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What ails agriculture

— Interview with Dr Akmal Hussain, economist

What ails agriculture
Dr Akmal Hussain.

The News on Sunday: In the wake of the negative growth for agriculture projected in the current budget, can you identify the problems of the agriculture sector in Pakistan?

Dr Akmal Hussain: Sixty to sixty five per cent of Pakistan’s population is either directly or indirectly dependent on Pakistan’s agriculture. It provides inputs to the largest industry as well as our largest export item—textiles. Therefore, agriculture has direct as well as indirect effects on Pakistan’s export earnings.

Now the central problem with the agriculture sector in my view is that over the last fifteen years or so, the fluctuations in agricultural output have increased — both the amplitude of fluctuations as well as the frequency of fluctuations in agricultural output. This means the frequency of bad harvests has increased and the bad harvests are much worse than before.

TNS: Why have these fluctuations increased so much over the years? Do we realise the impact of global warming on our agriculture?

AH: The single most important reason for increased fluctuations in the agriculture output and, hence in agriculture growth is global warming and the consequent increased variability in the monsoons. The crop output is critically dependent on the timing and quantity of precipitation during the monsoons.

The second consequence of global warming is that, with higher temperatures, the yield per acre is tending to decline. This is because the particular seeds being used in Pakistan are highly sensitive to temperature increases, ceteris paribus. This is the second major reason why we have not been able to accelerate agriculture growth on a sustained basis.

So, not only is agriculture growth unstable, the rate of growth has also slowed down as far as crop output is concerned.

TNS: How do you look at the agrarian structure of Pakistan?

AH: That’s the third dimension why agriculture growth can’t accelerate substantially in Pakistan in a stable fashion. Over sixty percent of farm area is being operated by farmers who are operating less than 25 acres of land. So the small and medium-sized farms constitute the predominant proportion of the total arable land. The problem with the small farm sector, that is less than 25 acres, is that more than one third of the farm area is being cultivated by tenants. And tenants have neither the incentive to increase yields, because they know that the fruits of fifty per cent or more of their effort would be appropriated by the landowner; nor do they have the investable surpluses to invest in raising yields per acre.

The small farmer is much more susceptible to variability of the monsoons than the big farmers because he has no financial or asset base to serve as a cushion against shocks. In case of a bad harvest, the small farmer has to borrow money to buy his household requirements for food. So he gets into debt, it is difficult for him or her to reconstitute the production cycle the following year — purchasing seeds and fertilizer and tube well water.

The increased variability of the monsoons is manifesting itself in a sharp reduction in the yield per acre of the small farm sector, which actually constitutes over sixty per cent of the farm area. Of the total number of farmers, 97 per cent are those who are operating less than 25 acres.

TNS: What are the policy initiatives required to deal with each of these problems?

AH: The three problems that I just identified are: (a) increased variability in the monsoons due to global warming, (b) sensitivity of seeds to rising temperatures in terms of declining yields, and thirdly (c) the agrarian structure. These three critical constraints result in slow and unstable growth in agriculture.

Unfortunately, the government has not quite grasped the nature of the problem. The latest decline during the last financial year showed an absolute decline in the output of agriculture. It showed negative growth in the agriculture sector. The government made a knee-jerk reaction by increasing the subsidy on fertilizer. They are also quite correctly worried about the low yield seed being used for cotton. These initiatives will have only a limited and short term effect and over time the underlying structural constraints to growth indicated above will re-emerge.

The problems of water, heat sensitive seeds and inadequate investible resources faced by the small farm sector, cannot be solved simply by increasing subsidies to the fertilizer producers.

TNS: What should the government do to address this problem adequately?

AH: The government needs to address the underlying structural problems that are responsible both for the slowdown in agriculture growth as well as its instability. The three policy initiatives that are required are: firstly, we need to increase the storage of water since the global warming is here to stay and the rains are going to fall at the wrong time and in the wrong quantities. There are two kinds of storage: first store water in dams and second dig large holes all along the dry river beds during the off season and create natural lakes during periods when there are heavy rains and the water covers the entire river bed or even overflows the banks: this would create an enhanced and regionally dispersed water storage. That will reduce the impact of floods and, at the same time, increase the supply of seasonally flexible supply of irrigation water to the farmers.

The government, unfortunately, in this budget has not really grasped the nature of the problem. Since they have not diagnosed the problem correctly, therefore they have not allocated adequate sums of money in this budget for improving the water storage, whether dams or natural lakes.

The second policy initiative that is required is to get the Pakistan Agriculture Research Council to do its job. It has a number of competent PhDs sitting there. They need to be incentivised and given time-bound targets in which to develop heat resistant varieties of seeds etc. They can link up with multinationals or do their own research.

