THE Federal Committee on Agriculture does not appear to be innovative in setting crop targets and encouraging crop diversification.
It has fixed the same wheat target yet again despite a completely changed market dynamic that has seen international prices crash and domestic stocks piling up, resulting in a glut.
Everyone knows that the wheat stocks are eating into the national exchequer and contributing to poverty for the farming community. The government is suffering due to huge subsidies and administrative charges on those stocks, while the growers are facing regular price crashes in both domestic and world markets.
If the acreage under wheat is reduced, there will be room for other (perhaps more vital) crops. The FCA needs to work to create market conditions that give more room to other crops, instead of perfunctorily retaining crop targets
But the FCA has again fixed a target of 26m tonnes for the next season, ignoring the market conditions. If the country somehow meets this target, either the provincial governments (especially of Punjab) would risk sinking under massive stocks, or the farmers would suffer from an even bigger glut in the market.
The federal food minister also underlined the problem when he announced the target for next year. He told the media that the country held a staggering 8.69m tonnes of wheat — 1.7m tonnes more than the stock at the same time last year. Pakistan carried over around 3m tonnes of surplus wheat into the current season earlier this year.
The county would probably start the next season, which is only four months away, with just under 5m tonnes.
If the acreage under wheat is reduced, there will be room for other (perhaps more vital) crops. The FCA needs to work to create market conditions that give more room to other crops, instead of perfunctorily retaining crop targets every year.
In the new agricultural milieu, the FCA is now charged with a double duty: crop diversification, and enhancing crop yields and reducing the cost of production (as assigned by the latest subsidy package). Both these tasks are easier said than done. But someone has to take the first step. With a farmer sitting at its head, the Ministry for Food Security and Research should be better placed for the job.
The ministry needs to realise that crop diversification is more about selling crops than sowing them. A farmer will sow a crop only if he can sell it.
The FCA needs to consider Punjab’s experience, as the province is learning the hard way that unless a crop has an assured market and is profitable, no farmer will risk going for it.
Punjab has been running two diversification programmes — Rs410m to promote vegetables and Rs127m for pulses — with very limited success because one of the two elements is missing. Both vegetables and pulses have assured markets but they are not that profitable.
The profitability factor is compromised when the government allows cheaper imports whenever local prices start going up. The simultaneous rise in the prices of pulses because of falling production and massive areas undergoing wheat production should clarify the options available to the ministry.
The ministry needs to come up with a national plan for such crops that deals with all the relevant issues — productivity, value addition, incentive regime etc — and then find the political and financial will to back up the plan for the long term. Crop indexation and insurances is one such option where a farmer growing a crop whose price falls below a certain average will get compensated.
The government also needs to activate whatever mechanism it has perceived for raising productivity and lowering the cost of production. Both these factors forced the federation to come up with the Rs341bn package in the first place. The federation has grown highly sensitive to the farmers’ plight, but no government will be able to spare that kind of money every year if the conditions prompting the package are left unattended.
It is time that the FCA clarifies how it plans to tackle the problems facing the farm and then win the provincial governments’ support for dealing with them.
Published in Dawn, Business & Finance weekly, November 2nd, 2015