Agriculture is in trouble

Published April 1, 2019
The government admits that the agriculture sector cannot grow more than 1.9pc in the current fiscal year. ─ File photo
The government admits that the agriculture sector cannot grow more than 1.9pc in the current fiscal year. ─ File photo

The agriculture sector is in trouble. The government admits that the sector cannot grow more than 1.9 per cent in the current fiscal year.

We know that because the government shared this number with the media after the recent approval of the 12th five-year plan. It also envisages 4pc economic growth for this year. Towards the end of the PML-N’s five-year term, policymakers had set targets of 3.8pc and 6.2pc for agriculture and economic growth.

So either policymakers were too optimistic at that time or the political transition has proved to be too depressing for agriculture.

The recently released second quarterly report of the State Bank of Pakistan (SBP) does not project a growth rate for agriculture. But it says that overall economic growth will remain in the range of 3.5pc and 4pc. The SBP report says outputs of three key crops — cotton, rice and sugar cane — have been in decline. It casts doubt on the likelihood of achieving the wheat target of 25.6 million tonnes as well. The report informs us that all minor crops, minus gram and sunflower, have shown a declining trend in output.

So, the crop sector is in trouble.

The sector is facing problems because of a number of reasons, such as a water shortage, shrinking of the area under cultivation and higher costs of inputs

We know that it is in trouble due to a shortage of water and the resultant shrinkage of the area under cultivation. Other reasons include higher costs of inputs after the rupee depreciation, an uptick in headline inflation, little inter-provincial coordination and strained relations between Sindh and the federation.

The central bank report does not shed light on the performance of livestock, fisheries and poultry sub-sectors that are also a part of agriculture. But it is hard to assume that the livestock sector can grow at a time when there is not enough water for crops and slower economic growth has reduced people’s disposable income.

The performance of the livestock sector will become known after the release of the Economic Survey of Pakistan before the close of the fiscal year in June. The same is true for poultry. But seafood exports always give us a clue about the output of the fisheries sector. In the first eight months of this fiscal year, export volumes of seafood have declined about 2pc to 111,000 tonnes. By the way, meat exports increased 10pc to 39,500 tonnes during this period, but that alone does not indicate output growth in the livestock sector.

After stating that agriculture will grow just 1.9pc in 2018-19, policymakers have set agricultural growth targets of 3.2pc for 2019-20, 3.7pc for 2020-21, 3.9pc for 2021-22 and 4pc for 2022-23.

The way the federal government has strained its relations with Sindh, the country’s second largest agricultural hub, should be a cause for concern. We need more transparency on agricultural cooperation between Pakistan and China under the CPEC to achieve these growth rates. It is necessary so that the provinces can develop their annual agriculture development plans accordingly.

Politically sensitive topics, like the new National Finance Commission (NFC) award, judicious distribution of irrigation water among the provinces and speculations about a possible repeal of the 18th Amendment to the Constitution, will continue to affect the performance of agriculture in years to come. Under the 18th Amendment, agriculture is a provincial subject, although there is a genuine need and scope for better coordination between the provinces and the federation.

On March 18, Prime Minister Imran Khan approved a national agricultural emergency programme of Rs290bn to fulfil his pre-poll promise of revolutionising the sector. Next day, the National Assembly’s special committee on agriculture held its maiden meeting and elected the speaker of the assembly, Asad Qaiser, as its chairman.

This emergency programme is to be implemented over a five-year period. It is aimed at boosting agricultural research and overcoming the shortage of certified seeds and lack of proper storage facilities besides promoting technological advancement, economisation in the use of water for agriculture and import substitution in the edible oil sector.

Since all the four provinces are represented on the parliamentary committee, one can expect that it can come up with an implementable road map for agriculture growth.

All sub-sectors of our agriculture continue to suffer from low productivity. In the crops sector, per-hectare yields are far less than those in other countries. One of its reasons, according to a recently released World Bank report, is a consistent disparity between the crop yields of rich farmers and poor farmers in Pakistan.

“An increasingly unequal distribution of landholding and failure to reform a land tenure and agriculture system that significantly favours large landlords” has given rise to a politically influential landholding class, according to the report titled Pakistan@100: Shaping the Future.

Agriculture may not grow at a sustainable high rate unless this problem is addressed. Can the government do this? Will it be able to garner support from the provinces in so doing? Only time will tell.

In the current environment of political confrontation and uncertainty, it seems too difficult.

With energy prices shooting up every month as old subsidies go and oil prices rise, prices of agricultural inputs, including seeds and fertilisers, will likely continue to increase. Currently, this is a major concern for farmers.

Water shortages may become more acute as no initiative has been taken in the past eight months for building small dams and rainwater reservoirs.

If the country faces a super flood due to the faster melting of glaciers and increased mercury level, as the Federal Flood Commission fears, agriculture will suffer more. —MA

Published in Dawn, The Business and Finance Weekly, April 1st, 2019



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