Input Policy in Pakistan- Sohail Mailk


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Input Policy in Pakistan- Sohail Mailk

  1. 1. Agriculture Input Policies (Overview) – Pakistan Initiative on The Role of Fertilizer and Seeds in Transforming Agriculture in Asia Sohail Jehangir Malik PhD Chairman Innovative Development Strategies (Pvt) Ltd and Visiting Senior Research Fellow IFPRI Presented by Professor Stephen Davies Program Leader Pakistan Strategy Support Program ReSAKSS-Asia Program A Technical Consultative Workshop September 25-26, 2013 Cambodia
  2. 2. Pakistan Today: An Economy under stress • Inequitable Distribution of Resources - especially Land • Rapidly growing population – majority with little or no education, skills or access to productive resources • Energy Crises – Fully Blown • Debt Crisis - Burgeoning • Water Crises – Looming around the corner • Poor Governance – Inadequate Policy Analyses, Poor Quality Data, Diminishing Domestic Capacity to formulate or Implement Reform – Increasing Reliance on Donors for analyses and support • Circumstances out of Pakistan’s control – War on terror – domestic terrorism – Earthquakes – Floods These Constraints have severely affected availability of resources – And Agriculture struggles as a step child within this crippling environment
  3. 3. Agriculture in Pakistan’s Economy Agriculture Sector Industrial Sector Services Sector Real GDP -5.5 -3.5 -1.5 0.5 2.5 4.5 6.5 8.5 FY-06 FY-07 FY-08 FY-09 FY-10 FY-11 FY-12 FY-13 Percentage(%) Years Growth Rates of GDP and its Subsectors – Variable and Declining Source: Economic Survey 2012-13 Agriculture Major Crops Livestock 5.0 10.0 15.0 20.0 25.0 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Percentage(%) Years Share of Agriculture, Major Crops & Livestock in GDP
  4. 4. Agriculture in Pakistan’s Economy 0 5 10 15 20 25 30 35 40 45 50 FY-00 FY-06 FY-09 FY-10 FY-11 FY-12 PercentageoutofTotal(%) Years Share of Agriculture in GDP declining and Percent of Total Labor Force in Agriculture large and almost constant esp. since FY09 Source: Economic Survey 2012-13 Wheat Rice Cotton 500 1,000 1,500 2,000 2,500 3,000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13P Yield(kg/hectare) Years Yield (kg/hectare) of Three Major Crops Labor Force Agriculture
  5. 5. The emphasis on Four Major Crops Rice Wheat Cotton Sugarcane 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Percentage(%) Years Share of Imp Crops in Value Add of major Crops Rice Wheat Cotton Sugarcane 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Percentage(%) Years Share of Imp Crops in Real GDP Source: Economic Survey 2012-13
  6. 6. Agriculture in Pakistan’s Economy • Agricultural production is – Critical to Pakistan’s food security and relieving malnutrition – A major source of employment and income for the majority of the population - Pakistan’s rural poor – The source of raw material for the textile industry that generates most of the foreign exchange earnings • But Agriculture Growth has not matched Potential
  7. 7. Substantial yield gaps tons/hectare 2 0 1 8 1 6 1 4 1 2 1 0 Potential Achievable (progressive farmers' yields) National average Source: PARC, 2011.
  8. 8. Political Economy of Agriculture The Challenges to agricultural growth have been well known for several decades 1. flat (low) yields and large yield gap; 2. low productivity of water; 3. non-reliability of water services; 4. under-performance of rural factor and input markets; 5. Rapidly declining investment - especially public investment - serious under- investment in research and technology development and dissemination/extension Many factors hinder Pakistan’s agricultural growth (and hence employment and rural poverty reduction) – Unequal land distribution – and resultant skewed distribution of power and policy biases – Inefficient allocation and use of irrigation water – government intervention in markets – Step motherly attitude to agriculture in all policy decision making and resource allocation except decisions that lead to elite capture – Serious disconnects between the center and the provinces in decision making and implementation – one size fits all policies - overly focused on Wheat and fixated on 4 crops only (wheat, cotton, sugarcane and rice) – Regulatory environment that discourages investment and reduces market efficiency
  9. 9. These Challenges and Factors are well documented in all the official Agriculture Policy Documents since the late 1980s 1. Report of the National Commission on Agriculture (NCA) 1988 highlighted the neglect of agriculture and provided a Grand Overall vision to the year 2000 with agriculture in the center. 2. The National Agricultural Policy 1991 lamented the continued neglect of agriculture and repeated the recommendations of the NCA 3. The Agricultural Perspective and Policy of 2004 (NOT OFFICIALLY ENDORSED) repeated the challenges and recommendations of the NCA with minor changes 4. The (UNOFFICIAL) Draft National Agricultural Policy 2013 (NOT OFFICIALLY ENDORSED) repeats verbatim the challenges and recommendations of the earlier Documents
  10. 10. Pakistan’s Overall Policy Making – largely driven the Federal Planning Commission - Does Not give Agriculture its due role or required resources • Long Term Plans and Policy Visions – Five Year Plans – started in 1955 – intermittent – currently start of 11th Five Year Plan (starts 2014) – Poverty Reduction Strategy Papers – (Ministry of Finance in late 1990s). PRSP 2 formulated in mid 2000s - discontinued – Vision 2010, Vision 2030 and now Vision 2025 (starts 2014) • Previous Plans lacked sectoral integration and paid only lip service to agriculture – Agriculture is NOT seen as the engine of growth and employment generation – inadequate focus on the growth linkages of agriculture. • ONE SIZE FITS ALL APPROACH despite diverse resources, requirements and capacities at the subnational (Provincial and District) Levels where implementation has to take place.
