Shahid Hussain Raja Independent Consultant-Public Policy SANO Consultants Ltd UK July 03,2013

Introduction Historical Evolution Where we stand - Time Series Where we stand - Cross Country Present scenario - SWOT Analysis Challenges Responses Conclusion

Despite its relative decline in formal economy in percentage terms, agriculture is still dominant sector in overall economic structure Pakistans survival and growth are directly dependent on its agriculture due to its sociopolitical interconnectedness and its economic and financial linkages-backward and forward

Its performance still dictates all our macro indicators - GDP, Poverty, External Balance, Inflation etc
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The total area of Pakistan is approximately 80 million hectares out of which about 58 million hectares have been surveyed so far The area under cultivation is 22 million hectares (38%) out of which nearly 19 million hectares is irrigated; the rest is rain fed The area under forest is 4 million hectares (7%) and the balance surveyed area 8 million hectares can be classified as the cultivable waste

Coupled with suitable climate and availability of fairly good water resources, agriculture has been the major activity for centuries in this part of the world

Agriculture sector of Pakistan comprises four sectors - livestock, crop, forest and fisheries Livestock contributes 56% of the total agriculture production while crop sector adds 38% to it out of which the contribution of major crops is 25% and minor crops is 13%

Fisheries and forestry contributes 2% each

During the 1950s, agriculture growth was sluggish due to less area under cultivation and low productivity Low technological base, adverse agricultural terms of trade, patterns of landholding, inequitable tenurial relations were some of the causes Main driver of growth became increase in cultivated area which increased from 11.6 m ha in 1948 to 15.3 m ha by 1960

Development of lands (particularly in the new barrage areas) had huge impact on production

During the1960 emphasis shifted towards vertical expansion - increase in yields through genetic breakthroughs in major crops (wheat, rice, cotton) Land Reforms of 1959 devised a rational land tenure policy. Implementation facilitated creation of new social relationship conducive for agricultural growth Rapid increase in tube wells contributed to more than a million ha cropped area in Punjab alone (100% increase in cropping intensity) Agricultural sector grew at 3.8% pa with the production of all crops grew around 4.8% per year
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Varieties evolved during the 1960s were adopted widely by farmers in the 1970s Use of inputs (seeds, fertilizers, pesticides), controlled water, and access to subsidized electricity and credit on a large scale

Price and non-price measures resulted in higher use of modern inputs

Three rural reconstruction programs thrust to create more rural employment, facilitate flow of farm inputs and outputs and provide agri. services in small towns closer to farmers doorsteps

Two successive food crises forced the policy makers to formulate comprehensive food security policy and realisation of rural transformation as a necessary precondition for economic growth

Induction of local bodies resulted in improvement of rural infrastructure

Foreign remittances resulted in rural private construction, rationalisation of the cost of land and realignment of rural political dynamics

Better crop management and extension services played a major role in increasing the agricultural production Input use efficiency and greater integration with the world markets are the prime reasons for boosting growth in agriculture sector Fertilizer use and adoption of HYVs and the use of mechanical farm power exhibited rising trends

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Food crises of 2007 reemphasized the crucial importance of agriculture as an engine of growth, price stabilizer and vehicle for poverty alleviation Terms of trade became favourable for the agricultural sector after many decades Introduction of Biotechnology by the private sector started the Gene Revolution in the country Commercial farming started at large scale by enterprising farmers and business houses which boosted tunnel farming and farm mechanization Environmental consideration, looming threat of climate change and water scarcity have forced the policy makers to go for inputs use efficiency and resource management
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(million metric tons; 3 year moving average)

Crop

Decades Ago 1950-53 1960-63 4.01 1.09

In Recent Years 2003-06 20.80 5.14 2007-10 22.76 6.47

Wheat Rice

3.13 0.81

Maize
Sugarcane Seed Cotton Fruit Vegetable

0.37
6.09 0.82 N/A 0.63

0.47
14.52 0.99 2.54 0.86

2.60
48.44 5.87 6.49 3.07

3.48
54.45 6.18 7.06 3.13

Milk
Meat Fish

N/A
N/A 0.055

N/A
N/A 0.089

37.27
2.31 0.59

38.05
2.84 0.69

Ou tp u t of most crops in cre a s e d by 6 - 10 fold

Wheat - From 4 MT in 1950s to 6MT in 1960s to 23 MT in 2010 Rice - From less than 1MT to 2 Mt in 1960s to more than 6.9 MT in 2010 Maize - from 0.5MT in 1950s to 1MT in 1960s to 3.3 MT in 2010 Cotton - From 0.8 MT in 1950s to 2 MT in 1960s to 12.9 MT 2010

