October 17, 2003	Friday	Sha'aban 20, 1424

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ISLAMABAD, Oct 16: Policies adopted by the government are not pro-poor, but only pro-rich as evident from the manner in which the government withdrew subsidies on farm inputs and increased agricultural prices to the advantage of only large farmers, veteran economic experts said here on Thursday.

The rise in poverty, particularly rural poverty, witnessed over the past decade together with the distorted land and water markets and increasing alienation of small farmers from these had benefited only large landowners, participants of a workshop on the Rural Factor Markets were told.

The first of its kind in Pakistan, the workshop was organized by the Agricultural Prices Commission (APCOM) in collaboration with World Bank to discuss the studies on various aspects of the subject with particular focus on the structure and functioning of land, water, labour, capital and output as well as the Agricultural Growth and Rural Poverty.

The workshop is quite pertinent to the challenges the factor domestic market may face after the coming into full operation of the liberalization mooted in the WTO agreements.

Explaining the objective of the workshop, APCOM Chairman Dr Abdul Salam said the efficiency and functioning of the factor markets, like other markets, was influenced to a very large extent by their structures, policy environment as well as supporting infrastructure.

While increasing farm productivity was the key to the development of agriculture, it was the functioning of various factor markets, as the suppliers of various inputs at affordable prices and the output markets which will determine the sustainability of the efforts in this context.

Director, Pakistan Institute of Development Economics (PIDE), Dr A.R. Kemal observed that in spite of high agricultural growth rate, poverty had increased from 25.2 per cent in 1990-91 to 39 per cent in 2000-01.

As also emphasized by some other experts in their separate studies, the government policies were biased towards large landowners. Thus as the government did not procure agricultural produce whenever the market prices were below the support prices, the poor were badly hit.

It is estimated that had the small farmers been able to sell the output at support prices, the proportion of the poor in rural population would have been seven per cent less.

Dr Sarfraz K. Qureshi, former PIDE director, in his paper on Rural Land Markets, analyzed the state of the land markets and their linkage with water markets. Access to water market and credit was predicated on landownership.

As a result, the tenants, landless and small farmers are excluded from participation in land markets. Moreover, the concentration of land in a few hands, already high at the time of independence, has increased further, making removal of rural poverty almost impossible.

Dr Sohail J. Malik, in his paper on ‘Rural Credit Markets: Institutions and Constraints’, said significant poverty alleviation was possible in rural Pakistan through a well functioning rural credit market.

In Pakistan, however, this market on the institutional side was constrained by high transaction costs, both explicit and implicit, lack of information, collateral requirements and complicated procedures.

Hina Nazli, in her paper on rural labour market, pointed out that rural areas of Pakistan were characterized by higher incidence of poverty, lower levels of literacy, poor health status, low access to basic services and amenities, and higher levels of underemployment.

Citing official statistics, she said rural poverty was lower than urban poverty until 1993-94. By 2000-01, this trend was reversed.

Dr Zakir Hussain suggested that policies on water markets should be targeted to medium-sized farmers on account of their ability to buy a tubewell. Nevertheless, he added that policies that encourage acquisition of private tubewells must be approached with caution, keeping in view their sustainability and their implications for quality of water.

Dr Munir Ahmed, in his paper on agricultural product markets in Pakistan, said under the rubric ‘liberalization’, the removal of subsidies and reduction in expenditures which were not required under WTO agreements had exposed the agriculture sector to a comparatively disadvantageous state and hurt the small farmers most severely.