THE ECONOMY OF AGRICULTURE IN PAKISTAN
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The Economist Pakistan ReportPakistan has a rich and vast natural resource base, covering various ecological and climatic zones; hence the country has great potential for producing all types of food commodities. Agriculture has an important direct and indirect role in generating economic growth. The importance of agriculture to the economy is seen in three ways: first, it provides food to consumers and fibres for domestic industry; second, it is a source of scarce foreign exchange earnings; and third, it provides a market for industrial goods.
Land use, farming systems and institutions
The total geographical area of Pakistan is 79.6 million hectares. About 27 percent of the area is currently under cultivation. Of this area, 80 percent is irrigated. In this regard, Pakistan has one of the highest proportions of irrigated cropped area in the world. The cultivable waste lands offering good possibilities of crop production amount to 8.9 million hectares. Growth in cropped area is very impressive: from 11.6 million hectares in 1947 to 22.6 million hectares in 1997.
Most of Pakistan is classified as arid to semi-arid because rainfall is not sufficient to grow agricultural crops, forest and fruit plants and pastures. About 68 percent of the geographical area has annual rainfall of 250 mm, whereas about 24 percent has annual rainfall of 251 to 500 mm. Only 8 percent of the geographical area has annual rainfall exceeding 500 mm. Thus supplemental water is required for profitable agricultural production, either from irrigation or through water harvesting.
Agriculture is largely dependent on artificial means of irrigation. Of the total cultivated area, about 82 percent or around 17.58 million hectares is irrigated, while crop production in the remaining 3.96 million hectares depends mainly upon rainfall. The Irrigation Canal Command Area (CCA) has been grouped into classes on the basis of the nature and severity of its limitations water logging, salinity, sodicity and texture. At present about one-fifth of the cultivated land in CCA is affected by water logging and salinity to varying degrees. An additional area of 2.8 million hectares suffers from sodicity. Notwithstanding huge investments, the water table was 0 to 1.5 m under 2.2 million hectares of irrigated land, 1.5 to 3 m under 6 million hectares and 0to 3 m under 8 million hectares. Thus Pakistan needs to overhaul its entire drainage and reclamation strategy reduce its cost and make it efficient.
Significance of the agricultural sector in the economy
Agriculture is an important sector, providing food to the fast-growing population of the country. According the 1998 census, the total population of Pakistan is 130 million. With a population growth rate of 2.6 percent there is a net addition of 3.4 million people each year. In 1947 the population of Pakistan was 32.5 million; in 50 years it has increased fourfold. During this period the production of wheat, the major food crop, has increased only 2.9 fold. During 1970/71 the amount of wheat imported was 0.3 million tonnes; it has increased to 4.1 million tonnes in 1997. Tremendous efforts have been carried out to narrow the gap between population growth and food production.
Agriculture contributes about 24 percent of the gross domestic product (GDP) and employs 47 percent of the national employed labour force. The contribution of the agricultural sector to the GDP has declined gradually since Pakistan came into existence, from over 50 percent in 1949-50 to about 24 percent in 1996-97. Agriculture still remains the major sector of the GDP composition. A major part of the economy depends on farming through production, processing and distribution of major agricultural commodities.
In foreign trade agriculture again dominates, through exports of raw products such as rice and cotton and semi-processed and processed products such as cotton yarn, cloth, carpets and leather production .Agriculture is essential for sustainable improvements in internal and external balances. Of the total export earnings, the share of primary commodities and processed and semi-processed products constituted almost 60 percent of the total exports. There have been some structural changes over time, but the contribution of agro-based products has more or less sustained its position.
The average annual growth rates in the agricultural sector during the 1960s, 1970s and 1980s were 5.07, 2.37 and 5.4 percent, respectively. With the announcement of a new agriculture package by the government in April 1997, the growth rate during 1997/98 has improved to 5.9 percent.
More specifically; the agricultural sector plays an important part in Pakistan’s economy by: • contributing 24 percent towards GDP; • providing food to about 130 million people; • earning about 60 percent of the country’s total export earnings; • providing employment to 47 percent of the total work force; • providing the main source of livelihood for the rural population of Pakistan; • providing raw materials for many industries and a market for many locally produced industrial products.
Overview of agricultural sector development
Significant progress has been made in development of the agricultural sector in Pakistan since the time of independence in 1947. At that time, the Indus Basin was irrigated with an extensive system of canal irrigation, sown with low-yielding traditional seed varieties, fertilized mainly with animal manure and cultivated by means of animal draught power and by hand. In the early 1960s, conditions that favoured more rapid growth were put in place: the Indus Wate Agreement was signed under the chairing of the World Bank; the Indus Basin Development Fund w< established with multidonor support; government improved the terms of agricultural trade; and tubewe were installed as a viable investment. That decade witnessed a green revolution in Pakistan, and crc production accelerated during the first part of the decade, primarily because of the increased use of inputs.
Pakistan’s agriculture has made a long and difficult journey. Its performance is marked by a mixed trend. There have been some years of dismal growth and some years of cruising growth. Since 1980, agricultural GDP at constant factor cost has more than doubled, increasing from Rs 76 billion in 1980 to more than Rs 141 billion in 1996/97, with a steady growth rate of 3.91 percent annually. Agriculture’s share of total GDP however, declined from about 31 percent to just 24 percent over the same period. Crop production contributed the largest share of agricultural GDP (62 percent in 1996). with livestock contributing 34 percent and fisheries and forestry the re Policy measures in the last four years, i.e. from 1993/94 to 1996/97, were positive for the agricultural sector. Undue benefits provided to the industrial sector over the years were reviewed and modified.
T he agricultural sector as a result responded with new buoyancy. Export taxes on agricultural commodities were reduced or eliminated, which benefited the agricultural sector. In the policy reforms package, better support prices, better tillage and soil preparation practices and adequate and timely availability of fertilizer and certified seed have added to the positive response from the farming community. In 1996/97, production of wheat reached a level of 16.7 million tonnes, and there was also a 13.7 percent increase in the production of Basmati rice. The overall production of rice registered an increase of 8.5 percent – the total production of rice during the year was 4.3 million tonnes, compared with 3.97 million tonnes in the previous year.
There was, however, a decrease in the production of pulses, particularly of gram, during 1996/97 to 832 000 tonnes from 918 000 tonnes during the previous year (1995/96). Production of potatoes and onions in 1997/98 is estimated at 1 205 000 and 1 160 000 tonnes respectively, as compared with 963 000 and 1131 000 tonnes in 1996/97.
Over the past 20 years some important structural changes have taken place in the sector. In particular, livestock has emerged as an important subsector, today contributing more than one-third of agricultural GDP, compared with about 28 percent 20 years ago. Similarly, fisheries and forestry, while still minor contributors to agricultural GDP, have grown rapidly. Structural changes have also taken place within the crop sector. Cotton is now as important as wheat in terms of value added with a one-fifth share of total earnings. Rice and sugar have, however, fallen from a 20 percent share in the early 1970s to 15 percent today.