The third policy initiative is to launch a small farmer based agriculture growth strategy. This would require providing land ownership rights to tenants through (a) distributing the 3 million acres of arable state land to tenants which would make 60 per cent of existing tenants into land owners and (b) making credit available to the remaining 40 per cent of tenants to buy land. This policy of land to the tiller should be combined with setting up large corporation owned by small farmers and run by professionals that would provide support services to the small farm sector such as technologies for increasing value added of crops through tunnel farming; drip irrigation and laser levelling for more efficient water use on small farms and access over credit, crop insurance and quality inputs such as seed, fertilizer and pesticides.

TNS: How important is it to focus on research to increase agriculture growth?

AH: That is crucial. The report of the Inter Governmental Panel on Climate Change (IPCC), a UN body, which has done landmark research on the problem of global warming (and they have won the Nobel Prize for this work) have predicted in the fourth assessment report that the heat effect on seeds alone will cause a reduction of upto 30 per cent in the yields per acre of grain crops in South Asia.

Even if there is a 20 per cent absolute decline in yield per acre on a permanent basis, we’re really talking about major food shortages. If the predictions come true in terms of declining yields, the food deficit will be so large that we won’t have the foreign exchange to import the required amount of food. And even if we could beg, borrow or steal that foreign exchange, the marketable surpluses available in the world market may not be adequate for our import requirements. If this happens, God forbid, we are really talking about famine in this county.

TNS: Do you have any suggestions for the policy makers?

AH: Apart from what has been said above, we need to build food storage silos — these are sealed containers — in every district of Pakistan. At the moment, what we are doing is putting food out on the ground and it is covered with Tarpaulin and we’re losing 25 per cent of that stored food to rats and weather effects.

Prof. Amartya Sen has shown that famines that occurred in the nineteenth and early twentieth century were largely because food could not get to the right place at the right time. Overall, there may have been adequate food, but that food could not reach places where there was acute shortage or the people didn’t have access over that food because they didn’t have the purchasing power.

Contingency plans need to be made in the light of the research I have pointed out. If there is a major food shortage, make food free; release the food from those silos without charge, because people won’t have the buying power. Contingency plans need to be made right now and silos must be built, apart from policies of increasing agricultural growth and stabilizing it. We need to be prepared for severe food shortages in the years ahead.

TNS: How do you look at the role of the middleman? What should be done about it?

AH: Middleman’s role had a devastating effect on the poor farmers and not the rich. The government department concerned with acquiring grain, deals through middlemen. And those middlemen or contractors really squeeze the small farmers through their gunny bag allocations forcing them to sell at a low price. Subsequently, the middleman sells it at the official price to the government and pockets the difference. So the middleman is becoming rich while the poor farmer is becoming poor. There is one kind of middleman that is involved in buying grain and later selling grain also. They build their own stocks and sell grain at a high price to the same small farmer that has run out of it at the end of the harvest year.

The second kind of middleman is the guy who buys milk and other agriculture products from the small farmers. That middleman pays a very low price to the farmer and sells it at a high price to the customers. So he pockets the difference. The result is that the smaller owners of cattle do not get a fair price, except that they get the money at their doorstep. This problem can be overcome. There should be a reasonable system of marketing. A similar thing happens with vegetables grown in the vicinity of big cities. The poor should be given direct market access.

There is a third kind of middleman who supplies inputs to the smaller farmers — seeds, fertilizers, pesticides. The poor farmer gets seeds of low quality and low yield. He doesn’t have the resources to get them tested for quality. There is huge adulteration in fertilizers and pesticides. The adulteration of pesticides has serious health effects.

There should be a proper marketing system so that the small farmer has direct marketing access over standardized, good quality, inputs. Information at the stores should be publicly available so that he knows which pesticide to use when and on which crops.

TNS: Do you think the government lacks good advice on how to address issues facing the agriculture sector?

AH: Getting advisors in itself is not going to solve the problem. There are advisors available: there are advisors in all kinds of international agencies. But the government needs to build its own capacity for governance to be able to assess that advice. A lot of advice and knowledge is available from research done by Pakistanis. There are much better economists than I am who could provide knowledge to the government, free of charge, on the basis of the work that they have done. Then there are international agencies but the government should know which agencies to go to because some agencies can give you the wrong advice. They might have their own agendas.

The government must have the ability and the capacity to judge which advice is good and which is bad. That capacity the government doesn’t have, it appears. Otherwise they wouldn’t have done what they have done. Perhaps the government could help establish platforms at selected universities such as the ITU. This could bring together research on key policy issues in agriculture, and formulate policy advice that integrates the technological, institutional and organisational dimensions of proposed policy initiatives.

Ather Naqvi

One comment

  • Agriculture needs drastic reforms which the Wadera sains sitting in national assemblies and provincial assemblies
    wont let it happen. So lets wait for a Godot/ Messiah, who shall come and solve our problems.

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