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Pakistan
Agriculture Overview |
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Introduction
Agriculture is the largest sector in the Pakistan economy and accounts for
24% of gross domestic product (GDP). Government figures show that average
growth in the sector during the past five years has been 4.6% per annum
and, in 1998, a growth rate of 5.9% was a major contributor to the overall
GDP growth rate of 5.4%. Approximately 70% of Pakistan's foreign exchange
earnings come from the sale of agricultural products (such as cotton, rice,
fruits and vegetables etc) and this has stimulated demand for the provision
of raw materials, equipment (mostly second hand) and services to agro-based
industries, mainly in the cotton textile industry which is the largest industrial
sub-sector in the country. The sector is also the largest source of employment
and accounts for over 50% of Pakistan's labour force - nearly 2 million
new jobs have been added since 1995 of which 70% are estimated to be in
rural areas.
The present and previous Government from time to time has introduced a range
of incentives to enable farmers to boost production and increase output
by allowing Foreign Direct Investment in the agricultural sector. New targets
have been set for different crops for the year 2000-2001 with special emphasis
on cotton crop which is estimated at 9.7 million bales of cotton, 51. 6
million tonnes of sugarcane, 5.1 million tonnes of rice, 1.5 million tonnes
of maize and 22 million tonnes of wheat during the said period.
In the foreign trade, it is agriculture, which dominates through exports
of raw commodities like rice, cotton and fruits, semi processed and processed
products like cotton yarn, cloth, carpets and leather products. Of the total
export earnings of Rs 387.2 billion in 1998 - 99, the earnings from export
of rice and cotton alone amounted to Rs 26.3 billion or 7 percent of the
total exports.
Import of agricultural commodities contributes substantially
to total Pakistan imports. The major agricultural import categories are
edible oils and grains, pulses and tea. During 1998 - 99, the value of the
former category is made up of about 73 percent palm oil and the remainder
is mostly soybean oil. The latter category is made up of over 85 percent
wheat imports. Together, these two import categories represents 13.5 percent
of the total imports. However, expected wheat production targets (19.5 million
tonnes) in FY 99 - 00 was surpassed and the country for the first time exported
US $ 250 million worth wheat. |
Agricultural Policy
The agricultural sector is highly politicised because the majority of landowners
have had considerable political influence. This has resulted in agricultural
policy being steered towards supporting the production of major cash crops
such as sugarcane, and exempting almost all agricultural income from taxes.
However, following recent discussions with the IMF and World Bank on revenue
collection in general, the present government is in the process of re-structuring
the system to try and increase agricultural taxation. In addition, successive
governments have extended considerable support to the sector by providing
concessionary financing to farmers for the purchase of agricultural equipment
(mainly tractors) and for building irrigation and drainage systems. |
Three year Strategy
The Ministry of Agriculture is preparing a new three-year strategy. This
will focus on the enhanced productivity of export oriented crops and ensure
better marketing of exportable crops to get maximum prices of the produce.
The new strategy will envisages to improve the performance of the agriculture
sector including
- Higher growth rate of agriculture as compared to population growth
- Food security and self-reliance in food crops
- Enhancing the productivity of wheat, rice, oil seeds, cotton and sugarcane
- Land and water development for a sustained agricultural growth
-Farm input supplies supported by appropriate technology to the farmers
and at the users' end, balanced emphasis on all aspects of agricultural
production including livestock, fisheries and forestry
- Improving marketing of agricultural commodities, emphasis on agricultural
research to generate innovative technology including biotechnology for
raising per acre yield of land.
- Improving the productivity of small farmers while encouraging the large
farmers for utilisation of modern technology. |
Corporate Farming
Agriculture Ministry and Small & Medium Enterprise Authority (SMEDA) are
preparing a policy package for Corporate Agriculture Farming (CAF). According
to the proposed package, the land to be used for the purpose of CAF will
not be included in any land reforms, undertaken by the government in future.
A support committee will be created in Ministry of Food, Agriculture and
Livestock (MINFAL), comprising officials from the Federal and Provincial
Ministries of agriculture, Board of Investment (BOI), provincial boards
of revenue and farmers organisations to launch a campaign for attracting
foreign and domestic investment in the agriculture sector. All the proposals
for domestic and foreign investment for the CAF will be placed before the
BOI, which will finalise the case in consultation with the Agriculture Ministry.
The Provincial Governments shall be tasked to identify lands in blocks greater
than 2000 acres, suitable for large-scale mechanised farming along with
the terms and conditions.
