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New horizons for agricultural development.

At the time of allocation of resources either in the Five Year Plans or in the Annual Development Plans the sector got what can be termed as "step mother's treatment". If one glances through the Five Year Plan outlays in the public sector for the development of the economy, one finds that in the First Year Plan, the allocation to agriculture sector was 9.5 per cent of the total development expenditure, it came down to 6.5 per cent in the Second Five Year Plan, and gradually reduced in each of the succeeding Five Year Plans, so much so that in the Seventh Plan, it was only 3.5 per cent. It is understood (as of today) that the allocation to agriculture sector in the Eighth Five Year Plan would be much less in relative terms than in the Seventh Plan.

The importance of agriculture in the economy of Pakistan is well known. It is termed as the leading sector of the country's economy when judged by various indicators. It contributes about one fourth to the country's GNP; it provides not only food to the fast growing population of the country, but also meets almost all the demand of the raw material required by the local industry; it is the main source of earning foreign exchange; it provides employment over 50 per cent of the country's labour force; it is the major source of income in the rural areas which constitutes around 70 per cent of the total population and provides market for the industrial goods produced domestically.

Within agriculture, major crops provides a little less than half of the value added to the sector, minor crops 17 per cent, 30 per cent by livestock sub-sector, about 4 per cent by fisheries and a little over 1 per cent by forestry. It is thus apparent that within the agriculture sector, major crops and livestock sub-sectors are the major contributors to the value added.

During the last decade, 1982-83 to 1991-92, agriculture sector, as a whole, has performed fairly well, recording an annual average growth rate of about 4.4 per cent which is significantly higher than the 3.1 per cent growth rate in population. There have been, of course, substantial inter-year variations in growth rates, as for 'example, in 1982-83, the growth rate was in the negative by 4.8 per cent, and in 1987-88, it was only 2.7 per cent. On the other hand, the growth rates in 1984-85 and 1988-89 were 10.9 and 7.1 per cent respectively. Such yearly variations in a sector like agriculture which is greatly influenced by climate and availability of canal water and such other factors are but natural. The variations in the livestock and fisheries were much less marked but in forestry, the variations noticed from year to year were larger than the crop sub-sector.

Despite such a high growth rate of the agriculture sector (inclusive of crops, livestock, fisheries and forestry) which has remained, on the whole, well above the growth of human population, still the country has been facing serious pressures on its foreign exchange resources needed for the import of essential items to meet the increasing demand of the country created by a number of factors. These include the increase in population, rising incomes thus creating more demand of goods, changing pattern in consumption and living habits, and migration of the rural population to the cities and towns. The position of today is that:

i) The country continues to import wheat which in 1988-89 was of the order of 2.2 million tonnes, in 1989-90 about 2.1 million tonnes which declined to about 1 million tonnes in 1990-91. But in 1991-92 the imports went up to around 2 million tonnes, and in 1992-93, these might go beyond 3.5 million tonnes and may touch the level of 4 million tonnes.

ii) The country is importing edible oils to the tune of one million tonnes a year costing the exchequer about Rs. 9 million.

iii) The tea and coffee imports by the country, on an average, are about 100 thousand tonnes costing the country around Rs. 4 billion each year.

iv) The imports of milk powder cost the country about Rs. 600 to Rs. 700 million a year depending on the quality imported and its price. Of this, milk powder constitutes the largest share costing between Rs. 450 million and Rs. 500 million for about 14-15 thousand tonnes in quantity.

v) The country has also been importing sugar in the past. In 1989-90 about 250 thousand tonnes and in 1990-91, about 450 thousand tonnes were imported costing Rs. 2 billion and Rs. 3.5 billion respectively.

vi) The imports of wood and wood products consisting of (a) timber round and raw, (b) wooden and wood manufactures, (c) pulp and paper board, and (d) miscellaneous items. The total value of all these items were estimated at about Rs. 3.5 billion in 1990-91.

