GDP GROWTH RATE PLACES PAKISTAN AMONG FASTEST GROWING ECONOMIES

One big sector which could significantly contribute to the country's GDP is the hitherto neglected livestock sector.

SHAMIM AHMED RIZVI, Bureau Chief, Islamabad
Aug 21 - Aug 27, 2006

Pakistan's economy continued to maintain a solid pace of expansion for the fourth year in a row in the fiscal year 2005-06 besides facing headwinds from rising energy prices and wide spread damage caused by earthquake of October 2005. With economic growth at 6.6 percent (as against estimated 7.5 percent) Pakistan's economy has maintained an average growth rate of 7 percent per annum during last 4 years. For the current fiscal, the target has been fixed at 7.5 percent which should cause no serious problem provided the economic managers of the country pay more attention to the two sectors - large scale manufacturing and the agriculture sectors whose contribution to the GDP growth has declined during the last two to three years.

Agriculture still remains the single largest sector of the national economy but its share in the GDP is declining since 2003-04 when it was 9.2 percent to 4.3 percent in 2005-06. Similarly, growth rate in large-scale manufacturing declined to 8.6 percent in 2005-06 from over 18 percent in 2003-04.

The composition or the structure of the GDP has undergone considerable changes during the last three decades. The commodity-producing sector's share, which amounted to almost 62 percent of the GDP in 1969-70, has declined to 48 percent in 2005-06. During the last few years, the economic growth has been broad based and is shared by all the major sectors of the economy. However, major contribution towards growth has come from the services sector, which has emerged as a new growth powerhouse for some time. The commodity producing sectors (agriculture and industry) has contributed one third of the GDP growth and service sector contributed the remaining two third of the real GDP growth of 6.6 percent. The CPS contributed 31.7 percent or 2.1 percentage point of this year's growth while the remaining 68 percent came from services sector. Within the CPS, agriculture contributed 0.55 percentage points or 8.4 percent to overall growth while industry contributed 1.54 percentage points or 23.3 percent.

Despite all these changes in the GDP formation, agriculture still remains the single largest sector of the national economy. Approximately 67 percent of the population lives in rural areas and is directly or indirectly reliant on agriculture for their livelihood. The agriculture sector consists of crops, livestock and fishing and forestry sub sector. All these sectors especially the livestock, poultry and dairy sector offer tremendous potential for development.

Production of major and minor crops can be increased substantially through better inputs of better seeds and fertilizer. Farm mechanization is another field in which we are far behind in the region badly affecting our yield per acre. Intensive use of agriculture machinery needs to be popularized among the farmers with a view to improving the average yield. In the neighboring Indian part of Punjab the yield per acre is almost double than the Pakistani side of Punjab. This has been achieved through better seed and fertilizer and intensive use of agriculture machinery.

At a seminar on "Pakistan economy, future challenges and opportunities" recently held in Islamabad, the speakers were of the unanimous view that one big sector which could significantly contribute to the country's GDP is the livestock sector if proper attention was paid to this hitherto neglected sector which provided secure livelihood to over 35 million people residing in rural and sub urban areas of the country. Recently while reviewing the performance of Zari Taraqiati Bank (ZTBL), Prime Minister Shaukat Aziz directed the bank management to prepare a special package for providing credit to farmers for development of livestock. There was a great potential for development of livestock in the country and the ZTBL must play its role in harnessing this potential, he observed, adding that ZTBL should make special efforts for the promotion of this sector.

A livestock and diary product despite immense potential has been a victim of criminal neglect by the successive governments in Pakistan. It is indeed heartening that the present government has taken long overdue notice of this sector, which offered tremendous potential.

The government and private sector partnership can bring revolutionary change in Pakistan's dairy sector, which needs concrete steps for professional management and consolidation of resources available in the farm sector. At present only few business groups have the monopoly over the dairy farming and are out for minting money by selling products at a price of their choice. These business groups engaged in the dairy business are taking full advantage of government's negligence toward diary sector. Consequent to the negligence of the corporate culture in our farming sector, more than 60 million small farmers were also being deprived of their due benefits.

Experts feel that only few good policies of the government can bring a rapid improvement in poverty alleviation efforts as dairy sector has its roots all over rural areas of the country. They said that more than a dozen studies and surveys conducted by different institutions have confirmed that dairy sector has its volume of production nearly at the level of wheat and other agriculture products like cotton.

Pakistan ranks 7th among milk producing countries in the world, with an estimated 21 billion liters of milk produced annually. Although this level of milk production is more than adequate on a per capita basis for present population, lack of processing and poor distribution system in a long hot weather keeps it away from reaching consumers in areas that are either deficient in milk production, particularly the urban centers, or those that are difficult to access.

The milk yield per cow in the neighboring country is about 3,000 liters per lactation period as against 1,000 liters in Pakistan. In Western Europe, the average exceeds 5,000 liters, in USA 9,000 and Israel 7,000 liter per lactation period. After extensive research, Indian livestock ministry has introduced a programme to gradually replace buffaloes with cows, which give more milk, by educating their farmers through their well established cooperatives and successfully carried out replacement programs during the last decade or so. During this period India has almost doubled its milk production from 38 to 72 billion liters and now ranks at No. 2 after USA. Besides feeding its huge population, India is producing huge quantity of processed dry milk and packed milk. Like India, Pakistan can also earn sizeable foreign exchange by exporting milk and milk products thus ensuring significant contribution by agriculture sector to the GDP.