The induction of corporate farms will bring
modern production technology, access to capital, direct access to domestic
and foreign markets, and professional management expertise. It will also
generate opportunities for the inputs industry, as the corporate farms will
act as large consumers of farm inputs. On the marketing side, these farms
will generally undertake the processing and grading and supply of raw material
to agro industry. |
Main Crops
Four crops dominate agricultural production: wheat, cotton, sugar cane and
rice. They account for around 39% of total agricultural output and nearly
10% of GDP. This is despite the fact that crop yields in Pakistan are generally
low compared to international standards. For example, wheat yields are only
75% of international standards, while rice yields are approximately 66%.
Cotton - Pakistan is one of the largest cotton producing and exporting countries
in the world. Cotton and cotton related products make up 34% of Pakistan's
total exports. Cotton is used in the upstream spinning, weaving and textile
garments industries, which employ the bulk of the industrial labour force.
Wheat - Wheat is Pakistan's largest food grain crop, and accounts for
a large proportion of the total area under cultivation. The majority of
wheat is grown in the Punjab. Despite increased fertiliser usage and the
government's drive towards self-sufficiency, local demand continues to
outstrip supply, except for the year 1999 - 2000 when wheat production
was 21.1 million tons as against 17.9 million tones in 1998 - 99. The
increase in wheat production was mainly due to increase in area by 2%
and yield 15%. Factors responsible for this increase are:
> Increase in support price of wheat by Rs 60
per 40 kg
> Increased use of fertiliser by 9.5%
> Improvement of
seed supply
> Favourable weather
> Provision of training to farmers in wheat production technology
Rice - Pakistan grows enough high quality rice to meet both domestic demand
and allow for exports of around one million tonnes per annum. Two varieties
of rice dominate the market: basmati, which is grown mainly in the Punjab
and irri, which is grown mainly in the Punjab and Sindh. Basmati accounts
for around 2% of exports and is of a higher quality than irri. Quantities
of irri are exported to Bangladesh and Africa. Production of rice during
1999 - 2000 was 5156 thousands tonnes, which is 10.3 percent higher than
1998 - 1999 as a result of increase in the area, better yield, favourable
climatic conditions and less attack of insects, pests / diseases, on the
crop during the year. It was cultivated on an area of 2515 thousand hectares,
which was 3.7 percent higher as compared to 1998 - 99. The yield per hectare
was also higher by 6.3 percent. However due to the less rains this year
government is discouraging the rice cultivation and instead encouraging
the farmers to grow cotton which consumes less water.
Sugar cane -
Sugar cane is grown in abundance throughout Pakistan and is the major raw
material for the sugar refining and packing industries. Most sugar is produced
in the Punjab (57%) and Sindh (40%). Sugarcane has been cultivated on an
area of 1010 thousand hectares during 1999 - 2000, showing a decline of
12.5 percent over 1998 - 1999. The production during 1999 - 2000 remained
46363 thousands tonnes which is lower by almost 16 percent as compered with
1998 - 1999. The yield per hectare has also declined by 3.9 percent. Several
factors are responsible for the sharp decline in sugarcane crop. Firstly,
the delay in payments by the sugar mills discouraged farmers to grow sugarcane.
Secondly, sugarcane is an intensive user of water relative to other crops.
The abolition of flat rates of electric tube-wells by the Water and Power
Development Authority (WAPDA) in Punjab also created water constraints.
The Government with its policy to cope up with the problem of water scarcity
is encouraging farmers to grow cotton instead of sugarcane. |
Mechanisation
Mechanisation of agriculture has played an important role in increasing
agricultural production. The policy has been framed to accelerate the pace
of agricultural mechanisation in the country. The sale of tractors for the
period July - March 1999 - 2000 is reported as 26313 or 47.1 percent higher
than 17882 tractors delivered during the same period last year. The increase
in sale is largely attributed to the availability of agricultural credit
(by ADBP) and ensuring of tractor pricing within the affordable limits of
farmers. Messy Ferguson (UK) in Joint Venture with "Millat Tractor" are
producing tractors to meet the local demand.
ADBP allocated funds to
the tune of Rs 7000 million for tractor financing during the year 1999 -
2000. Furthermore, a sum of Rs 4510 million was disbursed during 1998-99
for purchase of 16,951 tractors of various makes, including 2,562 tractors
under Punjab Government subsidy and 791 tractors under Federal Government
subsidy for Balochistan. |
Characteristics of Market
Government of Pakistan has identified agriculture as one of the priority
sector productive for domestic and foreign investment. Recent developments
include the import of agricultural machinery at concessional customs duty
for non-corporate agriculture.
Pakistan faces major difficulties with
crop yields and over use of pesticides when compared to other agricultural
centres in the region. This is compounded by dated infrastructure and farming
techniques that have not changed for decades and a lack of adequate irrigation
and cold storage facilities. |
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