Long-term strategic plans to overcome limitations in agricultural growth

Long-term Strategies

1.      Facilitate formulation and enforcement of a policy on minimum economic farm size based on digitized cadastral maps and an electronic land titling system that is easy for farmers and banks to use. Out of 34.5 million hectares of arable land in Pakistan, about 23.4 million are cultivated. Farm size distribution is skewed with many small, owner-operated plots and a few very large holdings. With most farms less than the economic landholding size of 5 hectares ha. There is little investment in land development, farm structures, and machinery. The antiquated land titling system discourages efficient land markets, investment in land, and the use of land as collateral for formal credit. 

2.      Pass and enforce laws to check the mushrooming growth of tube wells and the high rate of abstraction. About 85 percent of Pakistan’s cropped area is irrigated. Tube wells are increasingly used but groundwater abstraction has not risen commensurate with the number of wells, indicating abstraction in excess of recharge and leading to saline encroachment into fresh groundwater aquifers. 

3.      Enable fair competition in the agricultural marketing system at all levels. The provincial food departments and a parastatal, the Pakistan Storage and Supplies Corporation, procure wheat up to a target amount, after which the private sector may procure wheat. Similarly, the Trading Corporation of Pakistan, under the federal Ministry of Commerce, imports wheat, fertilizers, and occasionally other food commodities. The factor and product markets are linked at the retail/wholesale stage. A commission agent (arhti) supplies input as a dealer and wholesaler, purchases produce, and supplies regular customers inputs on credit, whether for production or consumption. Farmers pay a very high implicit interest rate because of risk and lack of competition. 

4.      Ensure private seed companies a level playing field and access to basic seed and plant materials developed by public researchers. Farmers retain seed for cereals from previous crops or purchase them from other farmers or wholesalers/commission agents. Wholesalers provide seed from previous crops or by way of national and multinational seed companies, as well as the public sector provincial seed corporation. About 600 registered private seed companies import or produce oilseed and vegetable seeds, while multinationals deal mainly in hybrids. Only provincial seed corporations are permitted to multiply improved cultivars released by public researchers, and handle their processing and sale to farmers. A national company has started producing and marketing hybrid paddy seed. Breeder’s rights need to be protected and access to private seed companies should not be restricted. Seed corporations should operate as commercial entities and not be subsidized. A Breeder’s Act, now being considered, would ensure breeders’ rights and private sector access to the new seeds. 

5.      Target fertilizer subsidies. The private sector produces and sells fertilizer. The government imports fertilizer to fill any supply gaps and subsidizes all purchases to encourage balanced usage. The main problems with fertilizers are timely availability and adulteration. The subsidy should target small and marginal farmers, not all purchasers.

6.      Disseminate information on safe pesticide use. Except for aerial sprays and locust control measures, the public sector is not involved in pesticide formulation, manufacture, or trade. Indiscriminate use of pesticides is creating health and environmental hazards. Provincial extension departments need to inform farmers of safe methods of pesticide application. 

7.      Explore opportunities for integrating farmers, supermarkets, processors, and exporters into value chains. Contract farming was recently introduced in Pakistan on a limited scale. The main producers of maize-based products negotiate pre-sowing contracts with growers. Fruit processors and exporters are bypassing commission agents to enter into direct agreements with orchard owners for supply of given quantity of fruits at a negotiated price. Two cash and carry companies have started buying vegetables and fruits from growers. 

8.      Improve governance to expand private sector’s role in the sector. Poor governance, especially rent seeking, is hampering the role of private sector in agriculture. Contract enforcement is very weak and investors bear great risks (e.g., in linking credit with input provision and output purchase). The obsolete titling system makes credit disbursement against collateral or contract farming arrangements nearly impossible. Moreover, the mechanism for settling disputes over property, land rights, or tenancy is cumbersome, costly, and usually not favorable to the small and vulnerable. The justice system as a whole needs reform to make services accountable and to empower the disadvantaged, particularly women. Though women contribute to most farming operations, that contribution is not accounted for. Local tradition deprives women of the right to inherit property, or, if they do own property, to manage it or earn money from it.

9.      Poverty alleviation:

          Following measures are suggested for reducing poverty in Pakistan:

• Promotion of efficient and sustainable agricultural growth to raise the incomes of small farmers and to generate growth linkages in the rural non-farm economy. Programs to increase livestock production, especially production of dairy cattle and milk in Punjab and Sindh, and sheep and goats in KPK and Baluchistan, could have significant direct impact on the incomes and food security of the rural poor.
• Creation of an enabling environment for the rural non-farm sector to enhance employment and incomes, and improve rural public service delivery in infrastructure, health and education to serve as a foundation for growth and to increase household welfare and food security.
• Enhancement of the effectiveness and governance of rural institutions through decentralization and strengthen local demand for enhanced accountability. Five years after devolution, there is still confusion regarding the roles and responsibilities of the various levels of government, as well as apparent jurisdictional overlaps. Immediate steps should be taken to begin to alleviate these administrative constraints and improve the efficiency of spending.
• Empowerment of the poor and protection of the most vulnerable through social mobilization, safety nets and by facilitating access to productive assets for income-generating activities for poverty reduction and food security.