2008 a disappointing year for agriculture

[Naveed Yaseen]

By Shahid Shah
KARACHI: Agriculture, the largest provider of livelihood to the poor, faced unbearable losses due to wrong planning and high input costs in the outgoing calendar year.

The year 2008 disappointed the growers despite announcement of an agriculture package by the government in the budget for the current fiscal year. Growers say they did not get benefits of the relief package.

Pakistan’s economy in general failed to achieve its growth target, but agriculture, the major contributor, particularly failed. In financial year 2008 the agriculture sector grew by only 1.5 per cent against a target of 4.8 per cent. Its total contribution to the GDP remained at 20.9 per cent. Out of this, 10.9 per cent came from livestock.

Every two persons out of five work in the agriculture sector, whereas it provides livelihood to every two out of the three. It contributes significantly to the country’s exports.

It also provides raw material to major industries such as textile, sugar, dairy, leather and other agro-based industries as well as market for industrial products.

The growth of major crops was negative three points against 8.3 percent increase last year. Water shortage at the peak season, increase in the fertilizer rates and use of substandard pesticides affected the crops badly. Minor crops showed an increase, but that does not count towards the major growth rate. “The contribution of commodity production sector to overall GDP growth in FY08 was lowest in the last six years,” said the annual report of the State Bank of Pakistan.

Though sugarcane production was above the target, it did not pay much to the growers, as majority of them are still waiting for the payments from the sugar mills.

A bumper crop of paddy was produced this year, but the government failed to ensure the support price. Rice exporters oppose the government agencies entrance in rice trade.

The report said delays in harvesting of cotton and sugarcane (mainly due to pricing issues), and lack of clear incentive signals (as government could not announce its pricing policy before sowing time) also resulted in area deficit for wheat crop.

A significant 25.3 percent rise in agri-credit during FY08 helped farmers to partly compensate the impact of high fertilizer prices. But, growers complained about the corruption in disbursement of agri-credit through the Zarai Tarqiati Bank that charges the lowest mark up.

The ‘percentage’ charged by its staff makes the mark up equivalent to that of the scheduled banks. The State Bank suggested that Pakistan should focus on modernising agriculture sector with greater emphasis on crop diversification and its value chains. “The need is to improve price transmission mechanism to ensure that the benefits reach the farmers,” said the apex bank.

The government has announced Rs32 billion subsidies for the farming sector against Rs25 billions last fiscal year. This year’s budget increased subsidy on DAP by 113 percent or by Rs530 to Rs1,000 per bag. Again, growers complain they were not provided that subsidy. DAP rates in the international market are equivalent to Rs2,600 and after deduction of Rs1,000 subsidy it should come down to Rs1,600 per bag, but the DAP bag was available for not less then Rs3,000. This would result in decline in the yield despite of governments increase of support price of wheat to Rs950 per 40-kg.

This year’s budget also announced exemption of 15 percent GST on urea and other fertilizer. That benefit is not passed to the growers instead, said Abdul Majeed Nizamani, President Sindh Abadgar Board.

The State Bank said if the agricultural package announced in the federal budget was fully implemented it would, “help increase production, export, boost economy and reduce poverty in rural economy.” The fisheries sector recorded improvement though export to the European Union (EU) member countries remained suspended.

Total fish catch in FY reached 640,000 tonnes against 578,000 tonnes last year. Value of the catch was recorded at Rs18.43 million against Rs16.60 million. Value of the inland fish paid around five times higher than the marine catch that shows low prices in the other market than the EU.

Increased use of fertiliser in Pakistan has increased the yields. The country increased its fertiliser use from 20 kg per hectare in early 1970s to 162.5 kg/ha in FY08. Still it remains low compared to 250kg /ha in Northern Europe and 170 kg in India.

Pakistan is the seventh largest wheat-producer but remains at the 13th number in yields. India is at number eight and China at seven. Pakistan’s wheat yield per hectare is 2.37 metric tonnes; India grew 2.62, where the UK has the highest output of wheat with 7.78 metric tonnes per hectare.

Similarly, Pakistan is the fourth largest cotton producer in the world but holds eighth position in its yield, 12th largest rice producer but remains at no.18 in yield with 2.96 metric tonnes per hectare. India is one number forward to us. Egypt with the top yield of rice remains at the top with 9.52 metric tonnes per hectare.

Pakistan can learn lessons from other countries to increase its yield, as water shortages would not allow more land cultivation.

Increase of the value-addition in agricultural crops, on the basis of cotton, have potential to double country’s exports in next five years, said Syed Mohibullah Shah, Chief Executive Trade Development Authority of Pakistan.

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