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Pakistan's Agriculture Sector-1 (Crops Sector) Challenges and Response

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Explains the importance of agriculture for Pakistan's economy,carries out its SWOT Analysis and describes the challenges it faces.Ends with a set of policy recommendations to improve its productivity

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Pakistan's Agriculture Sector-1 (Crops Sector) Challenges and Response

  1. 1. Shahid Hussain Raja Independent Consultant-Public Policy www.shahidhussainraja.com September 21,2015 1
  2. 2.  Introduction  Historical Evolution  Where we stand - Time Series  Where we stand - Cross Country  Present scenario - SWOT Analysis  Challenges  Responses  Conclusion 2
  3. 3.  Despite its relative decline in formal economy in percentage terms, agriculture is still dominant sector in overall economic structure. Its performance still dictates all our macro indicators - GDP, Poverty, External Balance, Inflation etc  This presentation, after carrying out the SWOT analysis of Pakistan’s agriculture sector, describes the challenges it is facing and how to respond to them  Its full-length Kindle EBook version is available for US$3.49 at Amazon.com at the following URL http://www.amazon.co.uk/Agricultural-Sector-Pakistan- Challenges-Response-ebook/dp/B010TMK28S 3
  4. 4.  Out of 80 million hectares total area of Pakistan, 58 million hectares have been surveyed so far  The area under cultivation is 22 million hectares (38%) out of which nearly 19 million hectares is irrigated; the rest is rain fed  The area under forest is 4 million hectares (7%) and the balance 8 million hectares can be classified as the cultivable waste  Agriculture sector of Pakistan comprises four sectors - livestock, crop, forest and fisheries  Livestock contributes 56% of the total agriculture production while crop sector adds 38% to it out of which the contribution of major crops is 25% and minor crops is 13%  Fisheries and forestry contributes 2% each 4
  5. 5.  During the 1950s, agriculture growth was sluggish due to less area under cultivation and low productivity  Low technological base, adverse agricultural terms of trade, patterns of landholding, inequitable tenurial relations were some of the causes  Main driver of growth became increase in cultivated area which increased from 11.6 m ha in 1948 to 15.3 m ha by 1960  Development of lands (particularly in the new barrage areas) had huge impact on production 5
  6. 6.  During the1960’ emphasis shifted towards vertical expansion - increase in yields through genetic breakthroughs in major crops (wheat, rice, cotton)  Land Reforms of 1959 devised a rational land tenure policy. Implementation facilitated creation of new social relationship conducive for agricultural growth  Rapid increase in tube wells contributed to more than a million ha cropped area in Punjab alone (100% increase in cropping intensity)  Agricultural sector grew at 3.8% pa with the production of all crops grew around 4.8% per year 6
  7. 7.  Varieties evolved during the 1960s were adopted widely by farmers in the 1970s  Use of inputs (seeds, fertilizers, pesticides), controlled water, and access to subsidized electricity and credit on a large scale  Price and non-price measures resulted in higher use of modern inputs  Three rural reconstruction programs’ thrust to create more rural employment, facilitate flow of farm inputs and outputs and provide agri. services in small towns closer to farmers’ doorsteps 7
  8. 8.  Two successive food crises forced the policy makers to formulate comprehensive food security policy and realisation of rural transformation as a necessary precondition for economic growth  Induction of local bodies resulted in improvement of rural infrastructure  Foreign remittances resulted in rural private construction, rationalisation of the cost of land and realignment of rural political dynamics 8
  9. 9.  Better crop management and extension services played a major role in increasing the agricultural production  Input use efficiency and greater integration with the world markets are the prime reasons for boosting growth in agriculture sector  Fertilizer use and adoption of HYVs and the use of mechanical farm power exhibited rising trends 9
  10. 10.  Food crises of 2007 reemphasized the crucial importance of agriculture as an engine of growth, price stabilizer and vehicle for poverty alleviation. Terms of trade became favourable for the agricultural sector after many decades  Introduction of Biotechnology by the private sector started the Gene Revolution in the country  Commercial farming started at large scale by enterprising farmers and business houses which boosted tunnel farming and farm mechanization  Environmental consideration, looming threat of climate change and water scarcity have forced the policy makers to go for inputs use efficiency and resource management 10
