INVESTMENT IN AGRICULTURE-ROAD TO PROSPERITY

PROF. SAEED AHMAD SIDDIQUI
(feedback@pgeconomist.com)

Aug 6 - 12, 20
12

Pakistan is an agrarian economy because rural sector dominates by contributing 21% to GDP of Pakistan and provides employment to 44% working population. More than two-third of total population of the country finds residential accommodation in the rural areas and their livelihood revolves around agriculture and allied activities. Poverty, like other developing nations, is also the mark of distinction of Pakistan. This is the reason that agricultural development can be the source of elimination of chronic poverty in the rural sector of Pakistan. Facts and figures prove that sustained agricultural growth during 70s and 80s was the main factor of reducing the degree of poverty in the rural economy of Pakistan. But during the following decades impact of agriculture on poverty reduction weakened because productivity-gains began to fall in Asian countries in general and South-Asian in specific due to structural problems. Agricultural research was almost suspended.

Pakistan is badly in need of accelerating its agricultural production and productivity so that food support may be provided to fast growing population. According to a cautious estimation Pakistan, to support existing population, needs 273% increase in fruits, 62% in wheat, 20% in rice, 69% in maize, 38% in sugar, 45% in edible oil and 15% in cotton.

The challenges presently being faced by agricultural sector of Pakistan include unfavorable weather conditions, shortage of irrigation water and outdated techniques of cultivation. Per hectare productivity and production is decreasing due to these problems. Consequently, cultivators are compelled to spend more on agricultural inputs and fertilizers.

INVESTMENT IN AGRICULTURE

Investment in agriculture is the only solution of all the problems cited above. During crisis period, no asset can be better than investment in agriculture. In some sense, farm land is better than gold and silver because land provides best returns in the form of tangible yield. Investment in agriculture is proved 'green gold'. Heavy investment in agricultural sector of Pakistan is required because:

1. LOW WATER SUPPLY REDUCES AGRICULTURAL OUTPUT: China, with 10% of total land under cultivation at the global level and 6% world water supply cater the food requirement of 20% of its population. Nevertheless, supply of irrigation water is being reduced gradually, China, according to the report of Financial Times, has been investing heavily in agriculture. Agriculture budget of china is constantly on rise; 27% in 2007, 38% in 2008 and 20% in 2009. No big country, except India, has invested too high like China. In spite of this heavy investment, fast growing population would be the problem for China.

Investment in water supply is investment in gold mine because concept of agriculture without water supply is not more than the mad's dream. In accordance with the United Nation's report, population of China, India, Pakistan and other Asian countries would increase by1.5 billion by the end of 2050 due to which continent's food demand would become double of present. The countries investing in agriculture would cultivate best results in future.

2. FOOD GRAIN PRODUCTION HAS DROPPED TO LOWEST LEVEL: The production of food grain, decreasing steadily during the last 40 years or so, is now touching the lowest level. Prices of grains and the lands producing them have gone at the highest point. Production of grains like maize, wheat and soya been has fallen to the minimum. This is the reason that like Argentina (Green Power House) decreasing export of grains and advanced countries are inclined to stock of grains safe so that the future need of grains may be met. Investment in agriculture in Pakistan is equal to investment in oil sector.

3. PER CAPITA ARABLE LAND IS DECREASING: The rate of replacement of quality top soil is much less than its utilization. Average thickness of quality top soil on the surface is 3 feet. It is not easy to replace the exhausted quality top soil and natural replacement of consumed soil takes place in centuries. We are wasting two bushels of quality top soil for producing one bushel of wheat. We waste ten times of replaced fertile soil . Heavy investment is required For getting the lost fertility back.

4. CONSUMPTION OF FOOD GRAINS IS INCREASING FAST: World consumption of wheat is 2,600 bushels per second which is double of 1974 and this consumption will increase to double (5,200 bushels) in next 20 years. Consequently, not only for the world but this burden would also enormous and unbearable for Pakistan also. The question of paramount importance is that why are we using food grains so much? As economic condition of people improves and entering in the era of middle class, they increase the use of meat. As a result of it, more grains are required for having more meat so that the need of meat- cattle may be fulfilled. The seriousness of the problem may be appreciated by the fact that one pound of meat can be produced by 10 pound of grains. This is the reason that demand for edible oil for cooking meat and grains for cattle food would increase in future. As people, crossing the poverty line, join middle class, demand for wheat and oil seeds is bound to increase. For increasing production of both these items, investment in agricultural sector is a must.

5. RURAL POVERTY: Although Pakistan is one of the poverty suffering countries but the intensity of poverty is very high in the rural sector of the country. Pakistani farmer is born indebted because his father has inherited loans to him, lives indebted because he borrows for fulfillment of genuine and non-genuine social demands leaving the loan burden for his successors. In other words, right from birth till death, he is entangled in the vicious circle of chronic poverty. The economic condition of a common Pakistani farmer is a must for growth and development of Pakistan which is not possible without investing heavily in the agricultural sector. Most of the industries established in Pakistan are agro-based. If agriculture is backward, where from the raw materials for these industries would come? Consequently, industrial units would run under capacity increasing pace of dearness. For addressing these problems, both public and private sector should jointly increase investment in agriculture.

WHERE INVESTMENT IN AGRICULTURAL SECTOR IS NEEDED?

Agricultural growth and development in Pakistan needs heavy investment in testified seeds and modern technology. Salinity has made the life of Pakistani farmers miserable. Salinity is caused by seepage of water through water courses, distributaries, canal system, uneven topography and defective drainage system. Salinity reduces production and curtails income earned through exports therefore sowing testified seeds having capability to combat salinity can boost the production from 30% to 35%. Since hybrid seeds are imported from Canada and Europe commanding high price therefore, the poor farmer opt to use cheaper seeds causing fall in production. Government of Pakistan should invest in agriculture by giving subsidy on import of hybrid seeds.

The main factor harming productivity in agriculture is poor soil fertility and minimum use of mineral fertility. Urea and DAP (Di-ammonium phosphate) are the best fertilizers for getting more and quality production but, the problem is that their supply is much lesser than their demand. This is the reason that scarcity of these fertilizers shoot their prices up and so the cultivators are compelled to substitute them by bio-fertilizer. The government should take measures to equate their supply with demand coupled with allowing subsidy on them which, in a sense, would be the public investment in agriculture.

Apart from all these reasons, use of outdated tools and traditional agricultural technology is also an important cause of fall in income of Pakistani farmers.

PRIVATE INVESTMENT IN AGRICULTURE SHOULD BE ENCOURAGED

Ever decreasing area under cultivation, untrained agricultural labor, backward and weak infra-structure, wasteful irrigation methods, outdated and traditional farming techniques, defective agricultural marketing etc. are the challenges being faced by Pakistani cultivators. For tackling all these complicated issues and big job of running agricultural activity in organized manner in future can't be performed exclusively by government. For solving these multi-dimensional problems, both government and multi-agency system will have to invest in agriculture jointly. Multi-agency system includes private corporate sector, farmer organizations, cooperatives, non-governmental organizations, input dealers and suppliers, media and information technology. The cultivators can be switch from subsistence farming to market-driving farming by introducing modern management practices.

Briefly speaking, agricultural sector of Pakistan can be developed only through heavy investment which will be the guarantee also for overall development of the economy of Pakistan.

A GOOD NEWS

Indus Basin Holdings is the company which has brought foreign investment in the agricultural sector of Pakistan much more than any other source and has been making constant efforts in this.