DIVERSIFICATION OF AGRICULTURE SECTOR IMPERATIVE
After the enforcement of WTO in 2005, the Asian countries would be faced with a difficult situation
By KHALID MAHMOOD CHAUDHRY
June 24 - 30, 2002
The globalization of economy after January 2005 when the WTO enforcement would be effected, is likely to usher in a new era of competitive marketing of goods and services pushing the marginal economies like that of Pakistan to face enormous challenges. Under the WTO agreement, to which Pakistan is also a signatory, it is mandatory for member countries to open their markets for other members. While it would offer ample opportunities to the developing countries to sell their products without any quota restrictions, the question is to what extent the developing countries would be able to sustain the competition with the developed countries given the inadequate state of infrastructure of the developing and poor countries.
After the enforcement of WTO in 2005, the Asian countries would be faced with a difficult situation. The international projections are that only China's economy will stand competing with the developed world. Its comparative edge in terms of technology and cheap labour in the manufacturing and production of almost all goods and services holds out the prospect of providing a breathing space. Confident of standing up to the challenges, China had to fight for 15 year to enter the WTO. Developing countries are also cognizant of the fact that China has the potential to face the competition with the developed world. The fact is that only those Asian economies will survive the competition which has an edge over manufacturing and production of goods and services. Japan and South Korea have technological advantage over China. Malaysia too has an edge not only in technology but also in export of palm oil. The Gulf countries also have abundance of oil reserves. But the other Asian and particularly South Asian countries hardly enjoy any edge except labour to compete with the developed world after WTO enforcement. India, Bangladesh and Sri Lanka have shown impressive economic growth over the last decade as compared to Pakistan. India is ranked high in information technology as 40% of the world's total software export is from India and its software export achieved a rise of 31.4% in year 2000-01 despite global recession.
The cardinal issue is how Pakistan can maximize the benefits as a member of WTO. The answer is to focus on agriculture and agro-based industries which can alone help sustain the competition. At present, Pakistan has almost a non-existent share i.e. 0.22% in total world trade. If Pakistan wants to stride in global competition after 2005, a paradigm diversification of agriculture sector is imperative.
The history of Pakistan bears testimony to the fact that agriculture as a largest contributing sector and backbone of economy has played a dominant role as a driving force for its growth and development since country's creation. At present, agriculture provides employment to about 47% of Pakistan's total workforce and contributes 24.7% of the GDP. The contribution of the agriculture sector in export earnings of the country is 65%.
It is distressing to note that being an agricultural country; we have to import agricultural commodities like edible oil, wheat, tea, wood and dairy products which costs billions of billions of dollars every year to the national exchequer. In the past, our policy makers and researchers did not rise to the occasion to focus attention on increased production of agricultural commodities other than wheat, cotton, sugarcane and rice. Therefore, the farmers did not feel any charm to substitute and diversify their production mode to other crops as the policy and priority atmosphere was not favourable.
Now, here we discuss about those crops that have equally favourable atmosphere to grow as that of wheat, cotton and rice etc. and their cultivation will not only increase agricultural production but can also result in upsurge in country's foreign earnings.
Pakistan is among one of the largest mango growing countries. Pakistani mangoes have no match either in terms of quality or in singularity of taste and flavour. Pakistan produces around 500,000 to 700,000 metric tonnes of mango annually. It has exported 53,444 metric tonnes in 2000-01 worth of US$17.05 million out of total mango production. It is a pity that we export only a small fraction of 4% to 5% i.e. about 35000 to 40000 metric tonnes and 40% of total production of our mangoes never reach the market due to spoilage, blemish and poor handling.
Pakistan equally produces all types of citrus fruits i.e. sweet oranges, mandarins, grape fruit and lemon etc. The mandarin variety consists of kinno and fuetrell. Kinno represents 80% of all citrus. It is interesting to note that Pakistan is the largest kinno grower. Pakistani kinno is highly demanded all over the world because of its taste, unique variety and other attributes like its pulp, juice contents, skin for cosmetics and high vitamin contents. Annual kinno production is around 1,584,000 tonnes and Pakistan's export is around 10% of the total production.
The total annual edible oil consumption of Pakistan is around 1.95 million tons that constitutes 5% of country's total import bill. Pakistan has to import two types of oils, i.e. refined, bleached and de-odorised (RBD) palm oil (hard oil) that constitutes approximately 80% of total 1.5 million tonnes of edible oil import mainly from Malaysia. On the other hand, Pakistan has also to import soft oils like soybean oil, sunflower oil and canola oil etc. It is relevant to note that RBD palm oil is not good for health and Pakistan has good potential to produce all types of soft oils.
