THE AGRICULTURE SECTOR IN PAKISTAN...

Significance, Performance and Issues... need some attention...

MUNTAZIR HAIDER
July 23 - 29, 2007

SIGNIFICANCE OF THE AGRICULTURAL SECTOR

In Pakistan, agriculture is an important sector that provides providing food to the fast growing population of the country. With a population growth rate of 2.23 percent, there will be a net addition of 3.0 million people each year. In 50 years, the population has increased four folds. During this period the production of wheat, the major food crop, has increased only by 2.9 fold. In 1970/71 the amount of wheat imported was 0.3 million tons; it has increased to 4.0 million tons in 1997/98 and 1998/99; and decreased to 2.0 million tons in 1999/2000. The year 2000/01 showed an exceptionally bumper crop of about 21.0 million tons. Tremendous efforts are needed to narrow the gap between population growth and food production. Agriculture continues to be a predominant sector of the economy and it has nearly always accounted for over 20% of the net GDP of Pakistan. The sector at present employs over 17 million workers, who represent 44.2% of Pakistan's labor force. About 67% of population resides in rural areas. The major sources of their earning are agriculture and other small-scale rural enterprises, which directly or indirectly depend on agriculture. About 65% exports are agro based. Agricultural production is dominated by crop production, which accounts for almost 61 percent of agriculture's GDP (at constant prices). Livestock accounts for almost 35 per cent. Fisheries and forestry currently make up about 4 per cent of the GDP. There are four major crops, namely, wheat, rice, cotton and sugarcane. Among the minor crops the most important are; fruits and vegetables, followed by pulses and oilseeds. The country grows surplus of rice and cotton. The exportable surplus of cotton fluctuates but it has mostly been meeting the requirements of the local textile industry. To meet food deficit particularly in the case of edible oil, the country has to continuously depend on imports.

AGRICULTURE PERFORMANCE

The agriculture in Pakistan has made a long and difficult journey. Its performance is marked by a mixed trend. There have been some years of slow growth and some years of moderate growth. Since 1980, agricultural GDP at constant factor cost has more than doubled, increasing from Rs.76 billion in 1980/81 to Rs.168 billion in 1999/2000, with average growth rate of 4.23 percent annually. Agriculture's share of total GDP, however, declined from 31 percent to 26 percent over the same period. Crop production contributed the largest share of agricultural GDP. During the past 50 years, a significant increase in production of the major crops has been achieved. Wheat production rose from 3.3 million tons in 1950/51 to about 21 million tons in 1999/2000. Similarly, during this period, rice production rose from 0.86 million tons to 5.2 million tons. The production of cotton reached 9.2 million bales during 1997/98 however during 1998/99 its production decreased to 8.8 million bales against the target of 10.5 million bales. The agriculture grew by more than 4 percent per annum in the 60s, fell to 2.6 percent in the 70s and again picked up in the 1980s. The growth performance by different sub-sectors has also shown large fluctuations over time.

The main successes since the 1960s have been in the production of wheat, rice, cotton and poultry products. Although self-sufficiency has not yet been achieved in grain production, rice and cotton have contributed substantially to increased export earnings. There are, however, signs that in the 90s agricultural growth has decelerated more significantly with respect to major crops. During the period of 1990-91 to 1999-2000 the major crops sub-sector witnessed a growth rate of only 2.87 per cent. The other sub-sectors such as minor crops and livestock have done well in the 90s but fisheries have slowed down. Income from forestry is declining due to ban on harvesting enforced in 1997/98 for forestry protection. The decrease in the major crops in the 90s is the main cause of low agriculture growth and contributes significantly to the increase in food insecurity in the country. Agriculture sector was targeted to grow by 4.3% in 1999-2000 based on the assumption of cotton output of 9.7 million bales, wheat production of 19.9 million tons, rice production of 5.0 million tons, and sugarcane at 55.7 million tons. The estimates of 1999-2000 suggest that the agriculture has registered a growth of 5.5%. More specifically major crops registered a growth of 9.6% and minor crop grew by 2.7%. Wheat production fluctuated between 14.56 million tons in 1990 to 18.75 in 1997, while it declined in 1998-99 due to long dry spell. It is clear that overtime there has been substantial increase in the area under wheat. The relative success story of wheat, rice and cotton has not been repeated in sugarcane though its production has increased mainly through increased area which went up from 190,000 hectares at the time of independence to a record 1.16 million hectares in 1998/99, declining to 1 million hectares in 1999/2000. Sugarcane yields have remained more or less static while area increased in response to better and assured prices. The scope for future increases in sugarcane area is limited by the availability of water.

