Earth is so kind, that just tickle her with a hoe and
she laughs with a harvest. However, despite having vast and rich lands
supported by honest and strong hands, the agriculture in Pakistan is
still far away from the desired results.
Though the agriculture has reached the level where it
meeting the domestic food requirement to a great extent, however, the
enormous potential the agriculture sector has in Pakistan is not
reflected in the overall agriculture production. The lacking areas are
the judicious and effective management of the available water resources
and a consensus among the land barons to use agriculture to build up the
national economy instead of serving the political interests.
Instead of developing harmony between the rural and
urban life, the personal and political considerations are said to be the
arresting forces behind the stagnant growth both in the agriculture as
well as the large scale manufacturing sectors in Pakistan. Politically
motivated bureaucracy is yet another factor which allegedly arrests the
growth through ineffective follow up of the good decisions taken by the
However, the responsibility for poor growth rate in
agriculture sector is generally shifted to the shortage of water in the
country which seems close to the facts to a large extent, yet it is not
the only reason for stagnant or declining growth rate in the agriculture
sector. There is something more than what it meets to the eyes. The role
of the big bugs in this sector should also be taken into account while
reviewing the performance of the agriculture sector in Pakistan.
Besides the available cultivatable lands, Pakistan
has yet to bring an area of 10.1 million acres of virgin land under
plough, however, it needs plenty of water which is one of the major
impediments in the way of agriculture growth in Pakistan.
At present only 11 per cent of the total water
resources were being stored in Pakistan, as no new water reservoirs had
been constructed after Tarbela, while countries like China had built
6000 water reservoirs during this period. Since the per capita water
availability is continued to drop, situation calls for a national
consensus for developing small or big dams all over the country to meet
the formidable challenges of water shortage.
We would have to look into the performance of major
crops and the active forces behind them. Take the example of cotton
which is the mainstay of our economy. Despite contradictory reports
about the size of crop, it is said that the total yield is sure to cross
the mark of 11 million bales this year. However, reports about shortfall
in the crop are also being released by the vested interest. They are
talking about the shortfall in the crop just to make more money of their
holdings. On the other hand, it is unfortunate that despite the approved
policy to offer premium on production of quality cotton, free from
contamination, the promised premium is not being paid to the growers and
ginners. In the sub-sector, we have a bumper kinno crop this year but we
failed to perform well on the export front due to controversy created
about wooden crates and card cartons. Who is responsible for creating
this controversy? Why a price dispute between the millers and the
sugarcane growers is generally erupts before crushing season. Whose
interests are being served with the creation of these disputes? Are the
questions to ponder upon for the economic managers?
The government is however taking corrective as well
as supportive measures to enhance agriculture production in the country.
In this respect, an amount of Rs300 million has been recently released
aiming at crop maximization program. The funds are to be disbursed to
the farming community through the Zari Taraqiati Bank to enable the
farmers to timely meet input needs, and ensure enhanced agricultural
In fact, the crop maximization program is the part of
Agriculture Development Plan 2010 which is being carried out in
collaboration with the Food and Agriculture Organization (FAO) of the
United Nations. The Ministry of Food and Agriculture had also launched
the food security program as pilot to the crop maximization program in
five villages across the country which proved a success. According to
reports, as a result of this support program the production of wheat in
these villages increased 45-50 mounds in these areas. Encouraged with
the results, the government has now decided to extend the food security
program in 109 villages of the country in the second phase of the
program. This program is believed to achieve not only self-sufficiency
in the food but also help developing a strong export surplus in the
The Asian Development Bank has also agreed with the
government policy of facilitating the agriculture sector with subsidy in
certain sectors of the agriculture sector. Besides continuation of the
subsidy, the ADB has approved a Technical Assistance worth $7 million
for the development of agribusiness sector in Pakistan, including
formulation of strategies and specific development projects by the
private sector. The technical assistance grant is envisaged in two
phases. The first involves a detailed assessment of agribusiness sector
potential and constraints. The assessment will also review the
sub-sectors in agriculture besides water resource management with regard
to efficiency of use of available water in the country.
