The federal government has decided to withdraw 5 percent sales tax on sizing, weaving and warping sectors comprising small manufacturers and allow sales tax zero-rating facility to these sectors of the textile chain in budget (2012-2013). Sources told.
Farming is Pakistan’s largest economic activity. In FY 1993, agriculture, and small-scale forestry and fishing, contributed 25 percent of GDP and employed 48 percent of the labor force. Agricultural products, especially cotton yarn, cotton cloth, raw cotton, and rice, are important exports. Although there is agricultural activity in all areas of Pakistan, most crops are grown in the Indus River plain in Punjab and Sindh. Considerable development and expansion of output has occurred since the early 1960s; however, the country is still far from realizing the large potential yield that the well-irrigated and fertile soil from the Indus irrigation system could produce. The floods of September 1992 showed how vulnerable agriculture is to weather; agricultural production dropped dramatically in FY 1993.
Pakistan’s total land area is about 803,940 square kilometers. About 48 million hectares, or 60 percent, is often classified as unusable for forestry or agriculture consists mostly of deserts, mountain slopes, and urban settlements. Some authorities, however, include part of this area as agricultural land on the basis that it would support some livestock activity even though it is poor rangeland. Thus, estimates of grazing land vary widely–between 10 percent and 70 percent of the total area. A broad interpretation, for example, categorizes almost all of arid Balochistan as rangeland for foraging livestock. Government officials listed only 3 million hectares, largely in the north, as forested in FY 1992. About 21.9 million hectares were cultivated in FY 1992. Around 70 percent of the cropped area was in Punjab, followed by perhaps 20 percent in Sindh, less than 10 percent in the North-West Frontier Province, and only 1 percent in Balochistan.
Since independence, the amount of cultivated land has increased by more than one-third. This expansion is largely the result of improvements in the irrigation system that make water available to additional plots. Substantial amounts of farmland have been lost to urbanization and waterlogging, but losses are more than compensated for by additions of new land. In the early 1990s, more irrigation projects were needed to increase the area of cultivated land.
The scant rainfall over most of the country makes about 80 percent of cropping dependent on irrigation. Fewer than 4 million hectares of land, largely in northern Punjab and the North-West Frontier Province, are totally dependent on rainfall. An additional 2 million hectares of land are under nonirrigated cropping, such as plantings on floodplains as the water recedes. Nonirrigated farming generally gives low yields, and although the technology exists to boost production substantially, it is expensive to use and not always readily available.
In the early 1990s, irrigation from the Indus River and its tributaries constituted the world’s largest contiguous irrigation system, capable of watering over 16 million hectares. The system includes three major storage reservoirs and numerous barrages, headworks, canals, and distribution channels. The total length of the canal system exceeds 58,000 kilometers; there are an additional 1.6 million kilometers of farm and field ditches.
Partition placed portions of the Indus River and its tributaries under India’s control, leading to prolonged disputes between India and Pakistan over the use of Indus waters. After nine years of negotiations and technical studies, the issue was resolved by the Indus Waters Treaty of 1960. After a ten-year transitional period, the treaty awarded India use of the waters of the main eastern tributaries in its territory–the Ravi, Beas, and Sutlej rivers. Pakistan received use of the waters of the Indus River and its western tributaries, the Jhelum and Chenab rivers.
After the treaty was signed, Pakistan began an extensive and rapid irrigation construction program, partly financed by the Indus Basin Development Fund of US$800 million contributed by various nations, including the United States, and administered by the World Bank. Several immense link canals were built to transfer water from western rivers to eastern Punjab to replace flows in eastern tributaries that India began to divert in accordance with the terms of the treaty. The Mangla Dam, on the Jhelum River, was completed in 1967. The dam provided the first significant water storage for the Indus irrigation system. The dam also contributes to flood control, to regulation of flows for some of the link canals, and to the country’s energy supply. At the same time, additional construction was undertaken on barrages and canals.
