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Export-oriented production of agricultural crops - a step towards self-reliance.

- A Step Towards Self-Reliance

In this paper an attempt has been made to evaluate the various aspects of export-oriented production of agricultural crops and its impact on economy. In this connection export potentialities of agricultural crops have been examined and analyzed on the basis of area, production and yield per hectare and export of agricultural crops including agricultural processed goods.

Lack of adequate finance has been the main factor impeding the necessary economic development. A number of proposals made from time to time and also as envisaged by various Five-Year Plans to make agriculture as agro-based industry, necessary funds are required to accelerate the existing rate of agricultural production by bringing more land under plough. There are plenty of uncultivated land the development of which can lead to this end.

The main object of production is not to attain self-sufficiency in those products only but also to earn foreign exchange through exports. New markets are needed to be explored for this purpose. Middle East, newly independent states of Central Asia and other developing countries may prove to be a profitable market for surplus production. In order to manage necessary funds required for development to make Pakistan a prosperous granary for food deficient countries, a food-supply agreement type is suggested to be made with those countries which are able to provide funds in advance: repayable in kind each year. In this way Pakistan can also march towards the road of self-reliance.

At the end of the paper a brief account of the impact on the economy has been presented which relates to enlarging the size of the cultivable land, increase in employment specially in rural areas, reducing rural indebtedness and overall flourishing aspects of the economy, the most glaring one will be to reduce dependence on foreign and assistance.

Introduction

Foreign exchange earning plays a vital role in the development of a country. Almost all financial and commercial policies aim to augment the foreign exchange earning through various measures. Therefore, one of the main objectives of a country specially developing one is to have surplus exports or at least trade balance in order to accelerate the pace of economic development.

There are two main sources of foreign exchange earning. First is the trade and commerce while second, is thenet factor income receipt from abroad. To this, foreign assistance and aid may also be added as a third main source of fianance which is always based on one condition or other by the donor country. In order to have trade surplus a course of substituting imports by domestic production is also followed. In this context, growing of sunflower and other oilseeds besides manufactured items may be quoted as an example. Similarly, an attempt was also made in past to grow tea and jute in the country on experimental basis. Therefore, substituting importas will save foreign exchange which may be utilized for economic development.

Export of Agricultural Crops and Commodities

Among the main items of exports of agricultural crops are rice, barley, cotton, tobacco, fruits and vegetables while exports of manufactured and semi-manufactured agricultural commodities include creals preparation, sugar and honey, cotton yarn, thread and cloth etc. Table-I shows exporters of selected agricultural crops and commodities. It is worth mentioning that besides important crops, potato, onion, garlic, fruits and vegetables have also their foreign markets specially in Middle East and other developing countries.

With the changed political world set up, possibilities of new markets have also emerged specially in Eastern Europe and newly independent states of Central Asia. In Table-I it may be seen that export of selected crops and commodities accounts for 55 per cent to 62 per cent in which the share of agricultural crops alone stands at 24 per cent to 39 per cent. Yearwise percentage shares of selected agricultural crops and commodities to total exports of Pakistan for the years 1979-80 to 1989-90 are as under:
 Percentage Share of Selected
 Agricultural Crops and
 Commodities to Total Export
 Agri.
 Crops &
 Agricultural Agricultural Commodities
Year Crops Commodites Combined
1979-80 35.45 24.17 59.62
1980-81 38.86 23.18 62.04
1981-82 29.89 28.12 58.01
1982-83 26.07 29.78 55.85
1983-84 51.68 29.77 21.12
1984-85 23.73 31.66 55.39
1985-86 30.41 28.71 59.12
1986-87 22.78 31.85 54.63
1987-88 24.44 32.24 56.68
1988-89 28.53 32.51 61.04
1989-90 17.85 38.11 55.96


The place occuped by agriculture in Pakistan economy may be visualized that while it employs about 50 to 60 per cent of labour force its share in the total export earning comes near to 60 per cent to 70 per cent. The agriculture not only meets the domestic requirements but also claims the largest share in foreign exchange earning. Not to this extent only, agriculture possesses much more potentialities and capacity than the present volume of export earnings. Any attempt to accelerate the agricultural production will lead to the road of prosperity and self-reliance.