  11. 11. Crop Decades Ago In Recent Years 1950-53 1960-63 2003-06 2007-10 Wheat 3.13 4.01 20.80 22.76 Rice 0.81 1.09 5.14 6.47 Maize 0.37 0.47 2.60 3.48 Sugarcane 6.09 14.52 48.44 54.45 Seed Cotton 0.82 0.99 5.87 6.18 Fruit N/A 2.54 6.49 7.06 Vegetable 0.63 0.86 3.07 3.13 Milk N/A N/A 37.27 38.05 Meat N/A N/A 2.31 2.84 Fish 0.055 0.089 0.59 0.69 Output of most crops increased by 6-10 fold (million metric tons; 3 year moving average)
  12. 12.  Wheat - From 4 MT in 1950s to 6MT in 1960s to 25 MT in 2014  Rice - From less than 1MT to 2 Mt in 1960s to more than 6.9 MT in 2014  Maize - from 0.5MT in 1950s to 1MT in 1960s to 3.7 MT in 2014  Cotton - From 0.8 MT in 1950s to 2 MT in 1960s to 13.5 MT 2014  Sugarcane - From 6MT in 1950s to 14MT in 1960s to 48.3 MT in 2014 12 MT = Million Tonnes
  13. 13. Commodity Pakistan India USA China World Wheat 28 27 26 48 28 Cotton 20 15 29 43 22 Rice 32 33 82 64 42 Sugarcane 516 734 785 871 717 Maize 33 22 96 55 50 13 Maunds (40 kg)/acre
  14. 14. 14 SWOT Analysis
  15. 15.  With more than 22 million hectares of land under cultivation, agricultural land of Pakistan is 35% of the total area, sufficient not only for its food self- sufficiency but also its industrial and exports needs  Contributing one fifth of Pakistan’s total GDP, agriculture is the only source of income for 60 % population of Pakistan absorbing 47% of the total labor force  Agriculture being the main income activity of the people of the area for more than 6 millennia of recorded history, agriculture is the occupation by choice of the inhabitants. They have now more than 60 years of accumulated knowledge of modern agricultural practices.  Irrigation system of Pakistan is best irrigation agriculture sector  Pakistan is blessed with all four weathers, very helpful in increasing productivity of agricultural land.  Pakistan is fourth largest producer of cotton, dates, mangoes worldwide 15
  16. 16.  Weak factor productivity, stagnant yields  Preponderance of small farmers, low technology base  Post harvest losses, inadequate supply chain Infrastructure, inefficient and inadequate marketing  Depleting soil fertility  Deteriorating Irrigation and drainage system  Ineffective Education, R&D and Extension linkages  Poor skill development for modern agriculture  Inappropriate use of natural resources  Rural Non-farm Sector performs below potential 16
  17. 17.  Existence of productivity gaps - great scope for production enhancing  Worldwide interest in agriculture  Burgeoning population - need for food  Growing prosperity - demand for value added food products 17
  18. 18.  Climate change and environmental threat  Use of arable land for non-agricultural use  Low priority for agricultural development- urban bias  Sluggish economic growth-catch-22 position  Rural Governance issues 18
  19. 19. How to improve the quality of life of the citizens of Pakistan by ensuring their food security and providing agricultural raw material to its industry at competitive rates by making agriculture an efficient, productive and profitable sector of the economy in a manner that its growth is sustainable and outputs are competitive? 19
  20. 20.  Increase productivity by increasing efficiency in all agricultural operations through public as well as private sector investment in R&D and Extension  Increase profitability by rationalizing input and output prices, reducing production and post production losses and selective public procurement intervention  Making agricultural produce competitive in the rapidly globalizing world by reducing cost of production, improving quality and ensuring Sanitary and phyto-sanitary (SPS) compliance 20
  21. 21.  Ensuring sustainability by promoting environment friendly good agricultural practices through ,appropriate legal framework, awareness campaigns and incentives and rewards  Equitable distribution of gains from enhanced productivity by making available public sector goods and services to all stakeholders without distinction 21
  22. 22. A. Horizontal expansion - increasing the area under cultivation B. Vertical expansion - increasing the productivity C. Structural transformation - diversification and value addition D. Cross Cutting Interventions - agrarian reforms 22
  23. 23.  Bringing new areas under cultivation  Reclaiming degraded lands  Intercropping 23
  24. 24.  Bringing uncultivated area under cultivation by providing proper technical support, making available affordable technology and adequate water  Increasing availability of water by construction of new small and medium dams and popularizing rain harvesting techniques  Saving water by reducing water losses through proper water conveyance and efficient irrigation techniques  Economical management of ground water pumping through incentives, legislation and awareness 24
