Taking a Bite of Growth: Unveiling the Challenges and Opportunities
Published on: May 8, 2024.
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Despite agriculture remaining crucial to Pakistan’s economic progress, governments are still not giving the sector the attention it deserves, argues S.H. Irtiza Kazmi.
‘Pakistan is an agrarian economy’. This statement has been repeated time and again for the past half a century. Perhaps 50 years ago it held true, but the fact is that the direct contribution of agriculture to Pakistan’s GDP has declined since the sixties. Nevertheless, Pakistan’s agriculture sector still plays a crucial role in the country’s economy, contributing approximately 23% to the GDP and employing over one-third of the national labour force. Agriculture is the second-largest sector in Pakistan’s economy, following the service sector.
Major Crops in Pakistan
Major crops include wheat, cotton, rice, sugarcane, and maize. Contrary to popular belief, the agriculture sector doesn’t only include crops, and livestock is particularly dominant within this sector, accounting for 62% of the total share, making Pakistan the fifth-largest milk producer and the fourth-largest leather apparel exporter. Agriculture is also one of the largest sources of foreign exchange earnings, with about 70% of our exports linked to it. Textiles account for the highest export revenue, and Pakistan is also the fourth-largest rice exporter globally.
Importance of Wheat and Rice
Around 82% of the cultivated land is irrigated through traditional means, and the remaining 18% relies on rainfall. Out of the five major crops grown, wheat and rice are the primary staples and play an essential role in both the domestic food supply and the country’s economic development, with Pakistan being the world’s 10th-largest producer of rice and the seventh-largest producer of wheat.
Challenges Faced by the Agriculture Sector
Despite its significance, the sector faces challenges such as slow growth (compared to previous decades), poorly functioning agricultural markets, and ineffective subsidy programs. Urbanization and changes in food consumption patterns are putting pressure on the sector to adapt and increase production. Moreover, climate change has further aggravated the pressure on the sector’s ability to perform consistently.
The Importance of Agriculture in Pakistan’s Economic Growth
The global average GDP per capita currently stands at around $11K, with the US at over $65K, South Korea at $30K, and Turkey at around $10K. Within our region, Pakistan is at $1.5K, while Bangladesh is at $2.5K, and India is at $2.85K. Pakistan should aim to reach and exceed the global average GDP per capita as a policy benchmark. Moreover, as per rough estimates, Pakistan needs to achieve a consistent GDP growth of over seven per cent over 25 years to eliminate poverty and reach global average levels. In this regard, the key is education, job creation, healthcare, and, above all, longevity in policy decisions.
Today, Pakistani economic policymakers have realized that agriculture is the one sector from which we can extract the maximum growth in the least amount of time with the least amount of investment.
The Need for Updated Policies
The laws, regulations, and rules framed by successive governments in the sixties and seventies facilitated growth in major cash crops like wheat, cotton, rice, sugarcane, and maize, and these five major crops are still considered strategic crops in Pakistan. However, these policies were neither updated nor tweaked to meet changing business dynamics. Furthermore, the rules and regulations governing these policies are not private sector-friendly, primarily due to the red tape and inefficiencies that exist within the government sector, in contrast to the business dynamics of today’s private sector.
Investment in R&D and Mechanized Farming
The required pace and scale of R&D in agriculture are broadly missing. Large-scale mechanized farming is also a crucial requirement for the agriculture sector. However, inhibitions to agriculture mechanization exist, with concerns that many people would lose their jobs. However, diverting and deploying human resources towards higher-value tasks and jobs is inevitable to achieve national progress. Other related sectors within the agriculture landscape require skilled people; hence, such redeployments are essential.
The Success of Maize Cultivation in Pakistan
Maize cultivation in Pakistan has seen significant growth. Several factors have contributed to this, including the adoption of high-yielding varieties and hybrids, as well as the expansion in cultivation. The poultry industry’s growing demand for maize has also played a role in its success. The maize sector’s trajectory suggests that similar success can be achieved with other crops, such as dairy-based products.
The Importance of Prioritizing Agriculture
Agriculture remains a critical component of Pakistan’s economy due to its importance in food security, job creation, and foreign exchange generation. However, the required efforts to prioritize it through policy dialogue and a national narrative are missing. It is time agriculture received the attention it needs to drive Pakistan’s growth.
S.H. Irtiza Kazmi has three decades of experience in corporate and investment banking and financial advisory services. [email protected]
Source: Aurora