Sugarcane - From 6MT in 1950s to 14MT in 1960s to 49.3 MT in 2010

MT = Million Tonnes
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Maunds (40 kg)/acre

Commodity Wheat Cotton

Pakistan 28 20

India 27 15

USA 26 29

China 48 43

World 28 22

Rice
Sugarcane Maize

32
516 33

33
734 22

82
785 96

64
871 55

42
717 50

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Weak factor productivity, stagnant yields Preponderance of small farmers, low technology base Post harvest losses, inadequate supply chain Infrastructure, inefficient and inadequate marketing Depleting soil fertility Deteriorating Irrigation and drainage system Ineffective Education, R&D and Extension linkages Poor skill development for modern agriculture Inappropriate use of natural resources Rural Non-farm Sector performs below potential

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Existence of productivity gaps - great scope for production enhancing 60 years of accumulated knowledge Worldwide interest in agriculture Burgeoning population - need for food Growing prosperity - demand for value added food products
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Climate change and environmental threat Use of arable land for non-agricultural use Low priority for agricultural development-urban bias Sluggish economic growth-catch-22 position Rural Governance issues
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How to improve the quality of life of the citizens of Pakistan by ensuring their food security and providing agricultural raw material to its industry at competitive rates by making agriculture an efficient, productive and profitable sector of the economy in a manner that its growth is sustainable and outputs are competitive?

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 Increase productivity by increasing efficiency in all agricultural operations through public as well as private sector investment in R&D and Extension Increase profitability by rationalizing input and output prices, reducing production and post production losses and selective public procurement intervention Making agricultural produce competitive in the rapidly globalizing world by reducing cost of production, improving quality and ensuring Sanitary and phyto-sanitary (SPS) compliance
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 Ensuring sustainability by promoting environment friendly good agricultural practices through incentives and rewards Equitable distribution of gains from enhanced productivity by making available public sector goods and services to all stakeholders without distinction

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A.

Horizontal expansion - increasing the area under cultivation Vertical expansion - increasing the productivity

B. C.

Structural transformation - diversification and value addition

Cross Cutting Interventions - agrarian reforms

D.

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Bringing new areas under cultivation

Reclaiming degraded lands Intercropping

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Bringing uncultivated area under cultivation by providing proper technical support, making available affordable technology and adequate water Increasing availability of water by construction of new small and medium dams and popularizing rain harvesting techniques Saving water by reducing water losses through proper water conveyance and efficient irrigation techniques Economical management of ground water pumping through incentives, legislation and awareness
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Launch a sustained campaign for the use of gypsum in every acre and provide incentives Forbid by law the burning stubs of wheat and rice and encourage the farmers to plough them into the field Encourage the sowing of humus making plants soon after the harvesting of wheat and plough them back into the lands
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Encourage eco-friendly inter-cropping practices as it increases the area under cultivation by cultivating vegetables in between the rows Agro-forestry is another profitable option for the farmers and the country However farmers must be given proper technical support for this practice to be cost effective and eco friendly
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Agricultural Education and Research Farm Mechanization Inputs

Seeds Chemicals Water Credit

Production Losses
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Introducing need based agriculture education, creating effective inter and intra institutional linkages and collaboration with reputable foreign universities Strengthening public sector Research and Development system, improving inter and intra institutional coordination among educational/research institutions and extension Encouraging private sector investment in the field of R&D with focus on modern technology and facilitating their outreach Capacity building of extension personnel of the provincial agricultural departments
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Intensification and diversification of farm mechanization by ensuring easy access of the farmers to essential farm machinery Its efficient and optimal use by incentivizing the private sector for opening farm machinery leasing/hiring outlets in villages Expansion and modernization of local farm machinery manufacturing by providing them training, incentives and technical/financial support to produce agricultural implements as per international standards
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Variety development and local production of good quality seeds by the private sector by providing them appropriate legal cover and technical/financial support Providing legal framework for establishing partnerships between bio-tech research institutes and private seed companies Encouraging good practices among the farmers to increase the efficacy of farmers saved seeds Incentivize the farmers to use drill system of sowing to save on fertilizer and for better seed germination
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Timely availability of fertilizers, un-adulterated pesticides & herbicides at reasonable prices to the nearest possible doorsteps of the farmers through rationalisation of prices, in time import and provision of subsidy when needed Popularizing the efficient and judicious use of chemical inputs for reducing production losses with minimum side effects

