The decision of the government would be welcomed as a wise decision

Nov 05 - 11, 2001

The government has increased the agriculture credit allocation to Rs.60 billion during the current financial year as against Rs. 49 billion during the last fiscal ending in June last registering an increase of about 22 per cent.

This has been made possible by the soft loan of $ 250 million (about Rs 15 billion) approved by the Asian Development Bank (ADB) for the development of Agriculture Sector. The ADBs approved this loan last month is a manifestation of the confidence of the bank on the policy initiatives taken by the present government for revitalizing the farm sector.

The loan from the ADB has provided the government with the much needed liquidity to cope with the uphill task of addressing the pressing need of the farm sector. The lack of liquidity and the inability of the government to provide soft term easy loans to the farmer has been one of the major hurdle in the development of this sector. Lack of realization of its huge potential, criminal neglect of the successive past government and absence of any sustained policy framework can be cited as other main reasons for our backwardness in this regard.

The Minister for Food & Agriculture was right when he, while announcing the increase in the credit line, observed that it was due to inadequate loan financing in this sector that the farmers usually faced difficulties in holding their crops after harvest for a reasonable period of time and consequently the middle man got an opportunity to exploit the situation by offering low prices to the farmers for their produce and therefore the tillers of the soil were deprived of a reasonable rate of return. This has been the perpetual adversity faced by the farming class despite the fact that the government also enters the market at peak season for the purchase of major corps, specially wheat at an officially fixed procurement price. However, since the government purchase operations are limited to a small quantity of the total available supplies, the farmers are left with no option but to sell their stocks to middle man at less than the official procurement price. In consequence the farmers are usually beset with poor liquidity position almost throughout the year.

The decision of the government would be welcomed as a wise decision because a well-sustained growth and expansion in agricultural production can hardly be achieved without adequate availability of funds at the disposal of farmers. Just as in the case of industry, advance planning is equally essential for the farmers to take care of their various needs of investment in maintenance of implements and machinery besides financing the purchases of new machinery, better seeds, fertilizers, pesticides and regular payment of wages to seasonal workers.

According to the institution wise break up of the credit line the Agriculture Development Bank of Pakistan (ADBP) will provide Rs.35 billion, nationalised commercial banks will allocate Rs.16.50 billions, private banks participating for the first time with an estimated Rs.2.5 billion and federal bank for cooperatives have allocated Rs.6 billion.

There can be no two opinions that without an adequately increased availability of loan finance in the agriculture sector, rapid pace of modernization in this sector and increase in per acre yield with larger availability of improved varieties of seeds, effective prevention of pests and diseases, proper blending of different types of fertilizers, minimum wastage of irrigation waters etc., will remain unthinkable. It may be recalled here that it was only substantial expansion in the agricultural credit about two years ago that made it possible for the farmers to obtain a record increase in wheat production to about 22 million tonnes and thus Pakistan emerged as a surplus country in wheat after so many years of deficit and dependence on imports. It may further be pointed out here that the proposed launching of corporate farming in the country would presuppose liberalization of credit facilities and then alone a successful implementation of the idea can be put through.

Agriculture and agrobased industry collectively constitute major economic activities in Pakistan. It is the backbone of our economy as it contributes 25 per cent to GDP and 70 per cent of our Foreign Exchange earning is from this sector. It is, however, unfortunate that only 22.04 million hectors of land is cultivated which is only 27.7 per cent of the total land mass of Pakistan.

In order to break the stalemate and modernize agri-sector there is a dire need to give immediate attention to utilization of waste-land production of high quality seeds, storage facilities for agricultural products, farm machinery and implements, marketing of agricultural product, the inputs industry of fertilizers, pesticides and herbicides, livestock and dairy industry food processing and packaging activity, water managements and the financing of agri-business. A few of these activities were covered by the Industrial Policy in the last decade and as such might have received the benefits offered for their promotion. However, in the past the main agricultural activity stayed outside the ambit of investment policies and remained neglected.

With meagre inflows of investment, the agriculture sector has been badly beset by many ills of the past like the fragmentation of land holdings, the transfer of liquid assets out of farming, absentee landlordism, marginal utilization of lands for mere survival, the outdated farming methods, and lack of interest in warding off natural enemies and pests.

However it is heartening to note that this indifference and disregard towards agriculture is melting. It is now being realised that this sector needs special attention as it helped the country to survive in the post-sanctions scenario. People now felt that agriculture should not only secure reasonable living standards for the growers but should also earn its share for the country.