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Farm sector’s neglect adding to rural distress




  • Despite favourable farming conditions, Pakistan until two-three years back was not producing sufficient wheat to meet the domestic requirements. On an average, 2.5 million tons of wheat was imported every year.

    But during the last couple of years, production has surpassed the needs thus taking Pakistan into the export market. However higher cost of production and incidentals did not allow the wheat a competitive edge; so its exports were heavily subsidized.

    The government has decided that irrespective of the domestic production and demand, half a million tons of wheat should be exported every year to keep the country in export business, because it is difficult to find fresh markets in years of surplus production.

    In view of the expected low production of the crop harvested in spring 2004 the export is temporarily banned. Other items being imported are edible oils (about 85 per cent of the domestic requirements), tea and wood products, and powdered milk.

    Sugar, like wheat has always been on the import list, but recently it has accumulated some surpluses, which are being exported by providing subsidies because the international prices were lower than our prices owing to high cost of production. The position would become different if international prices improve.

    Agriculture is a gamble in nature. Its performance is influenced by the natural calamities, sometimes quite significantly like the temperature, rainfall, drought, storms, hailstorms, insect and disease attack, floods and so on.

    On account of these and other factors, the yield in many cases does not equal to the world average. It is somewhat lower than in an adjoining country where agriculture is being practised with heavy subsidy due to the use of fertilizers and better infrastructure facilities.

    One of the major factors is that the farmers generally don’t get the cost incurred on production, or more, which could motivate them not only to grow the crop but also to raise production.

    Another factor is inefficiencies in the marketing system, which don’t permit the farmers to reap what they should, affecting their net income – factor influencing the poverty level.

    The government, on the recommendations of the World Bank, instituted the Agricultural Prices Commission (APCom) in 1981 to recommend the support price of a dozen of crops.

    This was to safeguard the farmers’ interest, particularly in a good crop year when post-harvest prices fall to a level against the interest of farmers. This system of fixing support prices worked satisfactorily for over a decade or so.

    In recent years, the same World Bank along with other international loaning agencies has been advising the government to do away with it for enabling the market to determine the price level depending on supply/demand situation.

    This made the farmers to agitate. The President of Pakistan constituted a Committee which submitted its recommendations. The Cabinet despite opposition from the ministries of finance and commerce, decided that the support price of wheat, cotton, rice and sugarcane should continue.

    However, the finance minister in his 2002-2003 budget speech announced to keep intact the support price of wheat and cotton only – implying that there would be no support price for other crops.

    The first Cabinet meeting held under the Chairmanship of Prime Minister Mir Zafarullah Khan Jamali decided to announce the support price of all crops (Kharif and Rabi) about two months before their sowing times.

    Presently, support price of cotton and wheat only are being announced, and that too, not before sowing. In the case of rice crop “indicative” price has been announced which practically has no meaning after sowing. The price of sugarcane was left to the discretion of the provincial governments and only “indicative price” was announced by the federal government.

    Another factor is the continuous rise in input prices. Again under the pressure from international organizations the government withdrew subsidies on agricultural inputs. As if this was not enough, the government also levied sales tax on fertilizers to raise revenues.

    The economic analysis done by experts shows that the revenue realized from the sales tax was far less than the loss of crop in value terms because of the shortfall in production due to the low use of fertilizers on account of exorbitant prices.

    What a policy? In addition to substantial increase in fertilizer prices, which accounts for over 20 per cent of the cost of wheat production, there have been substantial increases in the POL costs, labour, harvesting and threshing charges.

    The support price, which was fixed at Rs300 per 40kg for the 1999-2000 wheat crop, remained in force for four years till it was revised to Rs350 per 40kg for 2003-04 crop, adversely affecting the farmers’ income. This contributed to the poverty graph.

    It is pertinent to mention that although Pakistan withdrew the subsidy on fertilizer, India is still providing to the extent that they allocated about Rs14,170 crore in their 2002-2003 budget which was raised from Rs13,800 crore in the previous year.

