Agriculture is undoubtedly the backbone of Pakistan’s economy as 45% of the labor force depends on this sector for livelihood. However, growth rates have been poor owing to bad policy decisions and poor implementation. Farm input costs are rising, our agriculture produce markets are monopolized, access to finance is dismal, bad practices are depleting our natural endowment, climate change is adversely affecting our ecosystem, value-addition of crops is weak and agriculture related exports are far below potential. This gross neglect of the agriculture sector, especially small farmers, will hamper Pakistan’s GDP growth rate if left unattended and an aggressive turnaround is now pertinent.
In view of the rising inflation, commodity prices could not be increased to achieve profitability but a one-time price adjustment may be required. Input costs may be decreased gradually by adopting following measures:
- Optimizing existing and introducing new subsidy programs
- Increasing access to credit with easy terms of repayment
- Sharing costs of investments required to improve productivity
The declaration of an agriculture emergency to increase the profitability of farmers was one of the first 35 initiatives the ruling Pakistan Tehreek-e-Insaf (PTI) had promised after coming into power. A total of Rs 309 billion will be spent on agriculture by the government with 18 big schemes to be implemented in the next five years. Agricultural imports have touched the $4 billion mark including a $2 billion bill for importing edible oil. The new agricultural scheme will emphasize on boosting per capita production, cautious use of water and increased access to farming credits whilst the livestock and fisheries sector will be given special attention as they have huge export potential. Livestock initiatives for small and medium farmers entail four projects worth Rs 6.38 billion which include:
- Saving the buffalo calf
- Buffalo calf fattening
- Backyard poultry
- Controlling foot and mouth disease
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Out of the total 309 billion rupees’ package, the federal government would provide 84 billion rupee while 225 billion rupees will be shared by the provincial governments. The government is also negotiating with China for its cooperation in development of agricultural and livestock sectors by sharing expertise and knowledge. Pakistan is also seeking Chinese expertise for fisheries and aquaculture development in order to exploit the huge fish farming potential in the country.
The need of the hour is expansion of agriculture produce markets and enforcement of an efficient and transparent market clearing mechanism to get fair market prices for farmers. This could be done through following suggestive measures:
- Expansion of existing and creation of new warehouses along with crop grading system in key locations across Pakistan under public-private partnerships.
- Deregulation of the seed market apart from a few commercially important seeds.
- Reduction in import duty on farm machinery to increase productivity.
- Incentivization for farmers to conserve water, adoption of regenerative agriculture to effectively control weeds and be more market driven with their crop mix.
- Expansion of existing and creation of new markets for value addition, e.g. organic farming, SME level processing to provide cheaper inputs for local manufacturers (reduce import burden) and encouragement of high-value exports, etc.
- Encouragement for private banks to roll-out digital loans for quick access with easier terms of repayment and launch warehouse receipt financing.
- Imposition of a research emergency and spearheading scientific cooperation initiatives with other countries to strengthen agricultural research.
- Transformation and expansion of agriculture-extension program to provide effective on-farm technical support.
[box type=”note” align=”” class=”” width=””]The writer is a Karachi based freelance columnist and is a banker by profession. He could be reached on Twitter @ReluctantAhsan[/box]