To these problems the Government is trying its best to pay attention for their solution. No doubt there are also the problem like the disparity of income between the rural and urban areas. In the rural areas between the poor and rich and between the in-efficient (may not be always small farmers) and efficient farmers, nutritional level of the people and so on.

The solution to some of the major problem suited above lies in boosting the agriculture sector through increased production. This can be achieved by horizontal and, or by verticle means of production. In Pakistan, the horizontal expansion of agriculture is severely constrained by the non-availability of water resources. In the Eighth Five Year Plan period, it has been estimated that an addition of about only 8 million acre feet of water would become available over the estimated availability of about 125 million acre feet in 1992-93, which is an increase of only 6.5 per cent. Most of it would be utilized on the area already cultivated and very little would be used for bringing new lands under cultivation. In view of this, major emphasis and efforts would be on vertical expansion for the growth of the agriculture; this means enhancing the productivity of land already being cultivated. In agriculture, this is the vital question before the nation if it has to curtail imports and achieve self-reliance which is the declared objective of the present government.

Before discussing the steps the Government is taking in helping the farmers for improving productivity levels, it would be in order to have present picture of the situation. The table below depicts the average growth rates of important crops during the last decade, 1981-82 to 1991-92.
(Percent Growth Rate Per Annum)
Crop Area Yield Production
Wheat + 0.9 + 2.0 + 2.9
Rice (Total) + 0.5 - 1.1 - 0.6
Basmati (+ 3.1) (- 1.6) (+ 1.5)
IRRI (- 0.7) (- 0.3) (- 1.0)
Others (- 4.9) (+ 0.2) (- 4.7)
Gram + 1.3 + 1.2 --(*)
Sugarcane - 0.6 + 1.1 + 0.6
Seed Cotton + 2.6 + 8.0 + 10.9
Non-traditional Oilseeds + 1.3 + 5.7 + 7.1
* Negligible

The table speaks for itself. The picture that it flashes is that the performance of the main crops in terms of total production as well as yield per unit of land has not been satisfactory except in the case of cotton and non-traditional oilseeds; in the latter case, the base production is extremely low. Not only the growth-rates of yields have been disappointing but the yields are very low as against the potentials. The surveys carried out by APcom have clearly shown that the yields obtained by the "progressive" farmers of the country are two to three times the yields obtained by 'traditional' farmers. Such a gap indicating the possible potential in fact raises the hopes that there are great opportunities that exist, if properly exploited, crop yields in the country can be raised substantially.

The Government seems to be well aware of this disturbing situation. Various Committees and Commissions have been set up at different times to suggest, interalia, how the crop yields could be improved. Recent of these are the National Commission on Agriculture, (1986-88), the Committee to find out the yield constraints and to suggest remedies, (1991-92), the Cabinet Committee on Agricultural Policies and Priorities, comprising of Ministers and headed by the Minister for Food and Agriculture, and the Eight Five Year Plan. In pursuing the recommendations of these and previous Commissions and Committees one finds that there is not (and was not in the past) any dearth of recommendations. But the most serious factor which hindered the progress was the lack of implementation, monitoring and follow up action of policies and programmes. Decisions taken even at the Cabinet level to improve the situation remained unattended and unimplemented either at the Federal level, or the Provincial level or both. Every Government that came into power made loud statements telling the nation how important agriculture was and how much they were serious in improving the lot of the farmers through better policy decisions and programmes etc. In actual effect what has been happening was that at the time of allocation of resources either in the Five Year Plans or in the Annual Development Plans the sector got what can be termed as "step mother's treatment". If one glances through the Five Year Plan outlays in the public sector for the development of the economy, one finds that in the First Five Year Plan, the allocation to agriculture sector was 9.5 per cent of the total development expenditure, it came down to 6.5 per cent in the Second Five Year Plan, and gradually reduced in each of the succeeding Five Year Plans, so much so that in the Seventh Plan, it was only 3.5 per cent. It is understood (as of today) that the allocation to agriculture sector in the Eighth Five Year Plan would be much less in relative terms than in the Seventh Plan.

