KARACHI, Nov 12: The World Bank is working on an agenda for land reforms in Pakistan to raise agricultural productivity, reduce rural poverty and realize the full potential of economic growth.
The key issues identified for these reforms by the World Bank are “land ownership inequality” and “crop sharing pattern” that account for “low farm yields.”
The official studies show that in the decade of 1990s, the land ownership has become more concentrated in the hands of big farmers.
Though the bank has started focusing on problems of land ownership pattern in its recent documents, it is for the first time now the World Bank has called for “policy intervention” to remedy “inequality in farm assets” that have “substantial negative impacts on agricultural productivity and reinforce poverty.”
World Bank officials have stressed that “avenues for reforms need to be explored”, particularly “through innovative mechanism” to “improve the access to credit and land for the poor.”
A WB report on “Poverty in Pakistan: Vulnerabilities, Social Gaps and Rural Dynamics” just released says “the land-rich under-use their land while the poor cannot obtain sufficient land.” The inequality in asset ownership, particularly, land may be more than a distributional concern,” say World Bank officials.
The skewed distribution of land leads to tenancy, mostly on crop sharing basis, which provides lower incentives for investment in soil fertility than under ownership- cultivation.
In modern economies, it may be added, the share-cropping between the landowner and the tenant has been replaced by the wage-labour system. Individual ownership has given way to corporate farming. Agriculture has been commercialized to raise farm yields several fold compared to output achieved under feudal cultural practices. And democracy in the west has been reinforced by corporate farming.
For countries like Pakistan, agriculture is the foundation of the national economy. It provides raw material and market for industries.
Currently, the industrial capacity is under-utilized because of massive rural poverty and low purchasing power of the consumers. About two-third of all the country’s poor live in the countryside.
Industrial growth has been stifled because Pakistan is stuck up with outdated zamindari system. With the twin problem of rural poverty and global economic slump, the domestic market for industrial goods can be expanded by land reforms.
The current rate of economic growth is 3.5 per cent per annum against the potential of six per cent.
The World Bank report lists constraints to farm productivity as follows: the limitations on access to productive resources, land irrigation, soil fertility and credit. The governing factor is inequality in ownership of land.
“There are more indirect and subtle effects of land inequality on productivity, some of which receive empirical support,” the report says and provides supporting evidence.
Large landowners often engage in wasteful rent-seeking behaviour, using their influence with irrigation officials to manipulate the water distribution in their favour. In fact, corruption on the public canal system is widely viewed as a constraint on agricultural productivity.
As a consequence of pervasive land tenancy, available medium and long-term measures to combat soil salinity are rarely undertaken, resulting in loss of cultivated land and low yields.
Finally, due to collateral requirements, land-poor households are mostly excluded from the formal credit market which can finance precisely the long-term productive investments in land and agricultural machinery that can pull them out of poverty.
The World Bank report says that land is the paramount asset in a rural economy. But, about half of the households own no land. Around two per cent of households own more than 40 acres of land and control 44 per cent of the land area.
Collectively, large and very large farmers control 66 per cent of all agricultural land. These inequities are reflected by the Gini coefficient of land concentration at 0.78, higher than the country’s own Gini for land in 1990 at 0.65.
Though land reforms were introduced in 1959 and 1972, and these were not very effective, as the revenue department of provincial governments, remained under deep influence of landed gentry. The implementation of 1977 reforms were held in abeyance by president Ziaul Haq after the overthrow of prime minister Zulfiquar Ali Bhutto.
Successive governments have distributed state lands among landless peasants, including the present regime, but the pace has been very slow. During the nine months ending March 2002, 43,405 acres of land were distributed among 2,087 beneficiaries. The state land available for distribution, according to Economic Survey 2001-2002, is 2.7 million acres.