  25. 25.  Launch a sustained campaign for the use of gypsum in every acre and provide incentives  Forbid by law the burning stubs of wheat and rice and encourage the farmers to plough them into the field  Encourage the sowing of humus making plants soon after the harvesting of wheat and plough them back into the lands 25
  26. 26.  Encourage eco-friendly inter-cropping practices as it increases the area under cultivation by cultivating vegetables in between the rows  Agro-forestry is another profitable option for the farmers and the country  However farmers must be given proper technical support for this practice to be cost effective and eco friendly 26
  27. 27.  Agricultural Education and Research  Farm Mechanization  Inputs ◦ Seeds ◦ Chemicals ◦ Water ◦ Credit  Production Losses 27
  28. 28.  Introducing need based agriculture education, creating effective inter and intra institutional linkages and collaboration with reputable foreign universities  Strengthening public sector Research and Development system, improving inter and intra institutional coordination among educational/research institutions and extension  Encouraging private sector investment in the field of R&D with focus on modern technology and facilitating their outreach  Capacity building of extension personnel of the provincial agricultural departments 28
  29. 29.  Intensification and diversification of farm mechanization by ensuring easy access of the farmers to essential farm machinery  Its efficient and optimal use by incentivizing the private sector for opening farm machinery leasing/hiring outlets in villages  Expansion and modernization of local farm machinery manufacturing by providing them training, incentives and technical/financial support to produce agricultural implements as per international standards 29
  30. 30.  Variety development and local production of good quality seeds by the private sector by providing them appropriate legal cover and technical/financial support  Providing legal framework for establishing partnerships between bio-tech research institutes and private seed companies  Encouraging good practices among the farmers to increase the efficacy of farmers saved seeds  Incentivize the farmers to use drill system of sowing to save on fertilizer and for better seed germination 30
  31. 31.  Timely availability of fertilizers, un-adulterated pesticides & herbicides at reasonable prices to the nearest possible doorsteps of the farmers.  Rationalization of prices, in time import and provision of subsidy when needed  Popularizing the efficient and judicious use of chemical inputs for reducing production losses with minimum side effects 31
  32. 32.  Provinces to rationalize their respective water-related legislations including local water usage rules and implementation of integrated water resource management  Encourage public-private partnerships on water saving techniques in cultivation of different water terrains, and other innovative designs of groundwater recharge dams and rainwater harvesting  Prioritizing planned investment in large storage infrastructure and groundwater use in light of macroeconomic instability due to public budget deficit and conflicting demand uses  Saving water by reducing water losses through proper water conveyance and efficient irrigation techniques  Economical management of ground water pumping through incentives, legislation and awareness 32
  33. 33.  Streamlining the traditional sources of farmer credit by integrating them with the formal banking system  Making financial products tailor-made to the needs of smallholders and of micro, small and medium non-farm rural enterprises to become efficiently linked to the agri-based supply chains  Increasing the volume and outreach of formal banking network for timely and easy access to credit by farming community 33
  34. 34.  There are various estimates of production losses due to non-use of weedicides by the farmers  Ignorance, fear and costs of using are the general reasons for this neglect  There is need to create awareness among the farmers for judicious use of weedicides for reducing the production losses  There are eco friendly measures to reduce this loss for those who are excessively conscious of use of chemical inputs 34
  35. 35.  Reducing post production losses  Value addition  Marketing 35
  36. 36.  Reducing post-production losses through development of cool chain infrastructure including storage in the private sector  Establishing grain storage and handling system at all levels including on-farm, off-farm and points of entry/exit (sea/airports), and refurbishment of existing storage facilities  Enforcing grain quality standards and establishing reliable grain testing laboratories at delivery points 36