The main conclusions one can draw from the reports of the Committees and Commissions referred to earlier are that constraints on crop yields or on productivity can be classified into four main categories; viz: (i) Technical, (ii) Institutional, (iii) Policy, and (iv) Finance.

Technical constraints generally include proper use of national resources i.e. land, water and labour, adoption of sound cultural practices; optimal use of inputs like seed, fertilizer and irrigation methods, proper use of equipment and machinery, and generation of new technology (i.e. research) and diffusion of knowledge (extension) to the farmers.

Institutional constraints include subsidies, taxes, exchange rates, trade, support prices, and physical and technical support services. These may not necessarily enhance productivity, but they have direct and immediate effect on the decision making process of the farmers.

Financial constraints - these relate to the allocation of resources which factor has already been dealt with.

It goes without saying that unless adequate resources are made available, all other programmes whether technical or institutional get adversely affected in varying degrees. The present authorities at the helm of the affairs particularly in the Ministry of Food and Agriculture recognised this deficiency and decided as a policy that unless the resource allocation position was improved adequately, all other programmes would not be properly and meaningfully implemented, hence the main objective of improving production and productivity would remain unrealized. It should be stated in all fairness that the Ministry of Food and Agriculture, particularly the Minister because of his convincing ability and personal relations at all levels in the Cabinet succeeded in getting three packages for agricultural development in the country during last 1-1/2 years. The first package announced by the Prime Minister in May 1991 dealt with the Productivity Enhancement Programme (PEP); the second package which in a way was a follow up, was announced in December 1991; and the third one which is more comprehensive in approach, in November 1992; the last one was based on the recommendations of the report of the Cabinet Committee on Agricultural Policies and Priorities headed by the Minister for Food and Agriculture. In the first package the Ministry obtained an allocation of Rs. 100 crores for PEP for the year 1991-92. This is the first time that such a block provision of this size was ever announced by the Government and its credit rightly goes to the Ministry of Food and Agriculture. These PEP allocations are to be used to remove, as far as possible, the various constraints whether technical or institutional or relating to policy so that agricultural productivity could be improved. In these "packages", the Government has also announced some concessions in the form of subsidies, tariffs etc. Similarly, in the third package, an amount of Rs. 150 crores are being made available during the 1992-93 year for the PEP programme.

These funds are mainly meant for the Provinces enabling them to formulate programmes, projects or schemes which could help the farmers to improve their activities to achieve higher productivity and production. The main programmes to be implemented from the First Package would relate to the use of subsidised gypsum on a countrywide basis and to accelerate the use of agricultural machinery for better soil management, or to supplement human and animal labour which is in shortage in peak seasons of sowing and harvesting or to save the produce against wastages occurring under conventional practices.

Many soils of the country are sick and suffer from sodicity with the result that productivity of these solid has been considerably reduced over time. Similarly canal water as well as tubewell water being used for crop irrigation is not all healthy. These waters do contain elements of sodic salts which over time get accumulated in the soils, thus adversely affecting the soil fertility resulting in reduced productivity. The solution to recover the fertility of these soils lies in the application of gypsum. The quantity of gypsum to be used depends on the intensity of the sodic salts in the fields. For this purpose, soil testing is a prerequisite. The present facilities for this purpose in the country are inadequate. Hence in the Third Package, provision has been made to give a grant of Rs. 13 crores to the Provincial Governments for making arrangements to provide mobile laboratories for soil analysis so that judicious use could be made of gypsum. Gypsum application is not needed every year, but needs to be repeated every 3-5 years. As the cost of gypsum is very high and, therefore, it has not been within the purchasing power of the small and medium farmers. Keeping in view the substantial benefits which can accrue to the farmers in terms of increased productivity, the Government have decided to provide subsidised gypsum to the farmers throughout the country under PEP programme, where soil tests indicate its use. Gypsum should not be taken as a fertilizer. Gypsum will be sold at Rs. 7 per bag against the average cost of Rs. 35 or so. As with the passage of time, the farmers get convinced of the benefits of the use of gypsum, the subsidy would be withdrawn.