A second phase of irrigation expansion began in 1968, when a US$1.2 billion fund, also administered by the World Bank, was established. The key to this phase was the Tarbela Dam on the Indus River, which is the world’s largest earth-filled dam. The dam, completed in the 1970s, reduced the destruction of periodic floods and in 1994 was a major hydroelectric generating source. Most important for agriculture, the dam increases water availability, particularly during low water, which usually comes at critical growing periods.
Despite massive expansion in the irrigation system, many problems remain. The Indus irrigation system was designed to fit the availability of water in the rivers, to supply the largest area with minimum water needs, and to achieve these objectives at low operating costs with limited technical staff. This system design has resulted in low yields and low cropping intensity in the Indus River plain, averaging about one crop a year, whereas the climate and soils could reasonably permit an average of almost 1.5 crops a year if a more sophisticated irrigation network were in place. The urgent need in the 1960s and 1970s to increase crop production for domestic and export markets led to water flows well above designed capacities. Completion of the Mangla and Tarbela reservoirs, as well as improvements in other parts of the system, made larger water flows possible. In addition, the government began installing public tube wells that usually discharge into upper levels of the system to add to the available water. The higher water flows in parts of the system considerably exceed design capacities, creating stresses and risks of breaches. Nonetheless, many farmers, particularly those with smallholdings and those toward the end of watercourses, suffer because the supply of water is unreliable.
The irrigation system represents a significant engineering achievement and provides water to the fields that account for 90 percent of agricultural production. Nonetheless, serious problems in the design of the irrigation system prevent achieving the highest potential agricultural output.
Water management is based largely on objectives and operational procedures dating back many decades and is often inflexible and unresponsive to current needs for greater water use efficiency and high crop yields. Charges for water use do not meet operational and maintenance costs, even though rates more than doubled in the 1970s and were again increased in the 1980s. Partly because of its low cost, water is often wasted by farmers.
Good water management is not practiced by government officials, who often assume that investments in physical aspects of the system will automatically yield higher crop production. Government management of the system does not extend beyond the main distribution channels. After passing through these channels, water is directed onto the fields of individual farmers whose water rights are based on long-established social and legal codes. Groups of farmers voluntarily manage the watercourses between main distribution channels and their fields. In effect, the efficiency and effectiveness of water management relies on the way farmers use the system.
The exact amounts of water wasted have not been determined, but studies suggest that losses are considerable and perhaps amount to one-half of the water entering the system. Part of the waste results from seepages in the delivery system. Even greater amounts are probably lost because farmers use water whenever their turn comes even if the water application is detrimental to their crops. The attitude among almost all farmers is that they should use water when available because it may not be available at the next scheduled turn. Moreover, farmers have little understanding of the most productive applications of water during crop-growing cycles because of the lack of research and extension services. As a result, improvements in the irrigation system have not raised yields and output as expected. Some experts believe that drastic changes are needed in government policies and the legal and institutional framework of water management if water use is to improve and that effective changes can result in very large gains in agricultural output.
The continuous expansion of the irrigation system over the past century significantly altered the hydrological balance of the Indus River basin. Seepage from the system and percolation from irrigated fields caused the water table to rise, reaching crisis conditions for a substantial area. Around 1900 the water table was usually more than sixteen meters below the surface of the Indus Plain. A 1981 survey found the water table to be within about three meters of the surface in more than one-half the cropped area in Sindh and more than one-third the area in Punjab. In some locations, the water table is much closer to the surface. Cropping is seriously affected over a wide area by poor drainage–waterlogging–and by accumulated salts in the soil.
Although some drainage was installed before World War II, little attention was paid to the growing waterlogging and salinity problems. In 1959 a salinity control and reclamation project was started in a limited area, based on public tube wells, to draw down the water table and leach out accumulated salts near the surface, using groundwater for irrigation. By the early 1980s, some thirty such projects had been started that when completed would irrigate nearly 6.3 million hectares. By 1993 the government had installed around 15,000 tube wells. Private farmers, however, had installed over 200,000 mostly small tube wells, mainly for irrigation purposes but also to lower the water table. Private wells probably pumped more than five times as much water as public wells.