    Similarly in the US, the Senate approved $275,000 per farm crop on agricultural subsidies. The farmers could receive under the existing rules unlimited subsidies for producing grain, cotton and soybean.

    The European countries are also providing huge subsidies to their farming communities. Pakistan can not have a competitive edge under such situation where cost of production is going up but farmers are not being compensated in the output prices.

    There are also marketing inefficiencies prevalent in the system. In wheat export, it was revealed that the incidental cost from purchase to export were as high 20-25 per cent of the support price.

    This resulted in high export subsidies which prompted setting up of the committee to study marketing system and suggest how to reduce costs. The report submitted at the end of 2002 does not seem to have been considered because of change in the government.

    The input-output price has to be rationalized, particularly when the country has to follow the WTO rules. Under the WTO regime there would be no restrictions on the import and export of commodities and on tariff, therefore, quality and price would be governing factors in international trade.

    If commodities, cheaper than the domestically produced, make way into Pakistan then our agriculture is bound to suffer. The flooding of local markets with cheap wheat, sugar, edible oils and other usable commodities would have devastating effects on the agriculture sector. This will negatively effect the income of particularly, small farmers.

    Crops like sugarcane do not have a competitive advantage when seen from the export point of view. The domestic resource cost, though varies from year to year, still remains much higher as compared to its competitive crops like cotton and rice.

    Having been given protection through banning cheaper imports, this industry has expanded and in a very small span of time, the number of sugarmills has grown to around 74.

    Presently, not more than half of the installed capacity of these sugarmills is being utilized. Once cheaper sugar enters into our market, the industry would face serious problems for its existence which in turn would impact on cane growers who will feel the brunt of low prices for their crop.

    Edible oil is on the top of importing list, putting pressure on foreign exchange. The government made a good start to raise oilseed production but the enthusiasm phased out after mid-nineties.

    Thereafter, it received low priority. The non-traditional crops, viz, sunflower, canola and soyabean were allowed to be guided by the free marketing mechanism. Private sector, in the hope of increased production expanded the solvent extraction industry. But, as the pace of production was much below than their expectations, the industry remained under-utilized. The entire edible oilseed and marketing sector needs a thorough probe to identify areas where improvements could be effected.

    Any increase in oilseeds production would benefit country in the sense that the huge foreign exchange burden would be reduced. Moreover, as these crops can be successfully grown in un-irrigated areas, it would help improve the income of farmers in these dry tracts.

    The government plans to promote tea cultivation in the NWFP to help inhabitants raise their incomes. For this, in 1986 a Tea Research Station at Shinkiari, Dist Mansehra was set up which succeeded in planting about 100 acres of tea, so far.

    A processing plant has also been obtained from China. The plan initially will extend plantation to 150,000 acres by the private sector. In addition, the Lever Brothers have also shown interest in tea cultivation, and so far they have succeeded in planting tea on 400 acres, to be extended to 1500 acre.

    They have also set up a processing plant at Mansehra but for the lack of tea leaves, utilization of the plant is not more than one fifth of its capacity. It is learnt that their efforts have not been successful and that they were planning to give their plans up.

    However, some experts are doubtful if tea cultivation would be economical in these areas and whether it would have competitive advantage to grow in the face of the WTO regime soon coming into operation, when customs free imports of tea could take place from the conventional countries like Bangladesh, Sri Lanka, Kenya and India.

    There are at least four factors, which experts think should be taken into consideration. It needs acidic soils, but many of the soils in areas where tea plantation is planned are not acidic, and therefore, may have to be brought to the desired level. This would need cost.

    Second, tea plants need frequent and timely rainfall, but in planned areas rainfall is irregular. Therefore, sprinkler irrigation may have to be adopted. Moreover, tea plants do not like water to stand in fields; it must be drained off.

    All areas under consideration do not have adequate slope for natural drainage of water. Moreover, temperature during summer is quite high, which adversely affects the quality of tea.

    And lastly, as it takes 3-4 years before tea can start giving any returns, the farmers would need credit to tide over this period. All these factors would add to the cost of cultivation and, therefore, need to be considered to determine if it would be economical to grow tea domestically before farmers are advised to resort to it. Moreover, comparative advantage vis-a-vis other countries from whom we import tea is a factor to be reckoned with.

