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Agriculture
Instructor: Prof.Dr.Qaisar Abbas
Course code: ECO 400
Lecture Outline
1. Agriculture sector
2. Agricultural policies
Agriculture Sector
Agriculture includes:
Livestock breeding 49.1% of value added in agriculture and 11. 4% of
GDP. 30-35 million rural population engaged in livestock raising.
Fish farming. Although small contribution in GDP, still earns foreign
exchange through export. Good nutritional value of fish with protein
content of 15 to 20 percent. Important source of livelihood for coastal
inhabitants. In 2003-04, 90,225 million of fish and fishery products were
exported, earning Rs. 7.6 billion
Poultry farming has emerged as good substitute of beef and mutton
with 356 million chicks production, 4850 million eggs and 303 000 tons
of poultry meat in 2003-04
Forestry. 4.8 of total land is under forest, recommended level is 2025%, bad environmental conditions
Tripling in cotton production over the 1980s due to the use of quality
seed and proper incentives to the sector
Agriculture Sector
1947- Agriculture accounted for 53% of GDP. 2005- 23% of GDP, 21% of GDP in
2011.
Pakistan ranks 5th in Muslim World & 20th worldwide in farm output.
In 2005 Wheat production was 21.591 million metric tons- more than all of Africa
and nearly as much as all of South America. (FAO)
Livestock sector contributes half of the value added in agriculture sector amounting
to nearly 11% of GDP- more than the crop sector.
Pakistan is Asias largest camel market, Second largest apricot and ghee market,
third largest Cotton, Onion and Oil market.
Agriculture Sector
Agricultural crops such as cotton and sugar cane provide raw material for two of the most
imp industries in Pak i.e textile and sugar.
Total supply of Agri credit has increased from Rs. 87 million in 1959-60 to Rs 47.93
billion in 2004.
Supply for other inputs has been increased i.e tractors imported and locally manufactured,
fertilizers, seeds, irrigation
Despite of this increased input, the output has not been increased accordingly.
Recent Performance
The agriculture has lost significant growth momentum as its growth slowed
down to 2.7 % in 2000s as against 4.4& in 1990s and 5.4% in 1980s.
Major crops remained the victim of natural calamities during the last few
years and three out of last four years witnessed negative growth in the
major crop sector. It causes declining trend of agriculture sector contribution
in GDP.
Agriculture Growth
Year
Agricultu
re
Major
Crops
Minor
Crops
Livesto
ck
Fishery
Forestr
y
200405
6.5
17.7
1.5
2.3
0.6
-32.4
200506
6.3
-3.9
0.4
2.8
20.8
-1.1
200607
4.1
7.7
-1.0
15.8
15.4
-5.1
200708
1.0
-6.4
10.9
4.2
9.2
-13.0
200809
4.0
7.8
-1.2
3.1
2.3
-3.0
200910
0.6
-2.4
-7.8
4.3
1.3
2.2
2010-
1.2
-4.0
4.8
3.7
1.9
-0.4
Salient Features
Total geographical area 79.6 million hectares. 27% of this area under cultivation.
80% of this area irrigated, but approx. 20% of area in Irrigation Canal. Most of the
area is affected by water logging and salinity. An additional area of 2.8 million ha.
affected by solidity.
no subsidies, high cost of inputs, crop and livestock insurance, lack of veterinary
services, lack of mechanization, primitive management and use of modern
techniques, lack of education and training, seed quality, research and dissemination of
knowledge
Salient Features
undocumented economy
lack of investment
Institutional Arrangements
Rice: it earns substantial amount of foreign exchange. 5.4% of value added in agri and 1.3%
to GDP.
Other major crops are tobacco, mustard and rapeseed, maize and barley.
Minor crops are major oil seed crops i.e cottonseed, rapeseed/mustard, sunflower, canola.
Most of these crops are imported which is about 70.85 % of total availability and remaining
29.15% is made available through farming.
Most of the pulses, tomato, potato, onion are other minor crops
Firstly, despite the policy makers stress on crop diversification, the economy
is dependent on cotton for more than half of its export earnings. This strong
dependence is dangerous given the climatic and viral-induced setbacks that
cotton production has historically experienced throughout Pakistans history.
Secondly, the avowed objective of food security, which should have been
possible given the favorable resource endowment of the country __ one of the
largest irrigation systems in the world__ has not been achieved so far.
Thirdly, the rapid increase in population, with the growth rate estimated at 3
percent has substantially reduced the per capita agricultural production rate.
Fourthly, growth in the most recent decade has come from more extensive,
and not intensive, agriculture.
Sixthly, the government price system has been criticized for inducing a
number of distortions and incorrectly trying to remedy the situation through a
series of input subsidies.
Finally, erratic and inconsistent policies and poor planning and management,
for example of the irrigation system, deficiency in providing fertilizer, lack of
quality control on pesticides, inadequate investment in rural infrastructure, and
improper research and extension services, have all played havoc with
Pakistans agriculture.
Agriculture Credit
In 2003-04, loans extended to the farming community was in the form of:
Production and Development Loans. Rs.47.9 billion were disbursed in 200304 through ZTBL as compared to Rs. 37.6 billion in 2002.
Microcredit Scheme. Rs. 25,000 can be advanced to both men and women
against security. Loans are recoverable within 18 months.
Phase 2.Between 1960-65 trend was reversed, growth rate was 3.9%
Phase 4 i.e between 1970-77 growth rate declined to 1.67% due to number
of exogenous and policy related features.
The pricing policy of agri input and output determine direction of agri
productivity and also income distribution of small farmers.
A good agri pricing policy can be defined as the one where prices act as an
incentive to produce certain goods in required quantities.
National Commission of Agri (NCA) analyzed the issues in the pricing policy of the first two
decades.
Govt fixed the consumer retail prices of agri goods at low levels which depressed the
market prices for producers.
For a decade after independence, no systematic attempt was taken to develop agri sector.
Barter trade was a common feature where agri products were exchanged for industrial
machinery and input.
Due to these policies agri sector was taken as a medium to protect industrial
sector. NCA argued that the main objective of the pricing policy of 1960-65
was to provide low cost food to urban population, to provide cheap raw
material for agri production, to keep the wages of agri workers low.
First step govt took to encourage agri output was to subsidize agri inputs
which cover seeds, fertilizers, tube wells, plant protection and agri machinery.
Concept of min price support program was introduced to protect farmers from
fluctuations in international prices
NCA is against this argument and says that agri holdings are too small to
generate taxable income.
Agri sector pays the largest percentage of indirect taxes i.e 42% of all
indirect taxes, so it should not be taxed more.
On the other hand National Taxation Reforms Commission (NTRC) has evaluated
policies of imposing a tax on agriculture.
There is a group of landowners who reside in urban areas and made investment
in real estate with income from their agri business.
Since they pay no tax, so they are questioned by traders and salaried class to pay
tax.
Many traders have purchased agri land with an intent to escape from income tax.
Many large farmers are earning handsome amount of money from agri.
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