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Provinces to rationalize their respective water-related legislations including local water usage rules and implementation of integrated water resource management Encourage public-private partnerships on water saving techniques in cultivation of different water terrains, and other innovative designs of groundwater recharge dams and rainwater harvesting

Prioritizing planned investment in large storage infrastructure and groundwater use in light of macroeconomic instability due to public budget deficit and conflicting demand uses
Saving water by reducing water losses through proper water conveyance and efficient irrigation techniques Economical management of ground water pumping through incentives, legislation and awareness

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Streamlining the traditional sources of farmer credit by integrating them with the formal banking system Making financial products tailor-made to the needs of smallholders and of micro, small and medium non-farm rural enterprises to become efficiently linked to the agri-based supply chains

Increasing the volume and outreach of formal banking network for timely and easy access to credit by farming community
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There are various estimates of production losses due to nonuse of weedicides by the farmers Ignorance, fear and costs of using are the general reasons for this neglect There is need to create awareness among the farmers for judicious use of weedicides for reducing the production losses There are eco friendly measures to reduce this loss for those who are excessively conscious of use of chemical inputs
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Reducing post production losses Value addition Marketing

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Reducing post-production losses through development of cool chain infrastructure including storage in the private sector Establishing grain storage and handling system at all levels including on-farm, off-farm and points of entry/exit (sea/airports), and refurbishment of existing storage facilities

Enforcing grain quality standards and establishing reliable grain testing laboratories at delivery points
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Making agricultural produce competitive in rapidly globalizing world by enforcing SPS standards and introducing international certifications Encouraging quality consciousness among the farmers through awareness campaigns Introducing and implementing grading standards and improving marketing system of agricultural produce

Establishing modern agricultural produce wholesale markets in public-private partnership with cold storages, pack houses, customs facilities etc.
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Sustained growth of the rural economy lies in the development of efficient and effective agri-based supply chains that link the agriculture sector with their corresponding upstream and downstream links in the rural nonfarm to the national and international markets Establishing modern agricultural produce wholesale markets in public-private partnership with cold storages, pack houses, customs facilities etc. Encouraging processing and value addition of agricultural produce to fetch better value, and to reduce post-harvest losses Introducing warehouse receipt system for easy realization of sale proceeds to farmers
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Formulation of comprehensive Land Use Policy Improving Agricultural Terms of Trade Improving Rural Infrastructure Improving Rural Governance Environmental Sustainability Creating Linkages and promoting Investment Gender Mainstreaming Production Relations

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Developing a national land use policy for rational use of land resources is the need of the day as valuable arable land is being converted at alarming rates by the property developers and industrial concerns for commercial non farm uses Infrastructural development, though necessary is also rendering fertile land to brick and mortar Add to it the declining fertility of our agricultural lands due to non sustainable agricultural practices Plus the degradation of our lands due to water logging and salinity going on for decades, a negative side effect of our irrigation practices All these issues needed to be addressed by formulating a long term comprehensive land use policy by the government

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Agricultural transformation demands restructuring, not merely fine-tuning, the political economy of the rural areas which are an integral subset of the overall economic structure of Pakistan One of the ways to do so is to improve the terms of trade between agriculture and the other sectors of the economy so that the squeezing of the peasants going on for the last six decades can be reversed Rationalize the prices of the inputs farmers use, provide subsidy on them and as well as those of commodities they produce Improving the marketing infrastructure

Selective procurement when the prices of agricultural commodities crash

Introduction of crop insurance scheme

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Urban areas do need good public goods and services but so do the rural areas where the roads, schools, hospitals and other infrastructure are in deplorable condition No doubt the government has invested a lot in farm to markets roads, construction of health facilities, schools and also rural electrification However there are complaints of substandard workmanship and their fast wear and tear due to paucity of maintenance funds

Similarly there are complaints of shortage of staff to man these health and educational schools. 'Ghost Schools was a term not invented in the air; it has a solid evidence

