ACHIEVING FOOD SECURITY
SHABBIR H. KAZMI
July 18 - 24, 2011
Lately, there has been a greater realization that country must achieve food security. This consensus has developed because of recent hike in global prices of commodities, particularly food items. It has also been felt that some mechanism must be developed to insulate masses from global price hike. There seems consensus that instead of importing staple food items at global prices, incentive must be given to the local growers to improve production and productivity. To achieve food security the resolution of number of major irritants is necessary.
The most important measure is to keep the cost of various inputs i.e. seeds, fertilizers, pesticides, and insecticides affordable. Cost of agriculture implements should also be controlled from going haywire. Since controlling costs may not be possible. Therefore, efforts should be made to extend soft-term credit to the farmers as well as fixing support price of different crop keeping in view their international prices. No one should oppose giving subsidy to farmers because almost all the governments around the globe pay huge subsidies to their farmers. This policy is adopted to insulate the farmers from any substantial increase/decrease of prices in the global markets. However, there is a need to make subsidy payment system transparent and to avoid cross subsidy.
One of the most common practices is fixing of support prices. While some of the proponents of market-based economies don't support this policy, the overwhelming consensus is that fixing support prices of wheat, rice, maize and edible oil is a must. This frees the growers from the worry of what will be the price of the produce once the crop is harvested.
Guaranteeing a minimum return encourages the farmers to maximize the return by achieving higher productivity through better crop management and greater efficiency. Since prices of all the inputs can't be controlled, one of the options is to enhance availability of credit to the farmers by extending loans for the purchase of inputs as well as the implements. Borrowing by the farmers is mostly seasonal in nature and financial institutions need plan well in advance. At present, annual lending to farmers is around Rs250 billion. It is a minuscule amount keeping in view the requirement of farmers and the importance of agriculture sector, contributing more than one-fourth to country's GDP. There are some structural weaknesses but higher interest rate emerges the biggest stumbling blocks. The reason behind charging high interest rate is exposure of agriculture to natural calamities.
While efforts are made to introduce comprehensive crop insurance system, the objective just can't be achieved without active participation of the government. Insurance companies have already submitted a comprehensive plan and await formal approval of the central bank.
Production and productivity of major crops in Pakistan is far below the international average. The key impediments identified are: 1) inadequate availability of irrigation water, 2) limited availability of certified seeds, 3) failure in convincing the farmers to stop switching over from one crop to another, particularly those for which the soil and weather conductions are not conducive and above all 4) failure in applying balanced dosage of different nutrients due to persistent hike in fertilize prices.
It is a common practice that when DAP price goes too high farmers apply extra dosage of urea which is not only counter productive but also damaging the crop as well as contaminating the subsoil water.
Lately, there has been a substantial increase in price of urea due to mandatory closure of fertilizer plants for certain days and 20 percent curtailment in supply of gas across the board. The policy is aimed at diverting more and more gas to power plants. However, the policy planners fail to understand the basic point that power plants can be run on alternate fuel but curtailment of gas supply and/or mandatory closure of fertilizer plants raises the cost of production and ultimately cost for the farmers.
To highlight the adverse impact of this policy, it is suffice to say that lately Pakistan has attained the capacity to produce exportable surplus urea but the policy has made the country net importer. Import of urea not only erodes foreign exchange reserves of the country but also forces the government to pay huge subsidy.
Another key impediment in achieving food security is highly inadequate storage facilities. The country has achieved production of more than 25 million tons wheat but storage facility is around 7 million tons, based on all sorts of warehouse. For wheat storage and keeping it safe and secure specific type of silos are required but Pakistan has around 2.5 million tons storage facility of this type. As a result, up to one fourth of stored wheat is rendered unfit for human consumption.
Smuggling of wheat and other food items to neighboring countries is common, partly because of porous borders and partly because of exchange of certain necessary items. Huge quantity of wheat is smuggled to Afghanistan and India every year. The reason for smuggling to Afghanistan is the price difference but wheat is used as mode of payment to the Indian sellers in exchange of certain goods.
Some of the experts say that whatever quantity of wheat goes to Afghanistan and India should also be treated as 'domestic consumption' as Pakistan gets 'other things' in exchange which also fall in the category of 'essential items'.
There cannot be two opinions that achieving food security is a must. Therefore, all the impediments must be removed at the earliest. Paying higher price to the local farmers is better than importing these items because achieving higher production and productivity can help in optimizing cost of production. One point must be kept in mind that the country does not need to bring more area under cultivation. Almost double the yield can be obtained from the same area simply by improving crop management, applying right dosage of nutrients, and using water judiciously.