  37. 37.  Making agricultural produce competitive in rapidly globalizing world by enforcing SPS standards and introducing international certifications  Encouraging quality consciousness among the farmers through awareness campaigns  Introducing and implementing grading standards and improving marketing system of agricultural produce  Establishing modern agricultural produce wholesale markets in public-private partnership with cold storages, pack houses, customs facilities etc. 37
  38. 38.  Sustained growth of the rural economy lies in the development of efficient and effective agri-based supply chains that link the agriculture sector with their corresponding upstream and downstream links in the rural nonfarm to the national and international markets  Establishing modern agricultural produce wholesale markets in public-private partnership with cold storages, pack houses, customs facilities etc.  Encouraging processing and value addition of agricultural produce to fetch better value, and to reduce post-harvest losses  Introducing warehouse receipt system for easy realization of sale proceeds to farmers 38
  39. 39.  Formulation of comprehensive Land Use Policy  Improving Agricultural Terms of Trade  Improving Rural Infrastructure  Improving Rural Governance  Environmental Sustainability  Creating Linkages and promoting Investment  Gender Mainstreaming  Production Relations 39
  40. 40.  Developing a national land use policy for rational use of land resources is the need of the day as valuable arable land is being converted at alarming rates by the property developers and industrial concerns for commercial non farm uses  Infrastructural development, though necessary is also rendering fertile land to brick and mortar  Add to it the declining fertility of our agricultural lands due to non sustainable agricultural practices  Plus the degradation of our lands due to water logging and salinity going on for decades, a negative side effect of our irrigation practices  All these issues needed to be addressed by formulating a long term comprehensive land use policy by the government 40
  41. 41.  Improve the terms of trade between agriculture and the other sectors of the economy so that the squeezing of the peasants going on for the last six decades can be reversed  Rationalize the prices of the inputs farmers use, provide subsidy on them and as well as those of commodities they produce  Improving the marketing infrastructure  Selective procurement when the prices of agricultural commodities crash  Introduction of crop insurance scheme 41
  42. 42.  In rural areas the roads, schools, hospitals and other infrastructure are in deplorable condition  No doubt the government has invested a lot in farm to markets roads, construction of health facilities, schools and also rural electrification  However there are complaints of substandard workmanship and their fast wear and tear due to paucity of maintenance funds  Similarly there are complaints of shortage of staff to man these health and educational schools. 'Ghost Schools’ was a term not invented in the air; it has a solid evidence 42
  43. 43.  Develop efficient and effective agri-based supply chains that link the agriculture sector with their corresponding upstream and downstream links in the rural non-farm (RNF) to the national and international markets  RNF provides 40-60% of incomes/jobs in rural areas, much of its activity occurs in the trading, services and processing sector having strong forward and backward linkages with agriculture  Informal and low capital using entities catering mostly to domestic markets, RNF presents opportunities for providing value addition to primary production at the farm level 43
  44. 44.  RNF is hampered by the numerous middle level low capital using players who add little or no value to products and services  For creating linkages between non-farm rural enterprises with agri- based supply chains, we have to establish modern agricultural produce wholesale markets in public-private partnership with cold storages, pack houses, customs facilities etc.  At the same time government should Introduce warehouse receipt system for easy realization of sale proceeds to farmers and encourage processing and value addition of agricultural produce to fetch better value, and to reduce post-harvest losses 44
  45. 45.  It is not an easy task to dismantle centuries old rural governance structure and replace it with modern, formal contract based rural public management in a short period but can be done in long term  Start with education, literacy and skill formation which will shake the foundations of this feudalistic structure  Establish alternate dispute resolution mechanism to replace the informal system heavily dependent on big landlords, supported by the police and the patwari  Local bodies elections be held as per fixed schedule which will bring in the leadership interested in improving rural infrastructure, the best guarantee of their fast journey to urban culture 45
