By AMANULLAH BASHAR
Jan 24 - 30, 2000
Agriculture is pivotal to overall economic development of Pakistan and
has contributed about 5 per cent to GDP of the country each year. It has supported the
largest industrial sector that is textile sector which in turn has contributed 67 per cent
of annual exports. Today, this is the only sector which has kept the economy going on in
our rural as well as urban areas and has potential for increase in exports.
These observations were made by a panel of agriculturists turned
politicians assembled at Karachi Press Club under banner of the Agriculture Committee of
The Reformers led by Nisar A. Memon. Prominent among those were Makhdoom Khaliquzzaman,
from Hyderabad, Qurban Ali Shah from Mirpurkhas, Zafar Ali Shah Naushehro Firoze, Shabbir
Ahmed Shah from Nawab Shah, Kher Mohammad Jonejo from Sanghar, Gadda Hussain Meheesar from
Larkana, Ali Mir Shah Badin, Qazi Shafiq Meheesar and Nisar A. Memon, president of the
Appreciating the recognition of the importance of agriculture in
economic package presented to nation by the Chief Executive, they pointed out that the
government has accepted quite a few recommendations of the Agriculture Committee of the
Reformers but many important recommendations i.e Corporate Farming, Price Support
Mechanism along with the institutional framework and Crop Insurance were not included in
the economic package which needs to be understood and implemented for achieving the
desired increased agriculture performance.
Inviting the attention of the Chief Executive Gen. Pervez Musharraf
they further observed that worldwide, agriculture has been recognized as a key sector for
social, economic, political and national security. As such, in USA and Europe, they have
established policies to encourage and support it in the form of long term consistent
policies and subsidies. Agriculture is a major consideration in even their foreign and
trade policies, they emphasised.
They highlighted following issues and concerns of the agriculture
sector in Pakistan:
Cotton and paddy being major crop have been severely affected due to
lack of recognition of farmers expenses and returns inspite of government agency like
Agricultural Price Commission's involvement in determination of costs involved.
Non-availability of adequate credit facilities for farming in
proportion of GDP contribution of agriculture as against industrial sector as well as
limitation on borrowing, coupled with high rate of interest have been negative factor for
growth of agriculture.
Limitation on land holdings has resulted in non-application of advanced
technology and mechanization, thereby, affecting the productivity and international
competitiveness of our produce.
Last year, sugar cane growers did not get the proper returns due to
discouraging policies of government, as such, the farmers were compelled to reduce the
area under sugarcane cultivation by over 25 per cent in Punjab alone. Sugar production
will therefore by 25 per cent lower this year, thus the export potential will be minimal.
It is anticipated that cotton and paddy growers will look for
diversification and thus reduce cotton and paddy cultivation next year which will reduce
their contribution to GDP and export.
Mismanagement of water witnessed this year due to lack of proper and
timely water distribution, lack of maintenance of canals, corruption, indiscipline and
lack of implementation of rules and regulations has resulted in water shortage.
Contribution of agriculture to various direct taxes i.e. agriculture
income tax, agriculture wealth tax, ushar, local cess on sugarcane, rice and cotton,
drainage tax, masjid tax, as well as indirect taxes i.e. central excise duty on sugar,
sales tax on cotton and cotton seed etc. need to be recognized for future restructuring of
Citizens, the consumers of agricultural products are being charged
higher prices thus increasing inflation. This is mainly due to lack of marketing support
organization by government and failure of existing marketing mechanism and market
Government should establish adequate and effective price support
mechanism for the major and minor crops supported by institutional framework. These
institutions should have sufficient and substantial representation of farmers on their
Ministry of Finance and State Bank of Pakistan should allocate
necessary credit funds of a large size than the industrial sector due to higher
contribution of agriculture sector to the GDP. The ceiling of individual loans be revised
upward to accommodate increased investment requirement of crops. As in the past, interest
free seasonal loans be revived for agricultural inputs.
Abundant barren state land should be developed by Government and
allotted to growers of the area through cooperative or corporate or individual arrangement
to boost agricultural production in the country. It is now internally recognized that
subsistent holdings of twelve or sixteen acres do not produce surpluses to feed growing
population. Surpluses are produced only by large farms where required inputs such as seed,
fertilizer, insecticides and pesticides, modern technology and machinery etc. can be
applied more pragmatically. Countries like USA which are largest exporters of grains and
fibers do not have a land ceiling, whilst communist farms with ceilings had only deficit.
