Key Challenges Facing Pakistan Agriculture
The fresh extraordinary building up in international meals and commodity costs has focussed attention, both home and world, on how perfect to cope with the immediate have an effect on of those increases at the poor and the inclined households who spend just about four-fifth in their incomes on food. Indeed, FAO (2008) estimated that in 2007 globally around 75 million people joined the number of hungry because of the build up in meals costs.
Several subsequent studies have strengthened the findings that millions of people have develop into food insecure and being driven into poverty across the globe because of increases in food grain costs (IFPRI et.al. (2009), DFID(2009), UN (2008) and Ivanic and Martin (2008a). Studies on Pakistan have also drawn the same conclusion (Chaudhry and Chaudhry (2008). While the fast center of attention of attention has rightly been on cushioning this have an effect on on poverty and hunger, the agriculture sector as a whole is now being tested in its entirety now not best on how absolute best it may well ensure that meals safety and fight starvation but additionally its function in economic development in a globalized economic system.
For if this build up in food and commodity costs indicators an earthly alternate in the global phrases of business in favour of agriculture, and there is explanation why to believe that is so given the worldwide upward shift in demand for meals grains, then the agriculture sector can turn out to be the foremost engine of monetary growth and construction particularly for growing international locations like Pakistan. Also the normal argument that expanding economies of scale are discovered simplest in trade because innovation and technical trade drives productivity growth basically in this sector, is also no longer increasingly more true.
Agriculture may be witnessing massive and sustained will increase in productivity because of the advent of hybrid seeds, new forms of cultivation and other technical and scientific advancements. In Pakistan the new democratic government is giving the best possible precedence to developing agriculture as well as assigning it a leading position in the development technique being formulated for the impending 10 th Five Year Plan (2010-15). This Note identifies a few of these crucial challenges that coverage makers face in assigning agriculture this main position in addition to examines how carried out economic analysis and studying from different countries reports can lend a hand provide steerage to probably the most solutions that the coverage makers desperately search.
KEY ISSUES AND CHALLENGES
Agriculture Pricing : Should the Government be within the business of administering costs? Neo-classical (now neo-liberal) economics is relatively transparent that prices of agricultural commodities must be made up our minds by means of market forces and no restrictions should be positioned on their motion both within the domestic marketplace as well as on their exports and imports. Such a unfastened market regime would make certain that prices closely mirror world prices and result within the optimum utilisation of sources. Reality, then again, could be very other.
In Pakistan in its youth after independence in 1947 the process of industrialisation (or “primitive accumulation of capital”) used to be financed not directly through an import-substitution and pricing regime which modified the phrases of trade in favour of manufacturing and towards the agriculture sector (Amjad,1982). This resulted in rapid industrialisation and a rustic with hardly any industries at independence saw by the tip of the 1950s the emergence of a significant client excellent commercial base. Even despite the fact that in subsequent decades the location faced by means of the agriculture sector quite advanced as the economy spread out and value controls had been gradually diminished together with the abolition of the meals rationing machine within the 1980s, agricultural prices remained on average lower than 30 consistent with cent of world prices.
A Contemporary study (Salam, 2009) has calculated that because of price controls and business restrictions the resulting distortions resulted in an annual reduction in earnings of the major plants by means of virtually $1.7 billion on average throughout 2001-08 (see Table 1 and a pair of). This can be almost 15-20 according to cent of the price of those major plants.
Table 1: Average Annual Transfers from Selected Crops
|Period||Wheat||Basmati paddy||Coarse paddy||Seed Cotton||Sugarcane|
|US $ / metric ton|
Source: Salam, Abdul (2009).
Table 2: Annual Resource Transfers from Selected Crops ($ million)
|Period||Wheat||Basmati paddy||Coarse paddy||Seed Cotton||Sugarcane||Total|
|Million US dollars|
Source: Salam, Abdul(2009).
Fixing Price of Wheat 2008-10 Wheat is the staple meals of the folks of Pakistan and accounts for just about 40 in keeping with cent of value added within the crop sector. In a decisive transfer the brand new democratic executive that took over in March 2008 decided to boost procurement prices2 of wheat for the incoming wheat harvest in Spring 2008 at Rs. 625 according to maund3 from the cost of Rs.425 in line with maund fixed via the last government to make sure higher returns to farmers. This was once additionally in part a response to the fiasco that had resulted from the insurance policies followed by the last executive which had fastened the cost well under international costs for the Spring 2007 wheat crop. Believing it had a bumper crop the then govt had first allowed the export of wheat, however since it had fastened the cost of wheat smartly below global prices a big a part of the wheat crop was once smuggled into neighbouring international locations leading to acute shortages.
