Revival of agriculture sector has led to a smart recovery in the related industries like textiles and tractors

From Shamim Ahmed Rizvi, Islamabad
Mar 13 - 26, 2000

The third meeting of the Economic Advisory Board (EAB), a think tank constituted by the present government to advise on economic matters, while reviewing the economic situation with special reference to the developments during the first seven months of the current financial year, noted that whatever little improvement has taken place on the economic front was due to the good crop of cotton, rice and edible oils.

The official data presented to the Board showed significant improvement both in the agricultural and agriculture related manufacturing growth, during the year. Crops of cotton and rice recorded major increases over last year while the prospects of wheat looked highly promising. Even after accounting for the decrease in the production of sugarcane, the growth in agriculture sector looked set to meet the target of 4.3 per cent for 1999-2000 compared to the growth of less than one per cent last year. In the manufacturing sector, growth prospects were even better, revival of agriculture sector has led to a smart recovery in the related industries like textiles and tractors.

As indicators in the other sectors did not offer any good prospects in the near future there was almost a consensus on the point that for immediate boosting of economy agriculture offered a potential which should be fully harnessed. According to a report Pakistan is expected to save over 1 billion dollar from reduction of imports on wheat and edible oils in the current year. Pakistan's wheat out put target for the current year has been set at 20 million tonnes as against 18 million tonnes last year and the present crop situation promises that the target may be achieved further bringing down our import requirement. Pakistan's domestic demand is estimated at 21 million tonnes but another 1 to 1.5 million was needed to feed the neighbouring wartorn Afghanistan.

The Managing Director, Pakistan Oilseed Development Board told a press conference that Pakistan is expected to save over 500 million US dollars in the current financial year from a cut in its edible oil imports. He attributed this development to an upsurge in the domestic production of edible oils. Making a pointed reference to the role of his organisation in this context, he revealed that the quantum jump was possible largely due, among other factors, to its massive promotional programme for oilseeds, especially sunflower, leading to an increase in acreage from rising demand and profitability. Referring to sunflower alone, he said that it was planted over 427,000 acres in spring 1998-99, the highest ever and depicting an increase of 73 per cent over the preceding year's 248,000 acres. He stated that the increase in acreage under oilseeds could be possible from a number of steps aimed at reduction in the prices and improvement in quality of seed as made available to the farmers.

All these, put together, helped keep prices of domestic oil at levels competitive enough to cut the demand for imported oil. For a predominantly agricultural country like Pakistan, so caught in a vicious circle, as even to import its food needs, a small relief from reliance on own resources should serve as quite an eye-opener. He claimed that with little extra attention to this sector Pakistan can be self-sufficient in its edible requirement within a short span of 2/3 years.

The prospects of agriculture substantially boosting the economy have always been there, but enamoured by the lure of industry, as detached from farming, we could not put it to good use. It is not that nothing has been done for agriculture development, as all its aspects have been variously attended to, though in generally disconcerted manner leaving a bit too many loose ends. Now that with the passage of time and under the compulsion of unfolding constraints, newer avenues of agriculture are coming into focus, its importance to the country's economy is becoming increasingly pronounced.

Former finance minister of Pakistan Shahid Javed Burki, in a series of lectures during his visit to Pakistan last month described the economic situation of Pakistan as most critical in its 52 years history. He saw the only hope in Agriculture which according to him can put economy back on track.

Addressing a select gathering of economists and retired bureaucrats on "Current economic crisis of Pakistan and its implications for poverty and social development", the former World Bank executive painted a very bleak picture of the country's economy and its future riddled, as it would be, with slow growth and increasing poverty. The way things are going, he warned, there would be little improvement in growth and more appalling poverty would grip the country. The previous growth was based on the green revolution in agriculture, high remittances and direct inflow of investment. A number of these factors were now missing. The Middle East boom is no more, while the Pakistanis in Europe and the US were not interested. Foreign investors are also reluctant to come. Burki said that in the circumstances only agriculture could be the engine of growth if the government came out with clearly perceived policies in the next six months or so.

Answering how agriculture could be made a strong instrument of economic revival, he said that it would generate surpluses for exports, which should have value-addition. It would also provide employment and increase income of the poor. With forward and backward linkages, it would have salutary impact on other sectors. For improving the sector, he urged development of infrastructure and not mega projects like motorways, building of farm-to-market roads; meaningful results oriented research, development of agribusiness, and improvement in credit facilities and involvement of women in workforce. For achieving these, the government must come out with a comprehensive policy package.

It is gratifying to note that the present government has taken due cognizance of the problem and attending to it on prompt basis. The fact that the last cabinet meeting devoted almost 8 hours to discuss matters pertaining to Agriculture. Describing the agriculture as the backbone of our economy, Chief Executive Gen. Pervez Musharraf urged for all possible incentives far the formers in the farm policy under preparation. The policy which has almost been finalised will be announced after the approval of cabinet. Some of the recommendations have already been implemented.

The government has recently twice increased wheat procurement price in quick succession taking it to Rs. 300 per 40 kg. This was first raised to Rs. 285 and then further increased to its present level to boost wheat production. Earlier, it had been raised to Rs. 265 last September. Thus the total increase comes to 25 per cent which should serve as a major incentive for the farmers. Another significant change is that this time the increase has been announced before the start of the wheat sowing season. The signal from this is that the government will like to move toward self-sufficiency in wheat. But with the per acre yield of wheat remaining low at 20 to 22 maunds, institutional credit not available to the majority of farmers and other agricultural inputs being much too costly, the new price support mechanism can achieve only a limited objective.