Last year was more of a recovery period for agriculture, especially in Punjab. After three years of miserable performance, negative growth and regular price crashes, things have ultimately started looking up. At least that is what the performance of the crop sector and market behaviour reflects.

Production: Despite additional production in almost all major crops, prices went up. For example, everyone feared a price crash in maize because of record acreage. Up from 167,000 acres in 2015 to over 2m in 2016 and production jumping by over 100,000 tonnes — from 3.97m tonnes to 4.93m tonnes — the price rather went up. In 2016, it ranged between Rs800-1,000 per maund which had dropped as low as to Rs550 in 2015.

Almost the same pattern was witnessed in the entire crop range, be it rice, cotton, cane or wheat. Rice production during the year increased to 3.50m tonnes, up from 3.39m tonnes of the previous year. The price also increased to around Rs1,200 per maund against Rs700 per maund a year earlier.

Acreage: Despite being a disastrous year in terms of acreage, a drop of 1.2m acres (from 5.5m acres to 4.38m acres), cotton production increased by a million bales: from 6.34m bales in 2015 to 7.3m bales in 2016.

The average yield was one of the best the country has achieved so far — 21.21 maunds per acre — against a paltry 14.60 maunds per acre a year earlier. The price also sustained a level of over Rs3,000 per maund against around Rs2,500, or below in the previous year.

Similar was the story of sugarcane, which achieved a record per acre average yield of 650 maunds and overall production of 48m tonnes against 42m tonnes the previous year. Barring some complaints, the price, by and large, sustained the officially declared figure of Rs180 per maund for the majority of farmers.

Wheat remained at 19.54m tonnes, with a slight increase in the provincial average — from 29.95 maunds to 30.54 maunds. Again, the price was not a big issue as the official procurement kept it stabilised around official line.

Minor crops like tomato and moong recovered well and helped individual farmers greatly. For example, tomato yield went up from 94,000 tonnes in 2014 to 10,6000 tonnes in 2016. In the pulses sector, moong recovered very well from 94,000 tonnes in 2015 to 116,000 tonnes in 2016. It is because of this addition that the price has dropped from Rs160 per kg to current Rs120 per kg.

Fertiliser: The farmers and the government agree that reduction in fertiliser prices plays a huge role in putting production back on its feet. Fertiliser prices were driven down by two factors: the international price trend followed by the government’s subsidy.

During the year, prices of urea and the DAP dropped significantly and led to a massive increase in their application. The DAP price, which was hovering at Rs3,800 till the start of 2015, came down to Rs2,300 per bag in most parts of the country.

Similarly, the urea price came down to Rs1,300 per bag with a drop of around Rs500 per bag during the year. Because of this decline, the DAP’s application, which is crucial for strength of plants’ root zone, increased by 30pc in Punjab; from 0.95m tonnes to 1.25m tonnes. Similarly, urea’s off-take, which leads to vegetative growth, swelled by 25pc — from 1.55m tonnes to over 2m tonnes. Their application during the rabi crop is still being compiled and it may take the figures and average further up.

The reduction in fertiliser price, by and large, set off the negative impact of climate change and water shortage. Both farmers and planners agree that had it not been for 55pc increase of fertiliser applixcation, both these factors could have spelled disaster for the crop sector.

Removal of GST: Another factor that helped the sector was the removal of GST on pesticides and machinery. According to the industry, the pesticides application went up by 7pc and tractor sale was up by around 30pc.

According to the farmers, the sector has certainly come out of the rut it was stuck in between 2013-15. During 2016, they at least started recovering their production costs because, firstly, the production cost itself came down owing to massive subsidy packages that both the central and provincial governments had been running.

Secondly, the burden of cost was shared as farmers and the government both contributed to the mark-up rates, coupled well with a drop in fertiliser and electricity rates.

This delicate balance between additional supplies and market forces kept the prices stable, helping the sector back on its feet. They wish that the same trend continues in this year as well, so the sector may move towards profitability.

Published in Dawn, Business & Finance weekly, January 9th, 2017