Officials were aware of the need for additional spending to prevent further deterioration of the existing situation. Emphasis in the 1980s and early 1990s was on rehabilitation and maintenance of existing canals and watercourses, on farm improvements on the farms themselves (including some land leveling to conserve water), and on drainage and salinity in priority areas. Emphasis was also placed on short-term projects, largely to improve the operation of the irrigation system in order to raise yields. Part of the funding would come from steady increases in water use fees; the intention is gradually to raise water charges to cover operation and maintenance costs. Considerable time and money are needed to realize the full potential of the irrigation system and bring it up to modern standards.
Farm Ownership and Land Reform
At independence Pakistan was a country with a great many small-scale farms and a small number of very large estates. Distribution of landownership was badly skewed. Less than 1 percent of the farms consisted of more than 25 percent of the total agricultural land. Many owners of large holdings were absentee landlords, contributing little to production but extracting as much as possible from the sharecroppers who farmed the land. At the other extreme, about 65 percent of the farmers held some 15 percent of the farmland in holdings of about two hectares or less. Approximately 50 percent of the farmland was cultivated by tenants, including sharecroppers, most of whom had little security and few rights. An additional large number of landless rural inhabitants worked as agricultural laborers. Farm laborers and many tenants were extremely poor, uneducated, and undernourished, in sharp contrast to the wealth, status, and political power of the landlord elite.
After independence the country’s political leaders recognized the need for more equitable ownership of farmland and security of tenancy. In the early 1950s, provincial governments attempted to eliminate some of the absentee landlords or rent collectors, but they had little success in the face of strong opposition. Security of tenancy was also legislated in the provinces, but because of their dependent position, tenant farmers benefited only slightly. In fact, the reforms created an atmosphere of uncertainty in the countryside and intensified the animosity between wealthy landlords and small farmers and sharecroppers.
In January 1959, accepting the recommendations of a special commission on the subject, General Mohammad Ayub Khan’s government issued new land reform regulations that aimed to boost agricultural output, promote social justice, and ensure security of tenure. A ceiling of about 200 hectares of irrigated land and 400 hectares of nonirrigated land was placed on individual ownership; compensation was paid to owners for land surrendered. Numerous exemptions, including title transfers to family members, limited the impact of the ceilings. Slightly fewer than 1 million hectares of land were surrendered, of which a little more than 250,000 hectares were sold to about 50,000 tenants. The land reform regulations made no serious attempt to break up large estates or to lessen the power or privileges of the landed elite. However, the measures attempted to provide some security of tenure to tenants, consolidate existing holdings, and prevent fragmentation of farm plots. An average holding of about five hectares was considered necessary for a family’s subsistence, and a holding of about twenty to twenty-five hectares was pronounced as a desirable “economic” holding.
In March 1972, the Bhutto government announced further land reform measures, which went into effect in 1973. The landownership ceiling was officially lowered to about five hectares of irrigated land and about twelve hectares of nonirrigated land; exceptions were in theory limited to an additional 20 percent of land for owners having tractors and tube wells. The ceiling could also be extended for poor-quality land. Owners of expropriated excess land received no compensation, and beneficiaries were not charged for land distributed. Official statistics showed that by 1977 only about 520,000 hectares had been surrendered, and nearly 285,000 hectares had been redistributed to about 71,000 farmers.
The 1973 measure required landlords to pay all taxes, water charges, seed costs, and one-half of the cost of fertilizer and other inputs. It prohibited eviction of tenants as long as they cultivated the land, and it gave tenants first rights of purchase. Other regulations increased tenants’ security of tenure and prescribed lower rent rates than had existed.
In 1977 the Bhutto government further reduced ceilings on private ownership of farmland to about four hectares of irrigated land and about eight hectares of nonirrigated land. In an additional measure, agricultural income became taxable, although small farmers owning ten hectares or fewer–the majority of the farm population–were exempted. The military regime of Zia ul-Haq that ousted Bhutto neglected to implement these later reforms. Governments in the 1980s and early 1990s avoided significant land reform measures, perhaps because they drew much of their support from landowners in the countryside.