The agriculture was hit by acute water shortages for
the third successive year and as a result, the crop sub-sector recorded
a 0.1 per cent decline even on the low base of financial year 2001. The
weak performance of the major crops, in particular, is a matter of grave
concern, said the State Bank of Pakistan (SBP) in its annual report. It
is worth noting that the growth figure could have been even worse, if
not supported by the unexpectedly good sugarcane crop that mitigated
much of the impact of declines in other key crops.
In fact, the negative growth of the crops sub-sector
partially cannibalized the contribution of the livestock sub-sector,
which recorded a 3.4 per cent rise in financial 2002. As a result, the
agriculture sector recorded a growth of 1.4 per cent against the 2.6 per
cent negative growth in 2001. Thus even this weak recovery of the
agriculture in financial 2002 owes almost entirely to the livestock
The performance of agriculture during financial year
2002 was disappointing. The sector posted a weak recovery, growing only
by 1.4, even on the low base due to the 2.6 percent decline in the
previous 2001. Water shortage proved to be the key culprit, with
aggregate availability of surface water at canal heads declining further
to 73.1 million acre feet against 81.1 million acre feet during 2001.
The agriculture has lost much of the momentum from
the annual average growth of 4.3 per cent during the 1999s.
In real terms, the financial year 2002 value addition
of Rs166.3 billion has fallen even below the Rs168.5 billion contributed
by agriculture in 2000, pulling down the sectors share to 24 per cent in
2002 from almost 26 per cent in 2000.
The decline in the output, coupled with other
negatives such as a declining trend in farm output prices, increasing
input costs, and lack of protection from volatility in market prices
eroded farm incomes, leaving the rural populace precariously placed.
This is clearly visible in the falling rural per
capita real cash value that after showing an improvement in 2000
deteriorated by 4.4 per cent and 0.4 per cent in 2001 and 2002
respectively. Real capital formation in agriculture by public sector was
at Rs845 million during 2002 compared to 196 million last year.
The timing of the decline in farm incomes is
particularly unfortunate, since a coincide surge in the prices of key
farm inputs such as fertilizers and light diesel used by tractors and
tube-wells added to the cost of production.
Faced with limited choices, farmers opted to cut down
production expenses by curtailing the usage of fertilizer during 2002.
It may be noted that the urea off-take was 7.3 per cent lower than in
the financial 2001.
The financial managers, it seems to have taken notice
of the lack of interest of the farmers to available bank credit for
their farm developments which may ultimately affect the overall growth
of the agriculture products. The minister for food and agriculture
Sardar Yar Muhammad Rind has said that interest rate on agriculture
loans will be cut to the minimum. In order to facilitate the farmers, a
scheme of agricultural credit cards is also active consideration of the
Also, farmers seem to have deferred their expenses on
development works such as purchase of tractors, installation of
tube-wells, development of land and watercourses etc. In fact, they even
showed less interest in undertaking developmental activities through
bank borrowings. During financial year 2002 farmers availed 13.9 per
cent less development credit compared to the previous year.
In years of better growth, capital formation in
agriculture remains high, and vice versa. This is evident from the
significant relationship that exists between the annual growth in
agriculture and the real expenditures on capital formation by private
sector in agriculture.
Except for the year 1999, when farmers were given
incentives for purchasing tractors and installing tubewells, the
relationship holds strongly, in 2002, farmers clearly could not make the
necessary investment due to the shock of the large negative growth
After signing the Indus Basin Treaty with India in
1960, Pakistan holds the right to use the water of three rivers, the
Indus, Jhelum and Chenab. Their average annual flow was at 142 million
acre feet (MAF) at the time the treaty was signed.
However, the water flow has gradually declined. The
canal head water supply, which was on average 105.6 million acre-feet in
1990s, fell to 73.1 MAF in 2001-002, reducing water availability for
Pakistan crops. Poor rains have compounded this problem in the last two
In Rabi season of financial year 2002 water supply
was 50.0 percent lower than the average availability in 2001 the gap was
41.0 per cent. The total flow in main rivers at 91.2 MAF in 2002 was
significantly short of 131.7 MAF (the average annual flow during the
past 24 years).