  46. 46.  Creating awareness among the farmers about the looming threat of climate change and environmental degradation  Popularizing the good agricultural practices by synchronising the extension services of the provincial agricultural departments and marketing outlets of the private agro services providers  Promulgation of legislation for stopping of practices aggravating the threat of climate change  Allocation of resources for carrying out research to adjust the cropping pattern and fine-tuning the planting and harvesting schedules, practicing crop rotation and diversifying crop mix  Developing more varieties responsive to climate change  Adapting irrigation practices and fertilization regimes. 46
  47. 47.  Although it is not possible to replace the centuries old production relations of land cultivation in the rural areas of Pakistan in the short term, efforts can be made to introduce the three modern forms of farming  Contract farming-encouraging agri-based processors to supply inputs & technology packages to farmers on deferred payment with buy-back of produce at guaranteed prices  Cooperative farming-piloting variations of successful coop-models (with refinements to traditional coops)  Corporate farming-promoting lease of commercially viable tracts of land to corporate level entrepreneurs who are willing to practice high-tech export oriented agriculture and share profits with the owners  However all the above three need comprehensive legislation about contract making/dispute resolution as well as their strict implementation through a specially created institutional infrastructure 47
  48. 48.  Rural women are under three pressures-nature, society and family, all treat them unfairly in terms of status, ownership of resources , job opportunities and empowerment  Improving healthcare and family planning facilities to relieve them of excessive child bearing burden should be the top priority  Launching of special rural female literacy and education campaign by offering attractive monetary rewards would help in their empowerment and reduce domestic violence  Ensuring women’s access to resources and assets, including ownership of land by creating awareness about their rights and strict enforcement of legal framework priority  Providing equitable opportunities to women by developing marketing oriented skills and remunerative employment in the rural areas 48
  49. 49.  Enhance the productivity of the agriculture by increasing efficiency in all agricultural operations through public as well as private sector investment in R&D, extension services, rural infrastructure, marketing, value addition etc.  Unfortunately, the flow of investment funds towards agriculture, which has recently picked up, is still far below the desired levels.  we need to make agricultural produce competitive in the rapidly globalizing world by reducing cost of production, improving its quality and meeting global food safety standards. raising the awareness of the opinion leaders and decision makers to enforce strict food safety standards.  Motivating domestic and foreign investors to invest in seed production, fruit and vegetable processing, agri-infrastructure development and encouraging development of commercially viable non-farm rural agriculture enterprises 49
  50. 50.  Despite its declining importance, agriculture is a sector capable of accelerating growth, reducing poverty, containing inflation and improving the quality of life of its citizens. Due to its backward and forward linkages, small investment can bring substantial gains  Area needing urgent attention are inputs use efficiency, reducing production/post production losses, credit availability and bringing more areas under cultivation through intercropping and tunnel farming  Areas needing attention in the short term are rural infrastructure, agricultural terms of trade, promoting investment, formulating land use policy ,farm mechanisation and improving rural non-farm sector  Areas needing attention in the long term are agricultural education, rural governance ,gender mainstreaming, adapting to climate change threats and introducing modern forms of production relations 50
  51. 51.  Thank you for viewing the presentation  If you liked it, can you please download its EBook version for only US$ 3.46 at the following URL http://www.amazon.com/author/shahid_hussain_raja  Peanuts for you, but will help me a lot 51
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