Government policies designed to reduce the concentration of landownership had some effect, but their significance was difficult to measure because of limited data. In 1993 the most recent agricultural census was that of 1980, which was used to compare statistics with the agricultural census of 1960. Between 1960 and 1980, the number of farms declined by 17 percent and farms decreased in area by 4 percent, resulting in slightly larger farms. This decline in the number of farms was confined to marginal farms of two hectares or fewer, which in 1980 represented 34 percent of all farms, constituting 7 percent of the farm hectarage. At the other extreme, the number of very large farms of sixty hectares or more was 14,000–both in 1960 and in 1980–although the average size of the biggest farms was smaller in 1980. The number of farms between two and ten hectares increased during this time. Greater use of higher-yielding seeds requiring heavier applications of fertilizers, installations of private tube wells, and mechanization accounted for much of the shift away from very small farms toward mid-sized farms, as owners of the latter undertook cultivation instead of renting out part of their land. Observers believed that this trend had continued in the 1980s and early 1990s.
In early 1994, land reform remained a controversial and complex issue. Large landowners retain their power over small farmers and tenants, especially in the interior of Sindh, which has a feudal agricultural establishment. Tenancy continues on a large-scale: one-third of Pakistan’s farmers are tenant farmers, including almost one-half of the farmers in Sindh. Tenant farmers typically give almost 50 percent of what they produce to landlords. Fragmented holdings remain a substantial and widespread problem. Studies indicate that larger farms are usually less productive per hectare or unit of water than smaller ones.
Cropping Patterns and Production
In the early 1990s, most crops were grown for food. Wheat is by far the most important crop in Pakistan and is the staple food for the majority of the population. Wheat is eaten most frequently in unleavened bread called chapati. In FY 1992, wheat was planted on 7.8 million hectares, and production amounted to 14.7 million tons.
Output in FY 1993 reached 16.4 million tons. Between FY 1961 and FY 1990, the area under wheat cultivation increased nearly 70 percent, while yields increased 221 percent. Wheat production is vulnerable to extreme weather, especially in nonirrigated areas. In the early and mid-1980s, Pakistan was self-sufficient in wheat, but in the early 1990s more than 2 million tons of wheat were imported annually.
Rice is the other major food grain. In FY 1992, about 2.1 million hectares were planted with rice, and production amounted to 3.2 million tons, with 1 million tons exported. Rice yields also have increased sharply since the 1960s following the introduction of new varieties. Nonetheless, the yield per hectare of around 1.5 tons in FY 1991 was low compared with many other Asian countries. Pakistan has emphasized the production of rice in order to increase exports to the Middle East and therefore concentrates on the high-quality basmati variety, although other grades also are exported. The government increased procurement prices of basmati rice disproportionately to encourage exports and has allowed private traders into the rice export business alongside the public-sector Rice Export Corporation.
Other important food grains are millet, sorghum, corn, and barley. Corn, although a minor crop, gradually increased in area and production after independence, partly at the expense of other minor food grains. Chickpeas, called gram in Pakistan, are the main nongrain food crop in area and production. A number of other foods, including fruits and vegetables, are also grown.
In the early 1990s, cotton was the most important commercial crop. The area planted in cotton increased from 1.1 million hectares in FY 1950 to 2.1 million hectares in FY 1981 and 2.8 million hectares in FY 1993. Yields increased substantially in the 1980s, partly as a result of the use of pesticides and the introduction in 1985 of a new high-yielding variety of seed. During the 1980s, cotton yields moved from well below the world average to above the world average. Production in FY 1992 was 12.8 million bales, up from 4.4 million bales ten years earlier. Output fell sharply, however, to 9.3 million bales in FY 1993 because of the September 1992 floods and insect infestations.
Other cash crops include tobacco, rapeseed, and, most important, sugarcane. In FY 1992 sugarcane was planted on 880,000 hectares, and production was 35.7 million tons. Except for some oil from cottonseeds, the country is dependent on imported vegetable oil. By the 1980s, introduction and experimentation with oilseed cultivation was under way. Soybeans and sunflower seeds appear to be suitable crops given the country’s soil and climate, but production was still negligible in the early 1990s.
Source: Rehmananwar Blogspot