The government ultimately used to be compelled to import wheat at much upper costs than it had exported. In solving the upper value of wheat for the Spring 2009 crop the government relied amongst others on the suggestions of a Task Force of eminent mavens that recommended fixing prices as close to as international costs and saying them well earlier than the wheat sowing season.4 A wheat worth of Rs. 950 introduced by way of the government in September 2008 was once almost 52 % higher than its earlier worth. This ended in a bumper crop, as farmers shifted land to wheat manufacturing as well as used extra inputs, forcing the government to buy huge quantities of wheat to care for costs it had fixed.
This ended in a big building up in executive reserves for which it had neither the godowns to retailer nor had allocated sufficient price range to pay for their storage. Also prices in neighbouring countries were decrease so no wheat was smuggled out. Also international prices of wheat had begun to fall in order that the government could simplest export wheat at a loss which it was once now not prepared to do. In announcing the upper worth of wheat for Spring 2009 crop in line with world costs although welcomed through the farmers ended in different issues. First and important it adversely affected the poor in urban spaces and the landless labour and really small farmers (who do not grow sufficient to meet their wishes) in rural areas.
It also fuelled inflation within the economic system that was then working at over 25 in line with cent. The govt in part tried to offset this through providing direct income improve to poor households in both city and rural spaces (of Rs 1000 in line with family in keeping with month via the Benazir Income Support Programme).
Announcing the price of wheat for the Spring 2010 crop once more posed a predicament to the federal government as international wheat costs had fallen to nearer Rs. 700 per maund. However, the government may just no longer cut back the price it had mounted earlier and determined to care for wheat costs at Rs. 950 in step with maund much to the discontentment of the farmer lobby.
This review of government interference in solving the price of wheat lately to bring them consistent with global prices in addition to ensuring better returns to farmers is an representation of the challenges a govt can face when it intervenes in agricultural markets. The new government has also fixed minimal prices of rice in the closing two years with limited procurement goals and confronted equivalent challenges.
In a comparable transfer the Supreme Court of Pakistan upheld an order of the High Court that fixed sugar costs at Rs. 40 in step with kilogram (Kg) which was smartly below the prevailing global value. The outcome was once that sugar disappeared from the marketplace and was once available in restricted quantities at nearer Rs. 60-70 in line with Kg even if the government bought its sugar stocks thru Public Utility Stores at Rs. 40 consistent with Kg. Once the Supreme Court order receded sugar is now available in the market at around Rs. 70/- in step with Kg.
Some of the important thing questions that rise up from the Pakistan’s enjoy may also be posed as follows:
- Should the govt interfere in agriculture markets or go away them completely to marketplace forces?
- If it does intervene what must be the root on which costs will have to be fixed?
- If it does fix costs with regards to global costs how should it take care of problems coming up from large fluctuations in international costs?
- How do you reconcile incentives to farmers thru higher prices with reasonably priced coverage to the deficient and susceptible households who spend round 80 in step with cent of their earning on meals?
- If farmers are paid world costs for their merchandise should they not also pay income tax (from which they’re these days exempted in Pakistan) as do different source of revenue earners in the country? How is that this executed in different nations?
- What are the possibilities of opening up trade in meals grains in South Asia and the revel in thus far together with the putting in of a Food Security Bank?
Research and Sharing of Country Experiences
The problems outlined had been much researched but within the present international milieu there may be need for severe re-assessment. At a minimum analysis can lend a hand coverage makers realise the prices and benefits of the selections they take. Also how different developing nations are selecting those issues would assist policy makers learn from each and every others studies. The downside this present day is that the IFI’s, namely the World Bank and in Asia the ADB, have very inflexible perspectives on these issues (i.e. leave it totally to market forces and not using a industry restrictions) which can be for most developing countries neither politically possible nor essentially economically the best. Also fairness issues don’t lend themselves to easy solutions when such policy regimes are followed. The seek will have to center of attention on second absolute best answers which come as shut as imaginable to ensuring efficient results in addition to meeting needs of the deficient and inclined.