Success in industry and trade results in setting up of additional
projects by owners to enhance industrial growth in the country, while the successful
agriculturists are restrained to expand due to land ceiling, and thus depriving
agricultural sector growth. Therefore land ceiling be removed which will also be in
conformity with the Federal Shariat Court decision.
Government must allocate adequate funds for lining of water-canals and
All agricultural taxes be consolidated and tax slabs be rationalized
comparative to incomes from other businesses. The tax collection procedures be simplified
taking into consideration the realities of illiteracy, lack of infra structure and
experience. Crop insurance be introduced as recommended by various studies to bring this
sector in line with other business.
Marketing methodologies be studied and laws introduced.
Nisar Memon while summing up the discussion disclosed that since the
Sindh is the only province in the country where the farmers are paying Usher as rest of
the farmers of the three provinces of Punjab, NWFP and Balochistan are not liable to pay
Ushar, the Governor Sindh has agreed to do away with the Ushar tax from Sindh also from
He said that the agriculture sector has no objection to pay tax on
agriculture provided this sector is treated at par with the industrial sector as far as
the taxation regime is concerned.
He said that the taxation on agriculture income is acceptable but needs
to be implemented fairly and judiciously thus the process of assessment and implementation
should be such that it could be easily implemented at gross root level recognizing the
geographical distances and farmers low level of literacy.
The formulation of policy for agriculture tax by the provincial
governments must be done a way after due consultation and involvement of growers. The
assessment and collection of taxes be continued with the provincial revenue department.
The multiplicity of taxes on agriculture be eliminated, he demanded.
PRICE SUPPORT MECHANISM
It is regrettable that the present government has been unable to help
the growers in the current cotton and paddy crises. Although they have intervened with
Trading Corporation of Pakistan but without required results for the growers who continue
to suffer the financial losses which brought untold miseries in the rural life. Whereas
Agriculture Price Commission of the federal government has determined Rs700 as production
cost of 40 kgs of putty the grower is getting less than Rs400. Thus incurring a loss of
over Rs300 per 40kgs which amount to a total loss of over Rs9 billion to Sindh growers
alone which will have catastrophic effect on future production, he warned.
In addition to cotton, paddy growers have also suffered heavy losses
due to lower price and no support action by the government. Thus the cotton and rice
the two exportable commodities will have negative impact on our exports and further
deteriorate Pakistan's trade balance.
The TCP has contracted 892,400 bales from Punjab and only 87,700 from
Sindh which is less than 10 per cent while the production of cotton from Sindh is over 25
per cent. The actual purchase and lifting by TCP from Sindh is negligible. It is therefore
imperative to establish an acceptable process of price support mechanism for growers to
avoid expected crisis of low cotton and other produces next year with its consequences on
the Pakistan economy.
Success in industry and trade results in setting up of additional
projects by owners to enhance industrial growth in the country while the successful
agriculturists are restrained to expand due to land ceilings, thus curtailing the
agricultural sector's growth. Therefore land ceilings be removed so that agriculturists
come forward to make further investments in environment of confidence.
All existing water accords between the provinces must be implemented in
letter and spirit. Earlier system of monitoring by IRSA be revived with its original
composition to monitor the equitable distribution of water. Since there has been no
consensus on building Kalabagh Dam this project be abandoned once for all to bring
inter-provincial harmony in the country. He however appreciated the Chief Executive's
recognition for desilting and the concentrated efforts by the armed forces in
collaboration with the civilians.
Sindh lands have been severely destroyed due to water logging and
salinity as such we expect a clear pronouncement and action plan by the government along
with necessary allocation of funds to maximize the reclamation of land for cultivation.
Due to water logging and salinity, large tracks have been affected as
such measure like revival of subsidized availability for gypsum also surface drains be
made along the main irrigation canals to pump the seepage water back to canals. In
addition incomplete drainage schemes need to be funded and completed. Scrap tube wells
should be repaired and regularly run since the drainage rate of Rs32 per acre is being
levied from growers in scrap areas.
Replying to a remark that the Reformers has assumed the role of the
spokesman of the feudals turned politicians, Nisar Memon in a prompt response said that
agriculture sector is one of the important segment of the economy, however the Reformers
will be coming out soon with the recommendations for revival of the industrial sector in
The Reformers have spent their time and efforts for the good of the
agriculture sector in the hope that with the introduction of a corporate culture in the
agriculture sector the country will not only be able to attract foreign investment in this
sector but help it to produce export surplus plus betterment of the farm sector in