Financial Requirements

Lack of finance impedes the economic development. Many of the development plans in the past could not be fully materialized because adequate funds were not available. The gap between the requirement for fund and its availability may be bridged up if new avenues of foreign exchange earning are explored.

Pakistan being predominantly an agricultural country can meet this challenge if volume of agricultural production is adequately increased. There are sufficient land, manpower and technique available to grow more if campaign for this purpose is properly planned and effectively launched. Planning and launching a scheme to grow more food should not mean publicity only, but it should be accompanied by provision of credit facilities to growers and adoption of mechanised technique of production. There is plenty of land available in this country. But the problem is to make barren land cultivable. The availability of land may be visualized in Table-II which shows the land utilization statistics of Pakistan. It may be seen in the said table that out of total area of 79.6 million hectares, the cultivated area reported in 1975-76 stood at 19.8 million hectares which rose to 20.1 million hectares in 177-78 and 20.7 million hectares in 1987-88. It shows that during a span of twelve years even one million hectares of land could not be added to cultivated area. No doubt, all pieces of land can not be made cultivable at a time. But if adequate funds are injected it will gradually strengthen the economy. Many factors may be attributed to this fact among which the prominent are the lack of finance and land tenure system prevailing in the country. As regards former, Pakistan depends on foreign aid and assistances which are not available according to requirement. The land tenure system is another fact or retarding the agricultural development on scientific line as well as impeding an overall mechanization of agriculture though three agricultural reforms were made, the details of which are not needed to be enumerated here. [TABULAR DATA II OMITTED]

Export Potentialities

The export potentialities of agricultural crops may be judged on the basis of data on area, production and yield per hectare besides data on domestic requirement. The increasing trend with regard to production and yield per hectare of important crops signifies the truth that there are much export potentialities in Pakistan. A remarkable achievement may further be obtained if irrigation water, availability of high yielding variety of seed, plant protection, supply of fertilizer etc. are made available to cultivators coupled with the adoption of early warning system to protect the crop from natural calamities. In this way, Pakistan may be able to counter act the vagaries of nature which have been faced by the growers on many occasions. These measures will not only increase the volume of production but will also reduce the per hectare cost of production.

The production of agricultural crops stands witness to the fact that in respect to certain crops like rice, barley, maize, tobacco, cotton, vegetables etc. Pakistan has been able to export on which account large amount of foreign exchange was earned. Pakistan has also been endeavouring to achieve self sufficiency in sugar which ultimately reduced the volume of imports of sugar significantly. It may be seen in Table-III that imports fell down from Rs. 428.5 million in 1972-73 to Rs. 0.1 million in 1975-76. The manufacturing of sugar increased from 851.3 thousand tonnes in 1980-81 to 1301.3 thousand tonnes in 1981-82 due to which a nominal import of sugar worth Rs. 1.1 million was needed while in 1984-85 sugar was not at all imported. Similarly, Pakistan is marching towards attaining not only self-sufficiency in wheat but also to export it.
 Table-III
 Manufacturing of Sugar and
 Its Import in Pakistan
 Sugar Import
 Manufacturing of Sugar
Year (000 M. Tons) (Rs. million)
1972-73 429.0 428.5
1975-76 630.1 0.1
1979-80 585.8 493.8
1980-81 851.3 473.0
1981-82 1301.3 1.1
1982-83 1127.0 14.2
1983-84 1147.1 1.1
1984-85 1306.1 --
1985-86 1116.1 929.7
1986-87 1285.9 2,762.6
1987-88 1770.9 958.1
1988-89 1857.8 204.3
1989-90 1856.8 1,919.3
Source: Federal Bureau of Statistics,
Government of Pakistan, Pakistan
Statistical Yearbook, different issues.