Reducing Rural Poverty: Empowering the Poor
While there remains substantial debate on ranges and trends in poverty in Pakistan especially post-2001 where legitimate estimates recommend a vital decline to round 22 according to cent in 2005-06 as compared to nearer 35 in step with cent in 2001-02, there is no disputing the stark finding that poverty in rural spaces is far upper as compared to city areas. Rural poverty used to be estimated in 2005-06 at 27 consistent with cent which is nearly double that of urban poverty at 13.1 in step with cent (Pakistan Economic Survey, 2008-09). Also there is proof to signify that poverty is upper amongst females as compared to males. Estimates for 2007-08 which have no longer been formally recognized suggest that poverty levels could have further decreased to round 17 in keeping with cent total which appear to be rather counterintuitive given a significant slowing down in the economy in that yr and with inflation being at 12 in keeping with cent.
Pakistan’s agriculture financial system is characterised by means of an extremely skewed ownership of productive property, in particular land and water. There are a lot of small, resource deficient and subsistence farmers (86 per cent of 6.6 million farm families) who own lower than 50 consistent with cent of the land and water resources and a small collection of massive farmers (14 in line with cent of the total) proudly owning more than 50 in line with cent of the assets. About a third of the agricultural labour power is composed of landless labour which along with very small farmers (2 hectares or less), especially tenant farmers tend to be the poorest in the country. (see Annex Table I and II).
The problem is to plan insurance policies which make agriculture more equitable for small farmers and landless labour.
This is again a far researched house but there are two primary initiatives by the newly elected democratic executive on which sharing of country experiences could be specifically helpful. These relate to distributing state lands among the landless and the second is poverty alleviation via small holders farm animals and diary construction.
Distributing State Land Among the Landless and Small Tenant Farmers
There is a rising body of research in Pakistan (drawing at the New Institutional Economics) that argues that a main factor hindering economic development is the limited get right of entry to nature of its underlying social order.6
This college argues that poverty in Pakistan is not merely the result of adverse resource endowments but since the poor are locked “into a nexus of power which deprives the poor of their actual and potential income.”7 This energy construction which contains state establishments and native robust elite discriminates in opposition to the deficient in gaining get admission to over productive belongings, finance, public services and governance selections which makes it virtually unimaginable for them to wreck out of poverty.
For them to break out of poverty requires first providing access to land for the landless labour in addition to tenant families to shop for land and then offering them through establishments over which they’ve regulate key inputs such as credit, seed, fertilizer, water extension services and get right of entry to to markets.
In Pakistan’s case it’s endorsed shifting the estimated 2.6 million acres of state land to the landless at the side of the availability of credit score to tenant farmers to enable them to buy land. This would make a significant dent on bettering prerequisites of landless and tenant farmers.
Pakistan has experience of distributing state land to retiring senior government functionaries each civilian and armed forces. However most effective in recent years has this transfer been made as an immediate intervention for lowering poverty.
The Punjab executive in recent years dispensed over 1 million acres to landless labour in the province in holdings of 12.5 acres below plenty of schemes and equipped necessary inputs to those farmers to ensure just right returns from the land. While no detailed find out about on these schemes had been revealed the overall impression has been that they’ve been successful on the subject of vital improvements in living standards and human development indicators of households who gained possession rights to this land.
More lately the brand new democratic provincial govt in Sind has additionally put in place a scheme to distribute state land to poor girls (under the Benazir Behan Basti Programme) who are receiving direct source of revenue strengthen below the Benazir Income Support Programme). No analysis has yet been finished of this scheme which used to be introduced in 2009.
The creator is not aware of any present or previous schemes that lend a hand tenant farmers in getting access to lands they these days domesticate regardless that this proposal is contained in the Approach Paper to the 10th Five Year Plan (2010-15) (see Planning Commission, June 2009).
The problems related to land distribution through land reforms or resettlement programmes in new lands introduced beneath cultivation has been extensively analysed. However, there are a number of key issues which want in-depth research from which policy makers may just benefit together with via other country studies. These relate to:
- Understanding the operating of rural agriculture land markets and how such land may well be made accessible to the poor landless and tenant farmers.
- Successful enhance programmes for offering key inputs to settle farm households who have been given land rights and particularly the ones programmes in the operating of which they are at once concerned.
- Programmes which distribute state land to poor women for cultivation and housing.
