Guest Post by Ali B.
Everyday we read something about Pakistan’s economic growth statistics, some flattering and others not so much. Most of it is concentrated around the macroeconomic reforms by the current regime and thus is all about policy. Yes, the policy has resulted in exponential growth over the past few years but it has also resulted in inflation, excess inequity and other problems that most people see as teething issues with rapid growth. What has gone unnoticed, though, at least in the mainstream media, is what is missing from our growth statistics and why this could come back to bite all of us, especially those making rosy projections of the Pakistani economy.
So, as my title implies, I am trying to refocus attention on the woes of the agricultural sector in Pakistan.
Why is agriculture important?
The obvious answer is that agriculture is still among our biggest single industries and much of our export depends directly or indirectly on this sector. But the importance of agriculture goes beyond that: almost every period of large-scale modernization and industrialization of an economy has been preceded by immense improvements in the agricultural sector of that economy. Two examples come to mind: First, the so-called Industrial Revolution ( Great Britain) was preceded by an increase in agricultural efficiency due to new farming techniques and methods; Second, the growth of China’s industrial base post-1970’s was preceded by an extensive growth in the efficiency and total production of its agricultural sector.
But beyond these examples, what does growth in production and efficiency in agriculture do? At the most basic level, it frees up labour to be employed in other more productive industries, creates more food for everyone (resulting in either self-sufficiency or greater exports), the greater food supply supports the movement of labour into other industries without the need for drastic family planning (statistically, fertility rates among the agri-employed is greater than among the non-agri-employed which should in the medium-to-long-run reduce population growth rate) and so on.
What does this imply about our country’s current growth and the prospects for continued growth?
If one were to look at agri-statistics from 2001 onwards (http://www.statpak.gov.pk/depts/fbs/statistics/agri_indicators/agri_indicators.html#Production), the prospects do not look great. Yes, one might say that we have already gone through the period of improvement in our agriculture prior to 2001 which is why we are having such success in the industrial sector but comparing our yields (per hectare as well as per unit of labour employed) to other countries shows that this cannot be true. The statistics post-2001 (linked to above) show that yields per hectare of the major crops have fluctuated with only a few crops showing definite upward trends (though none of those trends are very great).
This among other reasons, is why foreign organizations continue to maintain (see CIA Factbook if nothing else for this) that the prospect of growth in the medium-to-long-run is uncertain. This is also why despite our exponential growth over the past few years, we continue to import staple food such as wheat and sugar even though these are our primary agricultural products. Thus, for Pakistan to really see sustainable growth, instead of growth spurts every few years followed by regressions, the country needs to re-evaluate its priorities.
What exactly is wrong and what can be done about it?
First the things that are often cited as being wrong with our agricultural sector and which would be expected in a country of our background and economic standing: inefficient land-holdings (as rich landowners have no incentives to produce efficiently), absentee land lords (again cause for inefficiency), wastage of resources (especially water and labour) and unpredictability of production.
Considering the political climate in our country, I don’t know how much can be changed but following are a few things that Pakistan could start with:
– Implementation of water-saving techniques
o Improvement in the current canal systems
o Reduction in leakages (and stealing)
o Implementation of new techniques for irrigation
> Drip irrigation – a technique that is not overly expensive and has been used in other countries/regions where there is a shortage of water. It involves pipes with holes being installed along or under the crop rows and has been known to reduce water waste by at least 25% compared to techniques currently used in Pakistan. The best part about this is that it does not need government approval or implementation, though their promotion would definitely help
> Spray irrigation – more suitable for regions with greater access to water, but still uses less water than used by current techniques used in Pakistan
– Implementation of land-saving techniques
o Instead of focusing on getting more land that is not classified as arable, get farmers to plant on lands that are otherwise wasted because there is no motive when landowners already have plenty of farmland under cultivation
o Subsidize natural (or chemical) fertilizers especially for land that is feared to go dry due to over-cultivation.
– Allow greater access to technology – learn a lesson from India: Tata Consulting has an agricultural consulting division that helps farmers (for a fee) to decide on what crops to plant, where to sell them, etc. All of these recommendations use econometric/statistical models and agricultural research so that what the farmers plant will get the best output (not just in yield from their land but in profits considering local and international markets). This could potentially be a great project for some graduates from our agricultural and business universities to start working on.
I will end this article by touching upon what most probably expected to be touched upon sooner: the feudal and landholding system of Pakistan. Though this is assumed to have negative consequences for the economy, my own readings shows mixed results (case in point: England had a feudal system way past its Industrial Revolution). Due to this and the political difficulty of changing this over night, I personally don’t think we should worry about the system per se, but rather its implications that is, if a farmer under the feudal system is efficient, it does no harm. However, if this is not the case, create a policy to affect inefficient producers instead of having blanket policies to redistribute land to small landowners because too often these redistributions polices have been either ineffective (due to the political connections of those it needs to affect the most) or known to have negative effects due to adverse incentives for growth in holdings of efficient farmers.