The second main item for which the PEP funds are to be used is agricultural machinery. Low cost small implements can be purchased even by the small farmers. But high cost machinery like rotavators, chisel ploughs, deep-tillage ploughs, harvesters and threshers and alike are normally beyond the purchasing power of the small and medium farmers, and perhaps not all big farmers can buy such machinery without getting a loan. The Government under PEP has allowed the farmers to buy such machinery on easy installments at low mark-ups. The purchasing procedure has also been facilitated, and the surcharge on the imports of tractors have been reduced. Some critics can argue that the users of this facility would not be the small or medium size farmers. They may be right in holding such a view but the fact is that even the small and medium size farmers can also benefit from this programme. First, they will have a couple of options to them. Interested farmers can form a group and jointly buy the machinery and use it as required by each farmer. Such a system when develops on voluntary basis works very well as happened in the case when the manually operated machines were introduced in place of manually hand-chaff cutters in 1930's or so. The farmers formed groups and jointly purchased a machinery as it was costly for each individual to buy such a machine. The second option would be that a leading farmer having necessary resources would buy the machinery and it would be rented-in by the medium and small size farmers. Such arrangements are already functioning in the case of harvesters and threshers of wheat, and sugarcane crushers.

It should be mentioned here that deep tillage machinery, rotavators, chisel plough help raise the productivity to a great extent when used judiciously. The use of harvesters and threshers help save the wastages, reduces time of operations which safeguard against the vagaries of weather, help overcome the seasonal shortages of human and bullock labour, and saves the farmers from arduous and monotonous operations of threshing (as in the case of wheat).

Fertilizer is an important input for enhancing the productivity of land. The use of the three main fertilizers viz; nitrogenous, phosphatic and potassic were subsidized to promote their use by the farmers. A significant growth rate in fertilizer use was obtained in the past but during the Seventh Plan it grew only at the rate of 4 per cent against the target of about 8 per cent. In 1987, the nitrogenous fertilizer was deregulated and subsidy on its sale withdrawn, while the subsidy on the other two, whose use progressed much slower than the farmer is being reduced. Two things have happened under this policy. One was that the prices of nitrogenous fertilizer (mainly urea) increased substantially overtime. Two, the rise in the price of phosphatic fertilizer, the second in importance after nitrogenous, resulting from the reduction of subsidy, slowed down the increase in its use. This imbalanced the use-ratio between nitrogenous and phosphatic fertilizers to the detriment of the farmers. According to experts this ratio should at least be 2:1 between nitrogen and phosphorus for getting good results in terms of yields particularly of wheat, but with the price-rise of phosphatic fertilizer this ratio came to 3.5:1 or so. The Government has now reduced the prices of DAP (a commonly used phosphatic fertilizer) by Rs. 8 per bag of 50 kgs. (this is a decrease of about 4.7 per cent) and by Rs. 25 a bag of 50 kgs in the case of urea, a decrease of about 11 per cent. It is expected that these reduction in prices would take place before wheat sowings start this season. One wonders if such decreases would meaningfully influence the farmers to (a) increase their use to the desired level and (b) bring a balance between their use level as mentioned above.

Another important input is chemicals (insecticides and pesticides) for the control of insects pests and diseases. The use of such chemicals has increased substantially during the last 5-6 years particularly on cotton crop which has responded well in terms of providing significantly higher yields. Two scenarios have developed. One is that the farmers have started using these chemicals indiscriminately hoping to get as much returns as possible from crops they raise, particularly cotton. This has made the pesticides dealing companies to raise their prices not being fixed now by the Government. Second, is that the indiscriminate use of chemicals has upset the balance between the beneficial and harmful insects. Consequently, the population of harmful insects has increased to the extent that even those crops which were free of insect attack in the past are now being damaged by insect-pests. Wheat which was never attacked by any insect in the past is now getting attacked by aphids.