- Poverty Alleviation through Smallholders Livestock and Dairy Development
Only when it dawned on economic planners that livestock accounts for 52 in keeping with cent of agriculture sector GDP (Pakistan is the fifth biggest milk producer in the world) that critical consideration has been given to encourage its construction. The non-public sector has, on the other hand, been energetic in the putting in place of cool chains including international companies (eg. Nestle) which gather milk from designated points in rural spaces and then promote as packed milk in urban areas.
Again what is not sufficiently recognized is that landless labour which account for nearly one-third of agricultural households depend on livestock as crucial supply of source of revenue, which provides an ordinary waft of money source of revenue on day by day foundation and livestock conserving which is principally completed through unpaid feminine household participants is the most important for meeting their nutritional needs. Available proof also signifies that extent of reliance of farm households on farm animals is inversely similar with farm measurement. The Government in Pakistan thus sees small holder dairy construction specifically for landless as providing considerable attainable for poverty alleviation.
Given acute scarcity of available village land and top costs for land the landless to find it extremely tough to find suitable area for their milch animals. Other constraints faced via them come with insufficient diet, veterinary health and synthetic insemination coverage. They also are exploited by “dhodies” (milk dealers) and also via overseas firms who offer low milk prices to them. Given that land isn’t available many landless labour stay their milch animals at “deras” (enlarged residing quarters) of huge landowners and in return they have got to work for them with little or no wages.
To alleviate poverty amongst landless labour the government has therefore determined to release a Smallholder’s Dairy Development Project which can assist them in increasing milk productivity in addition to loose them from exploitation by means of “dhodies” and large landowners. Important elements of the scheme include provision of land and infrastructure for neighborhood farms, environment up of farmer’s organizations, era/input fortify particularly provision of credit, strengthen for improvement in health and breed of animals as well as fortify in processing and advertising of milk.
While examining enlargement and construction of the agriculture sector economists as well as coverage makers have no longer given enough attention to the improvement of the livestock sector which as now we have observed will also be an important method of assuaging rural poverty. Policy makers may just be told from other countries stories especially in devising focused programmes for small farmers and landless cattle holders. Some of the problems that need investigation are:
Analysis of the function of the farm animals sector in alleviating poverty especially feminine poverty in rural spaces.
Analysis of native, national and regional markets for milk and milk merchandise and how livestock house owners especially small farmers and landless can tap those markets and recover prices for the milk they promote.
Livestock possession as a method of offering economic enhance for deficient rural households especially in assembly their dietary needs and the way those may be adversely affected by more and more selling their milk for generating cash income.
Corporate Farming: Should it’s encouraged in labour surplus economies?
With a highly skewed land distribution and labour pressure enlargement at close to three in keeping with cent, amongst the highest on the earth, the problem of encouraging company farming and extra not too long ago leasing out of huge tracts of land to overseas companies or governments has grow to be a highly emotive issue in Pakistan.
The financial case for not encouraging huge scale company farming in Pakistan has been basically in accordance with the idea that this may result in an ejection of existing farmers particularly tenant farmers and at the similar time scale back labour absorption in
agriculture. With job era in the formal sector being very low these ejected farmers and landless labour would simplest be absorbed in the city informal financial system which already suffers from low productiveness, low incomes and extremely deficient and unsafe operating stipulations.
The debate on corporate farming has been intensified in recent months when with the new will increase in food and commodity costs led many nations exploring probabilities of meeting their meals grain needs by way of purchasing or leasing out of land in neighbouring countries and thus ensuring food security for themselves . In Pakistan such passion has been reputedly expressed by way of neighbouring Middle-East international locations.
It is also claimed that South Korea and India have leased land in African international locations for the production of the so-called miracle crop Jatropha which has no longer quite lived up to its expectations.
Issues associated with corporate farming and even leasing out of enormous tracts of land to overseas corporations or nations wishes some dispassionate analysis because the solutions to those questions might well not be in black and white but be conditional on land location, its bodily traits and local labour marketplace prerequisites. If for instance Pakistan used to be to rent out semi-arid land and those wishing to rent it are ready to make enough investment to make the land cultivable then this would increase labour absorption and benefit the local economy. Also the stipulations of the hire could be such that the land would after some time revert to nationwide ownership. These prerequisites may additionally include limits on the use of floor and underground water as well as moving of generation and many others. Also in Pakistan some local massive land house owners have long gone in for enormous scale company farming but slightly than just eject those that had been already farming the land they have got absorbed them in activities each farm and non-farm which they run.
