AGRICULTURE IN PAKISTAN’S ECONOMY

INTRODUCTION
Economy can best be described in simple terms as “Careful management of
resources”. Pakistan is a mixed economy due to its various dynamics such geographical
location, demographics, socio-political culture and a myriad of other factors. Pakistan’s
economy is composed of three major sectors i.e. agriculture, industry and services.
Agriculture makes up 18.9%, share of industries is 20.9% and services take up the
biggest chunk i.e. 57.7% of the total GDP. Owing to various factors, net economy
remained in loss for the most part of history of Pakistan. Similar trends continue at
present due to over dependence of imports, lesser agricultural and industrial production.
This has in turn taken an adverse toll on the forex reserves of the country resulting in
devaluation of currency and high inflation; resulting in additional difficulties in
maximization of production. Governments have been exercising the last available option
of IMF assistance programs very frequently. Subsequently, Public debt now stands at
an excruciating 60% of total GDP. Above in view, it is evident that Pakistan’s economy
is facing many challenges, so an integrated economy, viable socio-political framework is
urgently required to reinvigorate Pakistan.

In the historical perspective, Pakistan’s economy has seen it fair share of ups
and downs. But the bearish trends have remained overall predominant as evident from
the current economic situation and trade deficit. Taking a look back at the history of
Pakistan’s economy, one can safely conclude that Pakistan saw an era of satisfactory
economic growth in the first 20 years of its existence. Thereafter, growth started
diminishing until the period from 2000 to 2007. Some of the expedients of Pakistani
economy include abundant natural resources, human resource, ideal geography etc.
But the impediments out score the expedients, which are low literacy rate, ignorance,
shortage of capital, problems of rule and law, weak institutions, corruption, lack of will to
improve, lack of innovation, useless and superstitious social system.

Historical over view of Pakistan Economy

Era from 1947 to 1958

During this period, Liaqat Ali khan was Prime Minister. Also during this time, 5 year
plans were started. Important highlight of the era was war of currency with India in 1949.
However, relations were brought to normal in 1950 and trade between the two countries
was started. In 1953, Pakistan faced a shortage of funds resulting in disbandment of the
5 year plan. The economic turmoil was further compounded by floods during that time.
The situation was improved and new plan was published in 1956. This era marked
Pakistan’s constant struggle for economic and political survival. Pakistan was an
agrarian economy, as agriculture made up 50% of complete GDP at the time of
independence. There was hardly any industry or services. Further aggravating this
dilemma, was the complete lack of infra structure. In the first 5 years of independence,
GDP growth stood at 3%. In 1952, global demand of goods increased; from which
Pakistan also accrued advantages. GDP growth increased to 9%. In addition, the
government institutionalized new policies which encouraged investments in industry.
Heavy financial aid was also received during this period; easing the situation for the
government

Era from 1958 to 1969

This can easily be regarded as the golden period of Pakistan’s economy. Vast
transformational changes were brought to bear during this dictatorial regime of FM
Ayyub Khan. Pakistan’s economy flourished and infrastructure improved manifolds.
Apart from his measures to improve the economy, FM Ayyub with his far sightedness
improved other aspects which indirectly affect economy. This include passing of
Pakistan’s second constitution, laying foundations of the only big dams of Pakistan. His
far sightedness also manifested in his liberal views and clear mindedness. He did not
allow religion to be exploited. Later, religion was clearly left at the will of religious
zealots like Zia ul haq and others who have used religion to further their own agendas.
FM Ayyub recognized that constant economic growth depends on industry and
agriculture. Government gave special attention toward agriculture and it grew by 5%.
Mechanical Farming and research was the hallmark during this period.

Era from 1971 to 1977

ZA Bhutto came in power in 1970, walking over the fall of Dhaka. He initiated social
reforms in a bid to improve the economy. But due to his self-serving intent, his reforms
back fired. First of these reforms was nationalization of industry and services.
Nationalization was started with big firms and the later was spread to small firms, banks
even educational institutes. This was a disaster from the start as no compensation was
given to the owners. Furthermore, the inefficiency and corruption in the nationalized
institutions instead harmed the economy. Other reforms were meant for land, labor,
banking and purported end to feudal system. Ironically ZA Bhutto himself was a feudal;
hence all these reforms remained in effective and economic growth halted; Inflation rose
to a whopping 20%.

Era from 1978 to 1988

During this period the average growth remained 6.6%. There were improvements in
agricultural sector as compared to previous era. Industry saw a positive improvement
and grew by 9%. Exports were encouraged by implementation of simpler exchange rate
policies. Industrial zones were established to lure in investors. But all this was done on
borrowed money; Pakistan’s debt payments increased from 1.9% of GDP to 4.9% of
total GDP in 1987. He tried to bring in Islamic economic system; but his efforts did not
bring fruitful gains in the economy. Economy improved during his tenure, but his political
ideologies would mar the economic prosperity of the country for years to come. His
support for extremist ideas, half implemented Islamic laws and radicalization of the
youth would haunt the country for ages. Zia had a major role in the present situation of
the country’s economy.

Era from 1988 to 1999

This era was marred by the intervention of IMF in policy making due to the money owed
to them. This was a hijack of our economic sovereignty, which the leaders had brought
on the country through their corruption, negligence and outright indifference to the
affairs of the country. The focus remained on reducing the fiscal deficit, which was
decreased to 4% of GDP on instructions of IMF. Additional taxes of Rs 140 Billion were
levied on the people on special instructions of IMF. This resulted in decrease in public
expenditure from 9.3% to 3%; developmental expenditure was reduced from Rs 105
Billion to a mere Rs 85 Billion. Government increased the prices of utilities to
compensate. Also privatization was started, along with devaluation of Rupee.

