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8/6/2019 MOPE Presentation

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AGRICULTURE

Agriculture Sector 1950s 2000s


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INTRODUCTION

Backbone of Pakistans Economy

Contribution in GDP has declined

Share of Employment over the years has

declined Green Revolution of the 1960s


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LITERATURE REVIEW

Gulati and Pursell (1993) Effective protectioncoefficient

Rehman (1987) devised that Import tax rates arefar lower on agricultural imports than on other

kinds of imports. World Bank (1992) Most studies indicate that

the variables that consistently explain farmerinefficiency are farmers' knowledge and skills

Husain and Byerlee (1994) could find littleevidence that Training and Visit Extensions hadimproved the quality of extension advice


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GOVERNMENT AND ITSROLE IN AGRICULTURE

Fertilizer policy is imposing large hiddencosts on farmers.

Natural gas prices for state-run fertilizercorporations are held below the prices forother users.

Use of improved seed has been held backby problems of availability, accessibility,and quality.


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PRICE AND TRADE POLICIESAND THEIR IMPACT

In Pakistan all major crops are covered byguaranteed minimum price or supportprice programmes.

Distortions in direct marketing and taxingarrangements continue for some crops,notably wheat.

Tariffs and quantitative restrictions thatprotect other sectors affect the equilibriumreal exchange rate.


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INSTITUTIONS ANDSERVICES Cheap financing from the public sector

gave the state banks no incentive tomobilize deposits.

Collateral requirements are a majorobstacle to small farmers.

Informal finance, which is estimated toaccount for 70 to 80 percent ofagricultural credit, is geared towards

meeting short-term credit andconsum tion loans.


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AGRICULTURAL LAND ANDTAXATION

Agricultural wealth is not added to non-agricultural wealth for the purposes ofdetermining tax liability.

Large farmers have very low payment ratesfor services, which increases their gainsfrom the current subsidy regime.


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FOOD SHORTAGE

Like rest of the world Pakistan is alsofacing food crisis, and it has two sides;

one is unavailability of ediblessecond is soaring prices due to gap in

demand and supply of edibles.


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IRRIGATION SYSTEM ANDWATER SHORTAGE

To date no government has come up withan integrated agricultural policy.

Not only is the irrigation network sufferingfrom long years of neglect, there is noprovincial or national coordination ofagricultural policy.


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INPUTS AND CREDITS

Money costs have increased becauseInputs which were formerly non-monetized which a farmer formerly did

not use at all he now has to purchasewith money.

The second factor in the rise in money

costs is the shift from share-cropping tomoney rents which are rising sharply.


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LABOUR

In Pakistan two-thirds of the totalpopulation is rural, as are more thantwo-thirds of the poor (World Bank

2002).

Counting as farmers only those withenough land to provide half the povertylevel of income, only half the ruralpopulation are farmers.


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1950s

Through most of the 1950s, agriculturalsurpluses were taken for granted inPakistan

The government policy discriminated theagricultural sector in favor of themanufacturing industry

Degradation of land fertility and perpetual

underdevelopmentThe annual growth rate in agriculture

between 1949 and 1958 was 1.43%


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1950s

Agriculture provided not only food-grainsfor the rising urban population but alsoprovided most of the foreign exchange

Cotton and jute constituted 85% of totalcommodity exports up to the mid-1950s

Import of food-grains and flour as apercentage of total commodity imports

increased from 0.5% in 1951/2 to 14.6%in 1959/60


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1960s

With the power firmly in the hands of theChief Martial Law Administrator, he setupon the task of creating country of his

vision.

technocratic mode of governmentdepending upon a number ofcommittees and commissions


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1960s

The Land Reform Commissions findings:no person could own more than 500 acres

of irrigated land, OR

1000 acres of non-irrigated landwhere necessary , to give the equivalent

of 36,000 produce index units

gifts to members of family could not

exceed 18,000 produce index units


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1960s

Ayub era was an exceptionally successfulperiod of economic management

forceful efforts in support of the spread ofthe Green Revolution

Emphasis put on fertilizer plant installationand availability


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1970s

1970s was the decade of most turbulencesin the Pakistani economy

The main idea was to create a powerfulpublic sector

Agricultural growth was 2.3%

The Bhutto era was facing stagnation inagriculture, inter-crop disequilibrium, andneglect of the non-crop sector


