AGRICULTURE PANACEA OF ECONOMIC MALADIES

SHAMIM RIZVI
(feedback@pgeconomist.com)

Feb 13 - 19, 20
12

Perhaps agriculture may be the only sector, which can meet the economic targets set for the financial year 2011-12. According to a report of the State Bank of Pakistan (SBP), improved water availability, introduction of better yielding variety of rice and increase in the support price of wheat will be the main contributory factors for this achievement.

The growth target for the agriculture sector for the current fiscal year is 3.4 percent while it was 1.5 percent last year.

According to the report, agriculture is facing many challenges such as flood damage to Kharif crop, taxation on inputs and low credit available to the farmers.

Although the increase in support price pushed up wheat production, there is a fear that low global prices may make it hard to offload stocks that are procured by the public sector enterprises confirming thereby indirectly that the support price fixed by the government was on the high side. It was done mainly to help the landed aristocracy by over burdening the poor consumers in the country.

The expected rice production, the report revealed, is over seven million tons as compared to about five million tons produced last year. Flood related damage is likely to be limited as most of the rice crop (about 70 percent of the rice in Sindh) is produced in the upper region, which remained unaffected by the floods. The cotton crop target of 12.8 million bales was fairly conservative compared to initial estimates of about 15 million bales, said the report, adding unfortunately the expected gains from the bumper crop were lost due to the floods.

While addressing a meeting of Agriculture Credit Advisory Committee (ACAC),governor SBP urged the banks to adopt agriculture financing as a viable business model through development of specific products/schemes to extend credit facilities to the farmers at the grass root level.

Unfortunately, despite surplus liquidity, the credit facilities extended to farmers were far lower the target, he lamented. SBP governor said that the banks need to develop a comprehensive agricultural loans to the farming community like industrial sector in order to fully harness the potentials of their lands.

Another factor, which handicapped the agriculture sector during the past year, is that with the devolution of the ministry of food and agriculture to the provinces in pursuance of 18th amendment in the constitution, Pakistan has become perhaps the only country in the world with no federal control on the food policies. The ministry's devolution has raised a number of question never faced before such as (1) what will be the criteria for fixing the minimum support price for farm produce (2) who will distribute urea, (3) how will a wheat producing province be persuaded to sell its produce to other provinces instead of exporting it at a better price. These are just some of the questions from a long list, which are being raised.

Gilgit-Baltistan owes seven billion rupees to Pakistan agriculture storage and services corporation (Pasco) for supply of wheat during the past year and as a result, further supply has been stopped.

After the adoption of the 18th amendment by the parliament, the region will be depending on Punjab for wheat. Theoretically speaking, if Punjab does not want to supply wheat to Gilgt-Baltistan there is no immediate remedy available. It is also unclear as to who will be responsible for seed certification and dealing with quarantine and pest attack issues.

Earlier, there were uniform quarantine rules at the state level to handle the import of farm products in accordance with the international standards and prevent import of substandard food. Most of the agriculture research institutes and laboratories are located in Punjab. The devolution will raise questions about creating new varieties of farm products in the other provinces. Such issues can create food insecurity in certain parts of the country.

In addition, a federal ministry or an authority at that level is also needed to handle the coordination and collaboration at the international level.

Pakistan has 54 joint ministerial commissions, 29 memorandums of understandings and nine bilateral, regional and international agreements with various courts of the world in this sector. From these arrangements, Pakistan is receiving immense help and support. These matters cannot be handled by the provinces independently.

As a result, we can loose help and support of immense value for our development work. According to the official documents, each of the 192 members of the food and agriculture organization of the United Nations has at least one federal division to deal with food and agriculture issues.

According to the analysts, there was no constitutional need to devolve the federal ministry of food and agriculture. Out of the 39 functions of the ministry, 33 were derived from the federal legislative list and six from the concurrent list. However, the parliament devolved all the 39 functions in haste without taking all the necessary precautions.

Confusion created during the last year and the handicaps faced in the development work in the food and agriculture sector has forced the parliamentarians to realize their mistake and now they are trying to make amends through 20th amendment.

Agriculture is the main stay of Pakistan's economy. Without any doubt, it is the biggest sector of our economy. Pakistan, like many other developing countries of the world, is fraught with low productivity.

Agriculture is usually divided into four main subsectors: crops; livestock; forestry; and fisheries. Blessed with abundantly available national resources and favorable climate, this sector offers immense development potential. Agriculture is, therefore, the leading sector and backbone of our economy.