Era from 1999 to 2007

This era also saw increased rate of GDP growth as observed in previous martial laws.
GDP growth rate averaged at 5.3%. Liberal views and proximity to the west encouraged
many investors for business in Pakistan. Also Pakistan started receiving hefty economic
assistance from the west. Thus FDI increased to astonishing high levels. However in
stark comparison the policy was import based; thereby creating a bubble economy.
Huge imports in telecomm and auto sectors tilted the economic balances in favor of
supply against demand. During this era, no major infrastructure was added for growth of
electrical supply. In fact, more consumers were added by supplying electricity to far
flung areas. This resulted in a disaster of electricity shortage to industry, effects of which
are still present. Focus of the economy was shifted towards services sector which soon
busted the bubble economy. Also the economic assistance has subsided now.

Era from 2007 to 2013

Democratic government completed its term first time in Pakistan’s History. Country was
facing problems like growing inflation, fiscal deficit and less GDP growth. Due to certain
measures, inflation was reduced to half by 2009; deficit was brought down to almost
4.3% of GDP. However Forex reserves were being spent without remorse; and closed
at 13 Billion in 2009. Revenue collection was as lethargic as ever and goals were
constantly changed. It was during this era that Pakistan clocked the lowest tax to GDP
ratio in the region. Public debt continued to rise due to inefficient governing. Also 18 th
amendment bill was passed which delegated more powers to the provinces. This
resulted in dispersion of already dwindling resources to the provinces. At that time,
provinces could not make any significant change with the capital awarded to them. This
capital would only have made any impact as a whole.

Era from 2013 to 2018

This era was the epitome of corruption, inefficient governance, luxurious spending of
public money on political office holders. During this era, incompetent team of the
government was unable to deal with the growing trade, electricity deficit and lowest
forex reserves. Government tried to address this by releasing bonds on government
infrastructure like motorways. Looting and plundering was a norm in almost all
departments including the prime minister and president’s office. It was during this period
that the Prime minister was named in Panama corruption scandal, arrested and put
behind bars on charges of graft.

OVERVIEW OF THE ECOMOMIC SECTORS

Agriculture accounts for almost 18.9% 1 of the total GDP and employs 42.3 2
percent of the labor force and has always remained a major source of Forex earnings.
Important developments were carried out during the 60s to promote agriculture and
make Pakistan a major exporter of agriculture based raw materials. It is during this era
that the foundations of a vast (biggest in the world) irrigation system were laid down.
However owing to poor planning, mismanagement, lack of vision and long term planning
of later governments; Pakistan is now a net importer of various basic crops.

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Ministry of Finance, Economic survey of Pakistan, 2017, Chapter 2
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Ministry of Finance, Economic survey of Pakistan, 2017, Chapter 2
LIVESTOCK AND POULTRY

Livestock is a vital and principal source of income for almost 8 Million people who derive
close to 35% of total income from this sector. Owing to the socio-economic make-up of
the country, livestock and poultry emerge as a crucial and mostly the only source of
income in the wide swathes of rural areas. This in turn allows major Foreign exchange
income. Performance of Livestock and Poultry remained as under:-

“During 2017-18, livestock contributed 58.9 percent to the agriculture

value added and 11.1 percent to the overall GDP compared to 58.9 percent and
11.3 percent during the corresponding period last year, respectively. Gross value
addition of livestock at constant cost factor of 2005-06 has increased from Rs.
1,327 billion (2016-17) to Rs. 1,377 billion (2017-18), showing an increase of 3.8
percent over the same period last year.”3

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Ministry of Finance, Economic survey of Pakistan, 2017, Chapter 2, Part III Livestock and Poultry
With the positive trends in economy like increased income and feasible environment for
export; have increased the demand of livestock and its related products in the country.
The strategy for livestock is to have private investments enabled by public sector. This
is done by providing policy interventions. Policies are introduced to raise per unit animal
output by improvements in health, management, breeding, artificial insemination,
balanced diet and control on disease. This is being done to enable livestock sector to
fulfill the domestic needs as well as for the uplift of rural areas.

Poultry is another important division of livestock. Almost 1.5 million people are
employed through this sector directly/indirectly. Poultry also ensures that demand and
prices of other meat doesnot increase exponentially. Investment in this sector is Rs. 700
Billion

During the year, poultry productions remained approximately 1.39 Million tons, which is
32.7 percent of total meat production (4.3 million tons). Its share in the GDP is 1.4%,
while in agriculture was 7.5 % and 12.7% in livestock. The value added to current factor
cost has shown an increase of 7.8%. Production in rural areas grew by 1.5%.
GOVERNMENT MEASURES

a. Livestock Wing of Ministry of National Food Security and Research facilitated

export of 30.450 tons of red meat worth $105.41 million
b. Poultry byproducts exports were also facilitated. These included animal
casing, bones, horns, gelatin and hooves.
c. High quality semen was imported for dairy cattle and improvement in
indigenous animals.
d. Duty free imports of calf milk replacer and cattle feed premix was permitted.
e. Animal Quarantine Department (AQD) ensured quarantine services and
provided 22145 Health certificates to export animals. This export was valued
at 232.001 million. Revenue of Rs 77 million was generated.
f. Surveillance and diagnosis on contagious diseases was conducted. 9163
samples were taken for testing
g. Duty of 45% has been levied on import of skimmed milk powder.

RECOMMENDATIONS

a. Inter-provincial coordination for development of livestock sector is a must.

b. Coordination with private sector to promote value addition livestock industry
and diversification of livestock products,
c. Controlling Trans-boundary Animal Diseases (FMD, PPR, Zoonotic diseases)
of trade and economic importance through provincial participation,
d. Bringing more investments in livestock sectors.
e. Exploring new markets for export of meat and dairy products with focus on
Global Halal Food Trade Market.