services. Improving yields in the livestock sector would make a significant contribution to increasing value added in agriculture. It would also have a profound impact on reducing the incidence of poverty in the country side, the report says.

A strategy aimed at achieving this objective should provide better education and training to the people engaged in livestock and better health coverage for animals. The quality of food and fodder needs to be improved. Flow of credit to livestock owners also needs to increase. At this time 90 percent of bank lending to agriculture goes to the crop sector with the livestock sector receiving 10 percent. The proportion needs to be raised to reflect more closely the contribution to value added, the report says.

It is heartening to note that all the six coauthors of the above highly professional and research based report has been included in the "Task Force on Food Security" constituted by the Prime Minister last week. Let us hope that the task force will come out with its report and recommendation as early as possible and the government would arrange its implementation without any loss of time.