For oilseed, the country turned from self-sufficiency, into a major importer of edible oils. Imports currently represent 65 percent of domestic consumption. The area under traditional oilseeds has been declining and the yield has remained static. The main reason for this decline has been the price policy, which, due to excessive concern with consumer interest, kept the prices of edible oils low. Efforts to expand the production of non-traditional oilseeds also failed as domestic price policies and liberal imports of cheap oils have effectively curbed the farmers' incentive to produce oilseeds.

Area under maize has doubled since Independence but its yield has not shown any significant improvement due to lack of high yielding varieties and most of the crop in NWFP continues to be grown under rain fed conditions. The yield gap in this crop is one of the highest. Maize should be assigned a major role in the future cropping pattern because of strong demand as cattle and poultry feed and for oil, cornstarch, breakfast cereals and corn sugar. The present high prices of corn stemming from low production are a serious constraint on wider use of maize.

FACTORS INFLUENCING AGRICULTURAL PRODUCTIVITY

Production has traditionally been constrained by problems of a technical, institutional and policy nature. Technical constraints are poor agronomic and harvest management practices, non-availability and inappropriate use of physical inputs. Institutional constraints include capital availability for small farmers, inadequate research and extension, inefficient agricultural education and training, lack of statistics and information system, complex agriculture credit institutions and policy problems relate to input and output price distortions are the major constraints. The imperative need, therefore, is to address these issues more forcefully in order to tap the considerable productivity potential of the agriculture sector; e.g.

- Non-efficient Irrigation System: The fluctuations in production and low level of productivity would indicate that irrigation system (82% of the agriculture land) is not working efficiently and effectively. Water supply uncertainties translate into high degree of variability in the crop production. Less than half of the potential benefits from irrigation development are being realized.

- Salinity & water logging: The continuous percolation of canal irrigation water into the aquifers lead to rising water tables and salinity problems in certain areas. About 30% (4.7 million ha) of the gross command area is water logged and about 13% is considered highly waterlogged.

- Policies and role of the government: Pakistan has implemented a complex set of pricing, subsidy and tax polices which have altered over time the nature of incentives targeting the agricultural sector. These policies are often determined independently with inadvertent effects on agriculture. Yet, looked at in retrospect, the net effect of these policies on agriculture reflects a clear pattern of bias against agriculture.

- Land reform and security of land tenure: Land distribution in Pakistan is much skewed. Farms less than 5 hectares in size account for about 81% of farmers' owned only 38.7% of the total farm area. On the other hand, large farmers of more than 10 hectares comprised only 6.8% of all farmers account for 39.8% of the total farm area.

- Availability of credit: Small farmers do not have access to financial resources needed for production. The provision of adequate credit can be an important instrument for improving production and income levels of the small farmers and the landless and rural women in poverty. Most small farmers are unable to use the facility of cost free loans because of the cumbersome procedures for transacting a bank loan even if it is interest-free. The co-operative banking system is still very weak in terms of its ability to extend loans to farmers, to recover these loans and manage its affairs efficiently. Consequently, the influential farmers tend to dominate the co-operative organizations at the apex level.

Other issues that need to be addressed are:

- Soil erosion and degradation;
- Inappropriate fertilizer and pesticide use;
- Inadequate availability of quality seed;
- Inadequate markets infrastructure;
- Non availability of adequate farm power;
- Weakness of agricultural research and extension services