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 Sustained growth of the rural economy lies in the development of efficient and effective agri-based supply chains that link the agriculture sector with their corresponding upstream and downstream links in the rural non-farm (RNF) to the national and international markets
RNF provides 40-60% of incomes/jobs in rural areas, much of its activity occurs in the trading, services and processing sector having strong forward and backward linkages with agriculture Informal and low capital using entities catering mostly to domestic markets, RNF presents opportunities for providing value addition to primary production at the farm level

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RNF is hampered by the numerous middle level low capital using players who add little or no value to products and services For creating linkages between non-farm rural enterprises with agribased supply chains, we have to establish modern agricultural produce wholesale markets in public-private partnership with cold storages, pack houses, customs facilities etc. At the same time government should Introduce warehouse receipt system for easy realization of sale proceeds to farmers and encourage processing and value addition of agricultural produce to fetch better value, and to reduce post-harvest losses

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It is not an easy task to dismantle centuries old rural governance structure and replace it with modern, formal contract based rural public management in a short period but can be done in long term Start with education, literacy and skill formation which will shake the foundations of this feudalistic structure

Establish alternate dispute resolution mechanism to replace the informal system heavily dependent on big landlords, supported by the police and the patwari
Local bodies elections be held as per fixed schedule which will bring in the leadership interested in improving rural infrastructure, the best guarantee of their fast journey to urban culture

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Creating awareness among the farmers about the looming threat of climate change and environmental degradation

Popularizing the good agricultural practices by synchronising the extension services of the provincial agricultural departments and marketing outlets of the private agro services providers
Promulgation of legislation for stopping of practices aggravating the threat of climate change Allocation of resources for carrying out research to adjust the cropping pattern and fine-tuning the planting and harvesting schedules, practicing crop rotation and diversifying crop mix developing more varieties responsive to climate change adapting irrigation practices and fertilization regimes.
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Although it is not possible to replace the centuries old production relations of land cultivation in the rural areas of Pakistan in the short term, efforts can be made to introduce the three modern forms of farming
Contract farming-encouraging agri-based processors to supply inputs & technology packages to farmers on deferred payment with buy-back of produce at guaranteed prices

Cooperative farming-piloting variations of successful coop-models (with refinements

to traditional coops)

Corporate farming-promoting lease of commercially viable tracts of land to corporate level entrepreneurs who are willing to practice high-tech export oriented agriculture and share profits with the owners

However all the above three need comprehensive legislation about contract making/dispute resolution as well as their strict implementation through a specially created institutional infrastructure

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Rural women are under three pressures-nature, society and family, all treat them unfairly in terms of status, ownership of resources , job opportunities and empowerment Improving healthcare and family planning facilities to relieve them of excessive child bearing burden should be the top priority Launching of special rural female literacy and education campaign by offering attractive monetary rewards would help in their empowerment and reduce domestic violence Ensuring womens access to resources and assets, including ownership of land by creating awareness about their rights and strict enforcement of legal framework priority Providing equitable opportunities to women by developing marketing oriented skills and remunerative employment in the rural areas

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We need to enhance the productivity of the agriculture at micro and macro level by increasing efficiency in all agricultural operations through public as well as private sector investment in R&D, extension services, rural infrastructure, marketing, value addition etc. Unfortunately, the flow of investment funds towards agriculture, which has recently picked up, is still far below the desired levels. we need to make agricultural produce competitive in the rapidly globalizing world by reducing cost of production, improving its quality and meeting global food safety standards. raising the awareness of the opinion leaders and decision makers to enforce strict food safety standards.

Motivating domestic and foreign investors to invest in seed production, fruit and vegetable processing, agri-infrastructure development and encouraging development of commercially viable non-farm rural agriculture enterprises

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Despite its declining importance, agriculture is a sector capable of accelerating growth, reducing poverty, containing inflation and improving the quality of life of its citizens

Due to its backward and forward linkages, small investment can bring substantial gains
Area needing urgent attention are inputs use efficiency, reducing production/post production losses, credit availability and bringing more areas under cultivation through intercropping and tunnel farming Areas needing attention in the short term are rural infrastructure, agricultural terms of trade, promoting investment, formulating land use policy ,farm mechanisation and improving rural non-farm sector Areas needing attention in the long term are agricultural education, rural governance ,gender mainstreaming, adapting to climate change threats and introducing modern forms of production relations

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