    The problem of water-logging and salinity is serious. According to the Agricultural Statistics of Pakistan (Minfal), just after the monsoons i.e., in October, about 3.2 million hectares are such where water table generally is between 0 to 5 inches while 6.3 million hectares are such where water table is between 0 to 10 inch from the upper surface of soil. The corresponding figures before rains i.e., June, is 544,000 and 2.4 million hectares. As regards the salinity, about 3 million hectares of the cultivated area are affected by saline sodic salts.

    This is prevalent mostly in Punjab (1.5 million hectares), Sindh (1.2 million) and very little in Balochistan and the NWFP. This is one of the reasons for low land productivity, thus affecting incomes of farmers.

    With the foreseen shortage of water, these twin menaces are likely to increase rather than decrease. Very serious and concerted efforts are needed to arrest this likely trend, so that the farming community is not affected.

    There are about 550,000 tubewells in the country, of which about 87 per cent are in Punjab. Of the total, more than three fourth are operated by diesel. The cost of diesel has gradually gone up to much more than double what it was 3-4 years ago.

    Because of drought conditions, farmers have been over-pumping water from the subsoil for irrigation purposes. The result is that water of a very large percentage (according to one estimate more than 90 per cent) of the tubewells has gone saline and is becoming unsuitable for irrigation, and if its use is not rationalized, it would adversely affect the suitability of land for cultivation.

    This would also have deteriorating effect on land productivity, thus limiting chances for improving the output per unit of land and income of farmers. Water is life for plant growth.

    About 80 per cent of our cultivated area of 2.1 million hectares is irrigated by canal water which is supplied mainly from the Tarbela and Mangla dams, one of the biggest dams in the world constructed in 1960’s and 1970’s, respectively.

    The designed capacity of both these dams was 15.05 million acre feet. Because of indiscriminate felling of trees and denudation of vegetation resulting from over-grazing, particularly in the watershed of these dams, the capacity had almost reduced to 12.76 million acre feet by 2003, a fall of about 15 per cent, and is likely to further reduce to 11.50 million acre feet by 2010, i.e., reduction of about 23.6 per cent from the designed capacity.

    Concerted and continuous efforts are required for effective and efficient watershed management for these dams, if further silting up is to be restricted. Past efforts have not shown any tangible results except some success attained in the Mangla watershed.

    With the passage of time, water shortage is becoming a global problem and Pakistan is no exception. The situation in Pakistan got worsened because of the continuous drought during the last three or four years.

    The construction of Kalabagh dam to supplement the dwindling irrigation supplies has become the victim of provincial politics. According to irrigation experts, this is a desirable project as shown by feasibility studies carried out by the international organizations.

    However, early solution to this conflict seems the urgency of the day. Our world-renowned irrigation experts estimated that it would need some 750 small dams to store water equal to the planned capacity of Kalabagh dam.

    It is heartening to note that the President of Pakistan has recently taken a firm stand that the construction of Kalabagh dam or Bhasha dam (if its feasibility so demands) would start from 2004, but before this is done, consensus of the provinces have to be sought.

    In the looming days of water shortage, there is a need to change the cropping pattern of crops, from high delta ones to low delta ones, change in methods of surface irrigation, adoption to sprinkler irrigation system, levelling of land to economize the use of water, zero tillage of crops, where possible, and so on.

    The wastage of water from the canal heads to fields which is about 40 per cent or so, has to be reduced for which attention is needed. To reduce these losses for which more research and allocation of resources is required.

    Livestock is an important sub-sector as it contributes about 40 per cent to the agriculture sector, and about 10 per cent to the country’s GDP. It provides livelihood to about 30 million people and contributes substantially to foreign exchange earnings.

    It provides supplementary income to rural people. This sub-sector has not, in the past, received attention of the government, which it deserves as is manifested in the allocation of resources in the Five-Year, as well as, the Annual Development Plans to this sub-sector. 

    The Dawn

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