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Transforming Pakistan’s Agriculture Sector for Economic Growth

Instead of relegating the agriculture sector to merely providing food for the poor, Pakistan must recognize its potential as an engine of economic growth. Former State Bank Governor Salim Raza emphasized this point at the Agri-Connections Conference in Karachi in March 2023, stating that Pakistan’s economy cannot achieve the desired seven to eight percent GDP growth without a robust agriculture sector. Many developing countries, including Brazil and China, have experienced significant economic growth through their agriculture sectors, and Pakistan is at a similar level of development where agriculture can play a vital role in driving economic prosperity.

Agriculture, which accounts for 20 to 25 percent of Pakistan’s GDP, has a much greater impact on the economy than policymakers acknowledge. More than 75 percent of Pakistan’s exports are derived from agriculture, including textiles, rice, fruits, and leather goods. Every additional dollar of cotton produced generates at least three dollars and fifty cents of textile products for export. The agriculture sector is also interconnected with other industries, such as transportation, milling, packaging, and motorcycle sales, which further contribute to economic growth. According to a Bank of Punjab study, agriculture’s direct and indirect contribution to the domestic economy is estimated at 45 percent.

To address Pakistan’s current economic challenges, the government has rightly identified mining, information technology (IT), and agriculture as priority sectors for growth. Among these sectors, agriculture has the potential to deliver faster, cost-effective growth with substantial poverty reduction. However, the neglect of agriculture has limited its growth to just over two percent per year in the past few decades. For instance, a dollar of wheat produces only a dollar and fifty cents worth of wheat flour (atta), while it has the potential to generate six dollars’ worth of cookies. Additionally, Pakistan has become an importer of crops like wheat and cotton that were formerly grown domestically. It is evident that agriculture plays a critical role in Pakistan’s economy and should be recognized as a key driver of its economic transformation.

Dispelling Myths Surrounding Pakistani Agriculture

There are several prevailing misconceptions and myths surrounding Pakistan’s agriculture sector that hinder its potential for growth and development. By debunking these myths, we can better understand and unlock the true potential of the sector.

Myth 1: Agriculture Plays a Minor Role in Pakistan’s Economy

Pakistan’s agriculture sector is often overlooked and underestimated, but it plays a significant role in the country’s economy. Agriculture contributes 20 to 25 percent of Pakistan’s GDP and accounts for over 75 percent of its exports. The export mix has remained consistent for decades, with textiles dominating, followed by rice, fruits, and leather goods. Cotton production alone generates three dollars and fifty cents of textile products for every additional dollar earned at the farm gate. Agriculture also has indirect linkages to various sectors such as transportation, milling, packaging, and motorcycle sales. A study conducted by the Bank of Punjab estimated that agriculture’s direct and indirect contribution to the domestic economy is 45 percent.

Myth 2: The World Is Trying to Sell Pakistan ‘Terminator Seeds’

The fear of “terminator seeds” among Pakistani farmers is unfounded. Better seeds are essential for improving agricultural productivity, but the paranoia surrounding these seeds is baseless. The government heavily regulates seed varieties, especially for major crops like wheat, cotton, and Basmati rice. However, this approach has limited the introduction of new seed varieties that could significantly increase yields. While concerns about international firms selling genetically modified seeds persist, the success of imported hybrid seeds proves their potential benefits. Hybrid maize, rice, and vegetable seeds have led to tripled maize yields and a six-fold increase in output without any negative effects. The development of a modern seed industry within Pakistan, with international cooperation, is necessary to unlock the sector’s full potential.

Myth 3: Eliminating Middlemen in Agriculture Will Solve Farmer’s Problems

Attempting to eliminate middlemen, known as “aarrhtis,” in the agricultural supply chain is not the solution to the problems faced by farmers. These middlemen play a vital role in securing and financing farmers’ crops, as well as managing the logistical challenges of transporting harvests to markets. The power of these middlemen lies in their ability to provide funding for farmers’ crop inputs and ensure the continuity of the supply chain. While some middlemen exploit farmers through unfair practices and high interest charges, completely eliminating them is not feasible due to the small size of most farms and the limited number of markets. Instead, a transition to a modern supply chain with proper testing, warehousing, and price discovery should be pursued to protect the interests of farmers.

Myth 4: Water and Land Scarcity Hinders Agricultural Growth

Contrary to popular belief, water availability in Pakistan has remained relatively constant over the past few decades. The misconception arises from the focus on per capita water availability, which decreases as the population grows. While the per capita availability may be decreasing, the overall availability of fresh surface water in the Indus River system remains consistent at around 145 million acre-feet annually. The main issue lies in the mismanagement of water resources, with inefficient irrigation systems and wastage accounting for a significant portion of water loss. Additionally, concerns about agricultural land scarcity are unfounded. Nearly half of Pakistan’s land is cultivable agricultural land, while only about one percent is inhabited. Although agricultural land is being converted to housing colonies, especially near urban areas, these conversions are not as significant as they may seem.

Myth 5: Lack of Climate Change Awareness in Rural Areas

Pakistani farmers are acutely aware of climate change and its impact on their livelihoods. Farmers rely on the weather for their crops and livestock, making them highly attuned to any changes. They have experienced shifts in traditional weather patterns that affect planting seasons, crop yields, and animal husbandry. Farmers’ awareness of climate change is crucial for their own survival, and they have developed coping strategies to mitigate its effects. To further support farmers, robust crop insurance programs based on satellite data and field surveys should be implemented at a national level. These programs can provide financial protection to farmers against climate-related losses and help secure their livelihoods.

Unlocking the Potential of Pakistan’s Agriculture Sector

In order to leverage the potential of Pakistan’s agriculture sector for economic growth, certain changes and initiatives must be undertaken:

1. Recognize agriculture as a key driver of economic growth and prioritize its development.
2. Promote investment in research and development of high-quality seeds to improve agricultural productivity.
3. Implement modern practices and technologies in the agriculture supply chain to improve efficiency, reduce losses, and ensure fair prices for farmers.
4. Modernize water resource management and improve irrigation systems to reduce water wastage and increase productivity.
5. Introduce crop insurance schemes and social protection programs to mitigate climate-related risks for farmers.
6. Promote public-private partnerships to foster innovation, knowledge transfer, and investment in the agriculture sector.
7. Develop sustainable agriculture practices that protect the environment and ensure the long-term viability of the sector.

By embracing these changes and dispelling myths surrounding Pakistani agriculture, the country can unlock the full potential of this sector and drive economic growth for the benefit of all its citizens.

Source: Dawn