September 9, 2002	Monday	Rajab 1, 1423

The agriculture sector needs a policy to bring it out of the stagnancy it is facing for the last three years. Further delay would harm all related to this sector. The backbone of the country’s economy should not be ignored for too long.

The population, which is now 130 million was only 32.5 million at the time of independence. With an annual growth rate of 2.6 per cent, it increased fourfold in the last 50 years. During this period, the production of wheat surged by a mere 2.9 fold. During 1970-’71, the country imported 0.3 million tonnes of wheat which reached to 4.1 million tonnes in 1997. Tremendous efforts were carried out to narrow the gap between the population growth and the food production.

The contribution of the agriculture sector to the GDP has declined from over 50 per cent in 1949-’50 to about 24 per cent in 1996-’97, but it still remains the major sector of the GDP composition. A large part of the economy depends on production, processing and distribution of major farm commodities. The importance of this sector can be seen in three ways: it provides food to consumers and fibres for domestic industry; it is a source of foreign exchange earnings; and it provides a market for the industrial goods.

Agriculture is dependent on artificial means of irrigation. Of the total cultivated area, about 82 per cent or around 17.58 million hectares is irrigated, while the crop production in the remaining 3.96 million hectare rely on rainfall. However, the scarcity of irrigation water had pushed the sector into difficultly in 2001-2002, with its overall negative impact on the economy.

Agriculture grew at an average rate of 3.5 per cent since 1991-92 with wild fluctuations: rising by 11.7 per cent and falling by 5.3 per cent. These fluctuations stem largely from the factors like the pest attacks, the adulterated pesticides, and the lesser attention given to the sub-sectors of agriculture.

The drought that hit the agriculture last year resulted in water shortages by 51 per cent. Last year, it faced water shortages of up to 40 per cent. The total flows of water in major rivers declined to 91.15 million acre feet (maf) against an average flows of 131.69 maf. Rainfall has also been below average. The canal head withdrawals in the Kharif 2001, and the Rabi 2001-02, seasons have also witnessed a significant decline.

The value-addition in agriculture grew by 1.4 per cent in 2001-02, as against a decline of 2.6 per cent. Major crops, accounting for 40 per cent of the agricultural value-added, registered negative growth for the second year in a row. As against a decline of 9.8 per cent last year, value-added in major crops recorded a negative growth of 0.5 per cent.

Agriculture also dominates foreign trade, through the export of raw products such as rice, cotton, semi-processed and processed products such as cotton yarn, cloth, garments, carpets and leather. It is also essential for sustainable improvements in the internal and external balances of trade. Of the total export earnings, the share of primary commodities and the processed and semi-processed products constituted over 60 per cent of the total exports. There have been some structural changes over time, but the contribution of the agro-based products has more or less sustained its position.

The average growth rates in the agricultural sector during the 1960s, 1970s and 1980s were 5.07, 2.37 and 5.4 per cent, respectively. With the announcement of a new agriculture package by the government in April 1997, the growth rate during 1997/98 did improve to 5.9 per cent.

In agriculture, there have been some years of dismal growth and some years of significant growth. Since 1980, the agricultural GDP at the constant factor cost has more than doubled, increasing from Rs76 billion in 1980 to more than Rs141 billion in 1996/97, with a growth rate of 3.91 per cent annually. It’s share in the total GDP, however, declined from 31 per cent to 24 per cent over the same period. Crop production contributed the largest share of the agricultural GDP (62 per cent in 1996), with the livestock contributing 34 per cent, and the fisheries and forestry remaining at 4 per cent.

During the past 50 years a significant increase in the production of major crops had been achieved. Wheat production rose from 3.3 million tonnes in 1950/51 to 18.6 million tonnes in 1997/98, rice from 0.86 million tonnes to 4.32 million tonnes, with a record increase in cereal production, while cotton reached to 9.4 million bales, and sugarcane at 5.3 million tonnes.

Policy measures in four years, i.e. from 1993/94 to 1996/97, were positive for the sector. Undue benefits provided to the industrial sector over the years were reviewed and modified. The agricultural sector as a result responded with new buoyancy. Export taxes on agricultural commodities were reduced or eliminated, which benefited the sector.

In the policy reforms package better support prices, improved tillage and soil preparation practices and adequate and timely availability of fertilizers and certified seed have added to the positive response from the farming community. In 1996/97, the production of wheat reached a level of 16.7 million tonnes. Basmati rice rose by 13.7 per cent, wherein the overall rice production was up by 8.5 per cent. There was, however, a slump in pulses to 832,000 tonnes from 918,000 tonnes during the previous year (1995/96). Production of potatoes and onions was estimated at 1,205,000 and 1,160,000 tonnes respectively, as compared to 963,000 and 1,131,000 tonnes in 1996/97.

Over the past 20 years some important structural changes have taken place in the sector. In particular, the livestock has emerged as an important sub-sector, contributing more than one- third to the agricultural GDP, compared with about 28 per cent some 20 years back. Similarly, the fisheries and forestry, though minor contributors have grown rapidly. Structural changes have also taken place within the crop sector. Cotton is now as important as wheat in terms of value-added with one-fifth share of the total earnings. The contributions of rice and sugar have, however, fallen from a 20 per cent in the early 70s to 15 per cent of today.