  11. 11. The Development Policy Process in Pakistan Where is the Policy Research?? Routine Resource Allocation mechanism under current resource constraints gives NO priority to Agriculture • Preparation of approach paper • Formulation of technical working groups in all sectors • Preparation of sectoral chapters by working groups and their presentation before Planning Commission Consultations with all Federal Ministries for input Consultations with all Provincial Govts. for input Sent to all Federal Ministries and Dev. Partners for comments and input Sent to all Provincial Govts. for comments and inputt Finance Division (Resource Availability) Economic Affairs Division (Foreign aid availability) Finalization of draft plan by Planning Commission and its presentation before President/Prime Minister Submission to National Economic Council (NEC) Circulation of approved plan to all Provincial Govts. And Federal Ministries for implementation Transformation of plan into viable projects/programs EconomicPl an Requirements, programming and negotiations for external economic assistance External debt management
  12. 12. Inadequate Supply Driven Policy Research Weak of Absent Linkages to Policy Source: Birner and Malik (2010)
  13. 13. Some Key Agricultural Input Policy Issues Seed • High yield, disease free certified seed to meet huge yield gap • Adherence to safe seed replacement cycles • Certified and improved seed • Unregulated burgeoning seed Industry with little or no R&D capacity – IPR issues • Breeders Act, Seed Act, Seed Policy • Public private-partnerships Fertilizer • Adverse impact on fertilizer use due to price hikes incl. gas • Nutrient mix unbalanced – Farmers lack of awareness in optimal use and traditional preference for nitrogenous – Distorted relative prices – Limited or no soil testing • Adulteration and Timely Availability • Increasing subsidies since 2009-2010 – Rs 500 per 50 kg potash – Rs 1400 per 50 kg on urea – Total Rs. 14.5 bln – Plus 50 % subsidy on price of gas
  14. 14. Some Key Agricultural Input Policy Issues (contd.) Farm Mechanization • Traditional bias against mechanization as labor displacing etc. • Credit and capital constraints • 2011 estimate 0.9 hp per ha as against FAO recommendation of 1.4 hp • Subsidy - elite capture and political misuse • Developing market for mechanization services Water • Fluctuating availability from surface and ground water sources between 122 MAF in 1998 and 138 MAF in 2010 • Seasonal variation and climate change – Water reservoirs deplete to minimal levels in December to February when water requirements for wheat otherwise a low delta crop are largest • Policy Distortions and biases towards high delta crops – sugarcane, rice and maize • System losses, water delivery efficiency and on farm water use efficiency • Low O&M, political interference, theft and corruption • Increasing non-farm water use • Pricing, distribution, maintenance and water users • Rain fed Areas Issues
  15. 15. Some Key Agricultural Input Policy Issues (contd.) Research and Extension • Investment levels very low – private sector almost absent • Inefficient use of available public resources – bulk on establishment charges – operational research only about 3 to 4 percent of total • Inconsistent with national needs and not demand oriented Farm Credit • Essential for modernization • Access to credit limited by collateral and information constraints and prone to political abuse • Policy Distortions and inadequate market development • Limited Geographical spread of the rural financial market – micro finance evidence mixed and
  16. 16. The Critical Constraints to Pakistan’s Agriculture Input Policy Reform… Numerous Strategies over the decades…Same Issues… Same Recommendations ……Little Success 1. Extremely elaborate strategies but poor translation and lack of attention to detail and implementation capacity and processes 2. Inadequate Policy Research weak Extension and the Disconnect between the two 3. Lack of integration of agriculture (input) policy with overall policy reform and lack of integration of various inputs. Agriculture Policy Implementation based on residual resources available 4. One size fits all policy not conducive to meet diverse sub-national requirements 5. Modernizing Agriculture is not seen as an overall policy priority - Agriculture policy a means for accessing subsidies by influentals (elite capture) 6. Thin Markets and Weak Institutions – neglected in policy 7. Poor governance poor implementation and lack of accountability 8. Absence of M&E and lesson Learning - decade after decade same issues - same recommendations - no progress The Pakistan Fertilizer and Seed Sector Studies being presented here Provide the Specific Details for the two subsectors!
  17. 17. Thank You So Much