Public Sector Outlays on Agriculture

The dream to develop agriculture as agro-based as well as export-based industry remained a dream. The insufficient outlays on Agriculture during various plans period transpired that either funds were not available or genuine efforts lacked behind the requirement of agriculture sector. The public sector outlays in various Five-Year Plans are given in above table.
 (Rs. in million)
 Total Outlays on
Plan Period Outlays Agriculture (%)
1st Plan (1955-60) 4,863 461 9.48
2nd Plan (1960-65) 10,606 902 8.50
3rd Plan (1965-70) 13,204 1,377 10.43
Non Plan (1970-78) 75,544 6,492 8.59
5th Plan (1970-78) 75,544 6,492 8.59
6th Plan (1983-88) 248,600 7,700 7.12
7th Plan (1988-93) 350,000 15,832 4.52
Source: Government of Pakistan,
Planning and Development Division


Agriculture which is backbone of Pakistan economy acquired only 9.48 per cent of the total public sector outlays while in the 7th Plan Period (1988-93) the outlays on Agricultures sector is expected to be the tune of 4.52 per cent only.

For the development of agriculture sector as a whole, including infrastructure, how far the amount allocated will be able to make agriculture as an export-based industry and turn Pakistan into prospering granary for food-deficient countries is better known to planners themselves.

Food Supply Agreement

The requisite development of agriculture in Pakistan could not be fully made due to lack of fund. the domestic resources being unable to meet the requirement, the development plans continued to be dependent on foreign aid and assistance.

Raw material and food are the basic needs of all countries. Pakistan possesses enough potentialities to supply both. Food products, in particular, are th requirement of Middle East oil producing countries which may be in a position to provide necessary finance in advance to enable Pakistan to gear up its existing pace of economic development. Pakistan any have a permanent-type foreign market for its products if present need and future requirements of such countries are assessed properly. Based on this rationale our development planning may need to be tailored accordingly. Table-IV shows the volume of exports to M.E. countries which is a manifestation towards that end. It may be seen in Table that in 1972-73, the total amount of export ttowards that end. It may 787.8 million which is 9.21 per cent of the total export of Pakistan. It increased gradually and jumped to the level of Rs. 14,220.2 Milion in 1983-84 which is equivalent to 38.08 per cent of the total export. However, a decreasing trend in subsequent years has been observed.
 TABLE-IV
 Volume of Pakistan Export
 to Middle East
 (Rs. in million)
 Total Export to (%) of
 Export of Middle Total
Year Pakistan East Export
1972-73 8,551.2 787.8 9.21
1973-74 10,161.2 1,897.5 18.67
1974-75 10,286.3 3,004.7 29.21
1975-76 11,252.9 3,016.0 26.80
1976-77 11,293.9 3,570.0 31.61
1977-78 12,980.4 3,438.7 26.94
1978-79 16,925.0 3,619.1 21.38
1979-80 23,410.1 5,934.1 25.35
1980-81 29,279.5 7,841.3 26.78
1981-82 26,270.0 7,514.1 28.60
1982-83 34,441.7 12,803.8 37.37
1983-84 37,338.6 14,220.2 38.08
1984-85 37,979.4 7,772.2 20.46
1985-86 49,592.2 8,971.7 18.09
1986-87 63,354.9 9,608.6 15.17
1987-88 78,444.6 9,582.3 12.22
1988-89 90,182.5 9,267.6 10.28
1989-90 106,469.3 11,446.0 10.75


It is evident from data on acreage, production, yield per hectare as well as growth of manufactured items that a great deal of export potentialities are possessed by Pakistan. If adequate funds become available to develop infrastructure, use of better inputs in the form of high yielding variety of seeds, application of necessary quantity of fertilizer, provision of credit to farmers on easy terms with incentives and modernization of agricultural farms there is no doubt that Pakistan may turn into a prospering granary.

In search of finance for agricultural and other development, Pakistan may enter into food-supply agreement with M.E. and other food deficient countries in lieu of which the latter provide fund in advance repayable in kind each year. if this approach is practicable, it will reduce dependence on foreign and assistance which would prove to be a step towards self-reliance.