As a result, financial year 2002 canal-head water
availability was reduced by almost one-fourth compared to the average
for the past ten years. The adverse affect of this grave water shortage
was alleviated through minimizing the water flow-losses from canal-head
to farm gate and increasing water extraction through tube wells.
Consequently, water channel losses were reduced to
less than 5.0 per cent in 2001, for the first time in the past ten
years, the area irrigated by canal tube wells installed in canal command
areas exceeded the area irrigated by canals. The share of tube well in
total irrigation is also rising; it increased from 15.3 per cent in 1991
to 17.9 pr cent in 2001.
Installation of tubewells continued both in private
and public sectors. During the past ten years, higher annual average
growth at 6.2 per cent has been observed in private tubewells compared
to the 4.0 per cent increase in public sector tubewells. By the end of
2001, tube wells totaled 545.6 thousand, with private tubewells taking a
95.9 per cent share. Consistent with number of tubewells, the ratio of
tube well irrigation to total irrigation is also rising.
The high ratio of tube well irrigation suggests that
tube wells may have helped significantly in avoiding a steep fall in the
total area under cultivation, given that during the past two years this
was the only alternate water sources that significantly compensated for
canal water shortages. In fact, the shortfall in canal-irrigated area at
11 thousand hectares in 2001 was more than offset by an increase of 24
thousand hectares by tub wells. In 2002 again, the area under tube well
irrigation increased by another 24 thousand hectare, but could not fully
offset the decline of 58 thousand hectares in area under
The construction of small dams and water reservoirs
by both the private and public sectors is essential to maintain
underground water to the minimum level necessary for the functioning of
In each effort to reduce the fiscal deficit, the
immediate cut is placed on the size of the annual development plan,
squeezing the already marginal allocation of funds for rural development
and the agriculture sector. The existing situation is thus the
continuation of a trend that started after the first five-year plan.
Despite two years of negative growth major crops
maintained their customary largest share, contributing more than 40 per
cent of the value addition. However, the decline in major crops not only
overshadowed the progress of other sub-sectors of the agriculture, but
also pushed down overall GDP growth.
During financial 2002 efforts were made to increase
the production of major crops by ensuring the timely availability of
fertilizers, pesticides and higher disbursement of credit. However, the
shortfall in canal-head water proved counterproductive to all these
efforts and as a result both, the area under cultivation and yields
declined for most major crops.
Among the four most import crops with a 90.7 per cent
share in major crops, declines were recorded in the production of rice,
cotton and wheat production of sugarcane, on the other hand increased by
10.2 per cent supported by an increase in the area under cultivation and
higher per hectare yield.
With a worsening of the water shortage in later half
of Kharif and the entire season of Rabi, the area under rice and wheat
dropped and this loss was compounded by yield declines.
Another factor contributing towards a decline in the
yield of rice was the substitution of high yield but lower quality rice
with the low yield higher quality rice. For wheat, the decline in yield
was mostly related to insufficient rains in the barani and hilly areas.
The decline in yield of cotton crop despite a rise in
area under cultivation resulted in a smaller crop size last year. An
attack of bollworm in some of the cotton growing districts of Punjab and
late sowing in Sindh, due to water shortages, were among the main
factors contributing to the fall in the yield during last year.
There has been significant relationship between water
availability and the area under cultivation of important crops except
for the last two years when the area declined less proportionately than
the shortage of irrigation water.
This happened on account of better water management
by the authorities and greater resort to tubewell irrigation.
Further, if taken by end-use classification, area
under food grains i.e. wheat, rice, bajra, jowar, maize and barley, it
declined by 3.6 per cent followed by a 5.5 per cent decline in
production. By contrast, the area under sugarcane and cotton increased
by 4.1 per cent and 6.5 per cent respectively, mainly on account timely
rains in early kharif and substitution of area from rice to cotton at
It is interesting to note that the share of major
crops in agriculture has fallen from 50.4 per cent in 1992 to 40.1
percent in 2002, but it still sets the overall trend in agri-sector
The less thirsty minor crops, in contrast to the
major crops, succeeded in posting one per cent growth in 2002. compared
to a marginal increase of 0.1 per cent in 2001. With a 17 per cent share
in value addition, minor crops, after major crops and livestock, occupy
the third place.