It is ironical to note that we have never considered exporting flowers despite of the fact that all types of flowers can be cultivated in the country and this can make a substantial contribution in our export earnings. Netherlands is a small country as compared to Pakistan but its impressive agricultural commodity earnings are far more than our total annual exports. It takes a lion's share of world flower export. For example, the Dutch tulip export was US$1.5 billion in 2000-01. The Netherlands have established such a sophisticated system that its beautifully packed flower reaches anywhere in the world within a few hours of order placement.
Livestock production is an important segment of country's agriculture. It constitutes 36% of the agriculture sector and 9% of the GDP. Pakistan is the 5th largest milk producing country in the world with annual production of around 27 million tonnes. This sector also contributes about 1.75 million ton of meat to the local market. The export of milk and dairy products is still a distant dream for Pakistan as we spend millions of rupees on the import of dry milk and other dairy products to meet the demands of the urban population.
Pakistan has a distinction of second biggest tea importer after UK. It has to import around 120 million kg of tea costing billions of dollars to the national exchequer. It can save bulk of foreign exchange that is being spent on tea import by cultivating tea in Northern Areas, a suitable place for quality tea cultivation.
The climatic conditions in Pakistan are ideal as regards diversification of agriculture. God has endowed this country with vast potential to produce tropical, sub-tropical and temperate fruits, flowers and vegetables but no one has tried seriously to exploit this potential. The production of fruits, flowers and vegetables is not only viable but also of great benefit for Pakistan in terms of economic and financial gains as compared to rice, sugarcane, maize etc. The 25% of the total production of our fruits and vegetables go waste because of inadequate storage facilities and poor transportation infrastructure. Due attention should be given to resolve the impediments in this regard. The export of fruits and vegetables can be increased by standard packing, grading, proper preservation like waxing, adequate storage facilities, proper transportation and airlifting etc.
To rejuvenate agricultural sector, the hierarchy of agricultural research institutions and extension programme services should be improved on war footings. At present, there are five agricultural universities in Pakistan and the University of Agriculture, Faisalabad has a pivotal position for agricultural progress in country. But how pathetic situation it is that this university has produced about 250 PhD scholars to date since its inception in 1961 while the universities of the developed countries produce this much scholars every year. The government should allocate sufficient resources to the agriculture universities and other research institutes for research purposes.
Agricultural credit has direct relation with agricultural productivity. About 80% of the farmers (small farmers) have 12.5 acre or less of land holding. The small farmers can not use modern inputs and technology due to lack of credit facilities. They have to face many problems for getting loans. They often fail to meet the criteria set by lending institutions for loan disbursement.
It is, however, heartening to note that the present government has realised the difficulties of the small farmers and the Agricultural Development Bank of Pakistan(ADBP) have announced a package of concessions to the small farmers who could not repay their loans due to drought-like situation. This will help in rehabilitation of a large number of farmers in all the four provinces of the country.
Agricultural sector had showed impressive growth of 6.1% in 1999-2000 but could not maintain the pace of growth and showed a negative growth of 2.5% in 2000-01. This was mainly because of drought like situation that prevailed throughout the year. The present government has taken this issue on war footings and has adopted many practical measures to come up to meet this grim situation. The government has taken a number of measures to address the problem of water shortage for irrigation purposes. It has launched the Rainy Canal project worth Rs. 20 billion, RBOD, Sindh Irrigation System Rehabilitation Project of worth 10 billion rupees, and installation of Telemetry system on Indus Basin for online computerized data communication of water flow as well as fair distribution of water among the provinces, Katchi Canal Project worth 42 billion rupess, Mirani Dam and Subak Zai Dam projects, Gomal Zam Dam and Qaran Kongi Dam worth Rs12.8 billion , Greater Thal Canal Project, a project of Lining of Canals costing Rs. 20 billion and Punjab Barrages Modernisation worth 50 billion rupees. In the Northern Areas of Pakistan, the construction of Satpara Dam worth 24.8 million rupees has also been planned. The government has also approved to hold a study of Drought Management Plan costing Rs.40.6 million. This will be focused on bad effects of drought on agricultural and national economy and would suggest ways and means to combat the adverse effects of drought. The nations which sacrifice short term benefits for windfall gains in the long term have a history of marvellous progress. If we sacrifice the major chunk of resources for development of agriculture sector now, the coming years would bring happiness and prosperity: if we neglected this vital sector of economy at this critical stage prior to enforcement of WTO, we are doomed to turn paupers after 2005. This is the time the policy makers accord top priority towards diversification of our agricultural production.
The writer is a free lance journalist. E-Mail:email@example.com