Impact on the Economy

In order to examine the impact of export-oriented production of agricultural crops on the economy, a distinction is made between general export of agricultural crops and export-oriented production. The former relates to export of surplus production while in case of the latter, production is raised exclusively for purpose of export. As a general principle, export generates foreign exchange earning and increases the financial claims on importing countries as well. If a commodity which is short of domestic requirement is exporte,d it will raise the prices of those commodites in the domestic market and in certain cases, it may create a crisis also in addition to inflationary trend.

It was described at earlier paragraphs and evident from land utilization statistics of Pakistan placed in Table-II that area cultivated constituted to the extent of 26 per cent of the total area reported. It transpires that there is a wide scope to bring additional land under cultivation. Thus, the export-oriented production will bring more land under plough on the one hand and will earn foreign exchange on the other. Besides this fact, it will also create rural employment and will reduce the existing rate of unemployment or under-employment. The increasing rate of employment will also reduce the rural indebrtedness which in turn, will accelerate the rate of domestic saving, investment and overall GNP growth reflecting the flourishing feature of the economy.

The prospering affect will not be evident from the growth of agriculture sector alone, but it will also have its impact on other allied industries like transport, communication, banking, insurance, foreign tradet etc.

Conclusion

To make agriculture as an export-based industry in its real sense, the attention is required to be given on many aspects of the economy. Agriculture is perhaps the only industry where role played by weather is very prominent. Its prosperity rests with the weather conditions very much. Some times, its bumper crops seems to be the result of the magic hand and some times in opposite direction which Pakistan witnessed on many occasions. In 1981-82, for example, post-harvest losses to wheat crop was caused by excessive rain while in 1983-84 it was the turn of cotton crop. This aspect of the weather calls for appropriate planning towards setting up early warning system to protect the crop from vagareis of nature and also establishment of sufficient number of storage-warehouses with increased marketing facilities in rural areas. the cold storage on scientific line not only protects the crops from being rotten and wasted but also assists in stabilizing the price of the commodities. Low cost of production coupled with the quality of the crops is another factor which helps agricultural commodities to compete in the world market. The cost of production may be substantially reduced if adquate quantity and good quality of different inputs are used. One of the inputs is the seed, the high quality of which when used accelerates the agricultural production. Aiming at the export-oriented agricultural production, it is essential to obtain seed from the countries where it gives maximum production. For sake of comparative study and example the data on per hectare yield of selected agricultural crops for few years are given in above table.
 Yield Per Hectare in Kilograms
Crops Country 1985-86 1986-87 1987-88
Wheat France 5452 5647 5560
 Mexico 3957 4183 4231
 Pakistan 1881 1672 1865
Rice (Paddy) Egypt 5950 5952 5714
 Japan 6322 6222 6186
 Pakistan 2351 2532 2477
 U.S.A. 6097 6218 6143
Maize Italy 6979 7386 7492
 U.S.A. 7406 7553 7494
 Pakistan 1256 1361 1391
Seed Cotton Mexico 2732 2642 3173
(Phutty) Egypt 2884 2753 2376
 Pakistan 1545 1580 1716
Sugarcane U.S.A. 82036 83989 79520
 Egypt 79478 82174 79472
 Pakistan 35722 39273 39227
 India 59845 59986 59732
Source: (i) FAO, FAO Production Year Book, Volumes 38 and 42, 1984 and 1989
respectively; (ii) Food and Agriculture Division (Economic Wing), Government of
Pakistan, Agricultural Statistics of Pakistan, 1989.


It is worth mentioning that in respect of some crops like wheat the use of better seed in Pakistan obtained from other countries has produced satisfactory results. In the light of the data quoted above, it is suggested that an attempt may be made to procure seed from those countries where the maximum per hectare yield has been reported provided the soil is made cultivable accordingly.

From the discussions made at earlier paragraphs two most important points have come into light. First, the precise study should be made on demand for agricultural crops and commodities in the world market and second is the proper assessment of domestic requirement including household consumption. if either of the above aspects of the problem are not properly taken into account the country may face crisis of one form or the other.
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Title Annotation:Pakistan's agricultural industry report
Author:Qadir, Syed Abdul
Publication:Economic Review
Article Type:Industry Overview
Date:Jul 1, 1992
Words:3122
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