With the highest share in minor crops, the fruits
sub-sector is an important contributor to exports. During 2002 total
fruit exports amounted to $83.1 million compared to $78.7 million 2001.
Among other key minor crops, the production of onion
and chilies declined during 2002. Marketing weaknesses and fall in
prices were the main factors behind the respective declines. In
particular, transport and marketing bottlenecks resulted in significant
onion production losses during 2001 and 2002. This discouraged growers,
particularly in Balochistan. The setback to the production of chilies
was on account of a sharp fall in prices during 2001 when the average
retail price declined by 21.7 per cent.
The increase in production of oilseeds by 1.6 per
cent during 2002 could not bring any improvement in the domestic share
of total availability of edible oil. At present, the domestic production
of oilseeds provides around 29 per cent of the total domestic
Agriculture credit has traditionally been used for
purchasing inputs, and to finance developmental activities such as
purchase of tractors, installation of tubewells, development of land
etc. the ratio of agriculture credit to agricultural GDP, which was at
4.9 per cent during 1990s, has improved to 6.3 percent. With the recent
improvement in credit delivery e.g. the policy of revolving credit,
de-zoning of the commercial banks' territory etc; it has become easier
for the farmers to manage their loan portfolio more effectively.
Simultaneously, with the removal of the cap on
mark-up rates and expansion in the scope of agricultural credit, it has
become attractive for the commercial banks to lend to the agriculture
sector, either directly or by using the branch network and expertise of
Agricultural Development Bank of Pakistan.
As a result of improved agricultural credit policies,
a robust growth of 17.1 per cent was witnessed in the disbursement of
credit during 2002 with a record amount of Rs52.4 billion. The
encouraging feature was the rising share of commercial banks in the
overall disbursement to agriculture. Since the implementation of the
changes in credit policy introduced in 2001, the share of commercial
banks has risen sharply.
Province-wise distribution of credit reflects that
Punjab with the largest area under crops takes the highest amount of
credit, followed by Sindh, NWFP and Balochistan.
The situation becomes different when per hectare
availability of credit is taken into account. Interestingly, Sindh takes
the lead with an average disbursement of Rs3,978 per cent hectare, next
comes Punjab with Rs2,890, followed by NWFP Rs1458/hectare and
Balochistan Rs937/hectare. This wide variation is mainly attributable to
the financial position of the farmers in the respective province and
variation in land holdings, repayment position and track record,
interest of farmers towards institutional credit and concentration of
A comparison of provincial credit demand computed on
the basis of a methodology developed by the State Bank of Pakistan and
the information provided by each of the respective provincial
departments, shows that the share of Sindh in total credit demand is
higher relative to its share in total cropped area.
The functional distribution of credit showed that
during 2002 around 83.0 per cent of the total credit was disbursed for
production purposes, while the remaining was given for development
purposes. The lower off-take in development credit, as pointed out
earlier, was the outcome of a decline in farm incomes during 2002, which
compelled the farmers to defer their capital expenditures.
As far as recovery of the loans was concerned,
consistent with the concerted recovery drive launched by banks, the
recovery of agri-loans saw an improvement of 11.7 per cent during 2002.
In fact, the amount recovered at Rs53.3 billion, was even higher than
the overall disbursement made during the year. This was the second
successive year that recoveries remained greater than disbursement.
Besides the available cultivatable lands, Pakistan
has yet to bring an area of 10.1 million acres of virgin land under
plough. Recent experiments of cotton cultivation in the province of
Balochistan have proved a great success. Everybody knows that huge
barren lands are lying unutilized in that province. These highly fertile
and rich lands can give a tremendous boom to the export surplus of the
agriculture products which have a great demand all over the world
provided these virgin lands are brought under cultivation. However, to
carry out the plan to bring these lands under cultivation requires
plenty of water which is one of the major impediments in the way of
agriculture growth in Pakistan. In this respect, besides utilizing the
traditional water resources, there is another way out i.e. use of
desalinated water alongside the coastal belt of Balochistan for
agriculture purposes, as it has been successfully opted in the Middle
East. If carried out, the plan could convert the dry lands of Balchistan
into lush green farms. That will be the sight for the soaring eyes of
the poverty ridden people of that part of the country.