Some of the problems that subsequently want to be researched may just center of attention on:
– Advantages and disadvantages of huge scale corporate farming and figuring out conditions below which it must be encouraged or discouraged.
– Under what stipulations should countries allow leasing of land to foreign companies or overseas governments with out compromising on nationwide financial pastime and sovereignty.
Encouraging global elegance financial research on key agriculture (and business comparable) issues
Policy makers in Pakistan are starved of data and analysis on key financial issues a few of that have been highlighted in this be aware.
The Government is therefore significantly taking into account putting in of an overly top high quality research policy unit in the Ministry of Agriculture.
However, past revel in suggests that such executive based totally analysis units are hardly ever a hit and get mired in bureaucracy and fail to attract just right researchers even though they are paid marketplace primarily based salaries.
Pakistan has a number of Agriculure Universities and an excessively huge Pakistan Agriculture Research Council but those our bodies are a lot higher at doing medical research fairly than analysis on key economic problems.
This raises some fundamental questions on how research should be organized that concentrates on key economic issues equivalent to terms of business, agriculture pricing and other such necessary issues. Currently advice on those issues is given through the World Bank and the Asian Development Bank together with below programme loans with conditionalities that their economic viewpoint on these issues is strictly carried out.
Governments can learn from each others studies in engaging in and drawing on coverage related research in taking agriculture related decisions. Some key issues are:
– How very best can research on key agriculture issues be organized which is each timely and related to wishes of coverage makers?
– Should analysis be conducted in our bodies working in government or must those be carried out in independent analysis organizations and if the latter how should the govt make stronger the surroundings up and expansion of such organizations.
– Role of global organizations (eg. GDN) in providing strengthen to build up of such analysis capability each on the nationwide level as well as via pooling of worldwide knowledge.
Akmal Hussain, Institutions, Economic Structure and Poverty in Pakistan, South Asia Economic Journal, Volume 5, Number 1, January-June 2004, SAGE Publications, New Delhi.
Akmal Hussain, An Institutional Framework for Inclusive Growth, 15 May 2009.
Amjad, Rashid (1982) Private Industrial Investment in Pakistan 1960–70. Cambridge: South Asian Studies, Cambridge University Press.
Chaudhry and A. Chaudhry (2008) “The Effects of Rising Food and Fuel Costs on
Poverty in Pakistan”, The Lahore Journal of Economics, Special Edition, 2008.
DFID (March 2009). Eliminating World Poverty: Building our Common Future.
Background paper to the DFID Conference on the Future of International
Economic Wing, Ministry of Food, Agriculture and Livestock (MINFAL), Government of Pakistan. Agricultural Statistics of Pakistan (various issues).
FAO website (2008). World Food Situation: Food Prices Indices. http://www.fao.org/
International Food Policy Research Institute (IFPRI) et. al. Global Hunger Index Report
(2009) Bonn, Washington D. C., Dublin.
Ivanic, Maros and Will Martin (2008 a). Food Prices and Food Security: Don’t Blame Liberalization. VOX Research Based Policy Analysis and Commentary. November 21, 2008.
Planning Commission, Approach Paper to 10th Five Year Plan (2010-15), June, 2009
Planning Commission, Report of Task Force on Food Security, 2008.
Pakistan, Government of (2009) Pakistan Economic Survey 2008-09, Islamabad.
Salam, Abdul. Distortions to Incentives in Production of Major Crops in Pakistan: 1991-
2008. Journal of International Agricultural Trade and Development, Vol.5, Issue 2,
UN High Level Task Force on Global Food Security Crisis 2008 and Ivanic and Martin, (2008a)
Annexure 1: Average Farm Size in Pakistan (in hectares)
Source: Economic Wing, Ministry of Food, Agriculture and Livestock (MINFAL) Agricultural Statistics of
Pakistan (various issues).
Annexure 2: Percentage of Farm Numbers and Farm Area by Farm Categories in
|Census year||2 hectares or less||2 to <5 hectares||5 to <10 hectares||Above 10 hectares|
|% farms||% area||% farms||% area||% farms||% area||% farms||% area|
Source: Economic Wing, Ministry of Food, Agriculture and Livestock (MINFAL) Agricultural Statistics of
Pakistan (various issues).