The Government under the Second Package has allowed to import chemicals freely under generic names hoping that the price of chemical would come down. Furthermore it has also been decided that those chemicals registered in other countries need not be re-registered in Pakistan which was a time consuming process. This would facilitate import chemicals at cheaper prices. Another important step taken by the Government to remedy the imbalanced situation between beneficial and harmful insects, is the emphasis being laid on priority basis for the research and development of Integrated Pest Management and Integrated Disease Management Programmes. For this purpose the existing Biological Research Laboratory at Rawalpindi is being strengthened and upgraded by converting it to Integrated Pests and Disease Management Institute. This would rather be a long term programme but it would help the farmers in reducing their use of chemical and resort to cheaper remedial measures and improving the land productivity, thus helping raise their incomes.

Good and certified seed for quality is another important input in raising the productivity and production of crops. At present the two seed corporations, one in the Punjab and the other in Sindh is not catering to the full needs of the farmers and of all crops. The Sindh Corporation is in a deplorable condition and despite best efforts during the last decade or so, it has not improved to come upto a satisfactory level of functioning. No such facilities of seed production and processing etc. exist in the other two provinces. Under the Second Package, the Federal Government has allowed 25 per cent subsidy to the Provincial Seed Corporations and private companies on the sale of certified seed of wheat. Also, the funds would be used to increase the number of seed processing plants by the Provincial Governments and set up where these do not exist to meet as much of the seed demand of the farmers as possible.

Weeds deprive the crops of the nutrition they would otherwise derive from the soils. Their control is essential to obtain better yields. Hoeing by manual labour is becoming problematic because of (a) nonavailability of labour at the right time, and (b) high cost of labour. Use of weedicide is the alternative but their costs are also quite high. The Government therefore, has under its Package, allowed the import of weedicides by exempting them duty and surcharge. The control and eradication of weeds would help improve the crop yields.

Water is a scarce resource in the development of agriculture in Pakistan and is one of the main constraints to higher yields, development of surface water is extremely limited. In order to accelerate under-ground resources development, the Government, under the Third Package, has given the same facilities to the registered private firms of Drilling Rigs for installation of tubewell as available to rural industries. In addition a subsidy of Rs. 30,000 would be given for the installation of tubewells. Furthermore, in order to increase the efficiency of irrigation water at the field level, land levelling equipment including laser equipment in appropriate quality will be provided earliest possible on subsidized basis under the on-going "On-Farm Management Programme". The productivity of the land will undoubtedly get improved with the increase in the use-efficiency of water. This facility, would of course, be available to the big land owners and only in rare cases, medium or small farmers would be able to benefit from this programme.

Another item on which PEP funds would be used is for strengthening research activities both at the federal and Provincial Research Institutions. At present, these institutions are grossly starved of funds and the situation is so grave that in some of the institutions around 90 per cent of the allocations are being spent for the payment of salaries and allowances of the staff while only around 10 per cent are expanded for actual research activities. PEP funds would supplement the resources available to the institutions under normal budget so that these could function efficiently and effectively.

In the Third Package, the Government has set aside Rs. 200 million for the PARC for nation-wide research and fill the gaps of resource deficiency in the research institutes. In the past there has been always felt the need for better and effective coordination between the various research institutes located at Federal and Provincial levels. For such purposes, Agricultural Research Board were established to begin with in the Punjab but it was found wanting in achieving the objectives. An amount of Rs. 200 million has been allocated in the Third Package to enable the Provincial Governments to establish such research coordination. Research Coordination Boards do not pay due dividends if sound research results are not adopted by the farmers. In addition to the extension and other educational activities of the agriculture departments, it has, therefore, been felt that the leading farmers should be given training at the local level. Under the Third Package, the necessary funds would be provided to the Provincial Governments so that they arrange the dissemination of knowledge to the farmers by setting training centres at Markaz level. In order to provide honour-effective inducement for efforts to raise productivity of crops, the Government under the Third Package, would provide Rs. 5 crores for giving awards to the best growers and agricultural researchers.