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1970s

an insufficient supply of water andfertilizers and the governments pricingpolicy

late 70s witnessed a revival off theagricultural growth rate

Policies became unfavourable due to themajor devaluation of the Rupee


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1970s

during 1970s there were extensivesubsidies given to the agricultural inputssuch as fertilizers, seeds, tubewells andagricultural machinery

beneficiaries were the large farmers, thosewho most used these inputs


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1970s

Land and Tenancy Reforms of wereimplemented in 1972

Reforms were based on PIU


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1980s

Minimum price support programme Major agreements with the International

Monetary Fund (IMF) and the World Bank in1988

1988 report, which became the precursor tothe actual Structural AdjustmentProgramme agreements

Government policies designed to reduce theconcentration of landownership had someeffect

higher-yielding seeds requiring heavierapplications of fertilizers, installations of

private tube wells, and mechanization


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1980s

Rehabilitation and maintenance of existingcanals and watercourses

Governments in the 1980s and early 1990s

avoided significant land reform measures,perhaps because they drew much of theirsupport from landowners in thecountryside.


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1990s

Reforms in the agriculture sector targetedfour areas, including:Enhanced availability of water and its

efficient use.Providing market based environment for

input and output prices.

Provide physical infra structure and

support for research and extension work,and also provide better farm to marketlinks

Provide access to good land for cultivation.


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2000s

In 2000s, Pakistans economic growth slowed to aneight-year low of 5.7 percent

The 2000s was featured by continuation of a moreliberal outward oriented economic strategy aiming atenhancing exports and to get integrated into world

economy The structural reform programs designed and initiated

in 1990s, was continued and pursued during 2000sto put the economy on the path of recovery.

Unpopular decisions like imposition of sale tax, raisingprices of petroleum, withdrawal of subsidies were

taken for bringing fiscal discipline. Certain structural reforms, i.e. financial sector

restructuring, privatization, liberalization andderegulation of economy and bank reforms leadingtowards market led economy were under taken.


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The average farm size has declined from13.1 acres in the early 1970s to 7.7acres in 2000

The crop sector has gradually declined

from 65 percent of agricultural activity in1990-91 to 48 percent in 2006-07 Pakistans agricultural sector in 2000s was

characterized by low productivity, limitedinvestment, and a weak extension service

Food security based on self-sufficiency wasa potentially costly policy and a majorgovernment priority

2000s


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Major issues that were faced by thePakistans agricultural sector during2000s include:

lack of adequate irrigation,

improved marketing infrastructure,WTO compliant sanitary regulations,development and implementation of food

safety regulations,

avian influenza surveillance and publichealth measures,

and the development of improved plantand animal genetics

2000s


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Conclusion

Weaknesses and inadequacies in publicsector institutions are more evident thanin the areas of research and extension

Current expenditure has risen sharply whiledevelopment expenditure has fallen,which indicates that public investment inagriculture has been squeezed by othertypes of spending of dubious benefit to

agricultureThe natural tendency towards rent-seeking

by bureaucrats and farmers is only likelyto worsen this bias


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Conclusion

Cheap inputs also encourage wastethrough overuse, particularly by poorfarmers not well-versed in agronomy

Fertilizer and seed subsidies are essentially

regressive since they mostly benefit thelarger farmers who use a large amount ofthe subsidized inputs

Commercial policy and credit subsidieshave combined to make agriculturalmachinery very cheap, which hasresulted in very low productivity ofmachinery, while creating incentives todisplace tenants from land


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Conclusion

Most of Pakistan's agriculture has entered a post-Green Revolution stage of development thatrequires new strategies to enhance inputefficiency and maintain and improve the qualityof the resource base

Irrigation should undergo a demand-baseddecentralization, through the development ofWater-user associations at the distributary'slevel

Some immediate measures would be highlydesirable to correct land market distortions,which include artificially low machinery pricesand unequal access to credit. These reformswould increase the opportunities available for

farming, and for wage labour on employment-intensive farms.


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Conclusion

Market failure is likely to be a problem inenvironment and natural resourcemanagement

Lack of property rights and institutions tomanage common property resources caninflict on-site damage and createnegative externalities

Defining the appropriate role ofgovernment will be the cornerstone of thedesired reforms.


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Recommendations

Strengthening Agriculture R&D.

Agriculture Policies should address differentclasses of farmers.

Investigation of allotment of land tomilitary officers.

A fair taxation regime to help R&D.

Effective Legislation on land redistribution.

Land Reforms be introduced.


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Provincial Governments should set annualtargets in relation to each agricultureextension unit.

Agriculture Research should be demanddriven.

Every Agriculture Officer may be given atarget of area under each crop.

Strengthening of Governments role in ruralInfrastructure.

Overcome water shortage crisis.

Recommendations


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Recommendations

Legislation regarding water management.

Watershed managements projects need tobe implemented.

Output prices passed on to farmers need tohave fewer distortions.


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Thankyou!

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