In order to adopt new technologies, credit needs by the farmers have grown. To facilitate the procedure for obtaining institutional credit on priority basis, the Provincial Governments would issue Pass Books on priority basis so that this is completed soonest possible. Furthermore, the loan limit for the purchase of inputs like fertilizers, seed and chemicals has been raised by 25 per cent from Rs. 1,600 to Rs. 2,000 per acre.

The situation of edible oils in the country has been a great source of concern at all levels of the Government including the policy makers. With the efforts made to improve the oilseed production, very little progress has so far taken place which has not made any dent arresting the size of edible oil imports. The high hopes created by the World Bank Project being implemented at considerable cost are being betrayed. The conflict between the Federal and the Provincial Governments and between the Ministries within the Federal Government regarding the policy issues of development and marketing over a decade or so have been an important impediment in giving fill-up to the oilseed production. It is gratifying that the Government, under the Third Package, have at least announced to set up an Oilseed Corporation to coordinate, streamline and look after all aspects of oilseed production, beginning from seed production and its distribution, marketing, procuring, processing, and distribution of the end products. This decision seems to be in the right direction though it has come quite belatedly. It is hoped that bureaucratic problems would soon be overcome to make it effectively operational.

So far almost all the major programmes for the enhancement of productivity except support price policy and marketing have been discussed. Price is an important factor which induces the farmers for high productivity and production. Under the present policy of the Government, the Agricultural Prices Commission reviews the price structure of the important crops and after careful technical analysis of all the factors having a bearing on price determination, makes recommendations to the Government. The final decision is taken by the Cabinet or its Economic Coordination Committee depending on the importance of the crop. Such decisions are taken after keeping in view the social, economic and political conditions prevailing in the country and it may be that one or more of these factors play a dominant role in the final decision. Two things here are important which must be mentioned. First is that the support price is a minimum guaranteed price which the farmers must get even free-market prices fall below that level. Such a situation happens when the farmers reap a bumper crop and the prices in the post-harvest months fall considerably and go below the support price level. Under such a situation, the Government is under moral obligation to purchase all the quantities of the produce if offered by the farmers. The farmers thus are saved from financial losses. But in a poor crop year, the prices generally prevail higher than the support price level. In such a year, according to to the support price policy, the farmers are at liberty to sell to any one at any price. The Government has no moral force to buy the crop at the support price level. Should the Government wish to buy the produce to build up its reserve stocks, it should do so by buying at the free market prices. It is surprising that in many quarters, within the Government and within the farming community even by the elite farmers, this concept of support price is not correctly understood.

The second point which is important to be kept in mind is that the support price is not the panacea for all ills to raise crop production. Even when a very lucrative price for a crop is announced, but the implementing agency of the support price programme does not have the necessary resources to purchase their products, the price incentive will fail to achieve its objectives. Similarly, if the support price is increased, but by the crop does not fit in the cropping pattern, or is sceptible to pests or diseases, or climatic conditions are averse to its production, or agronomical practices needed to raise a healthy crop are lacking, the support price would not be able to play its role in inducing the farmers to raise the production of that crop. The examples of non-traditional oilseeds, gram and, in some years, of onions and potatoes can be rightly quoted in this respect.

The above gives in some detail to the readers a background leading to the present policies and programmes being undertaken by the Government. These can only be successful if these are carried out with full earnest at all levels - Federal, Provincial and Local, and monitored regularly to find out the weaknesses of the programmes so that remedial measures could be taken. Pakistani farmers though illiterate and simple, they are nevertheless very responsive to the sound policies and programmes extended to them by the Government. It is the hope that if such programmes are followed in earnest and with dedication, the country can achieve self-sufficiency in most of its requirements and spare adequate quantities of produce to earn foreign exchange.

The Prime Minister's Third Package of Incentives for the farmers is a step in the right direction. It seems to be a well-considered move to assist the farmers in increasing productivity and output through larger availability of credit, inputs at reasonable prices, rather than increasing the output price. It seems that it is perhaps for this reason that the support price for wheat for the year 1992-93 has not so far been announced.
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Title Annotation:Pakistan
Author:Niaz, M. Shafi
Publication:Economic Review
Date:Feb 1, 1993
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