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Crisis In Agriculture
Dr.Akmal Hussain
Newspaper: Daily Times
Dated: Thursday, May 9, 2002

The beginning of the new millennium signifies a watershed in Pakistan's economic history. As overall GDP growth has slowed down, and unemployment and poverty increased, the underlying factors rooted in the institutional structure of Pakistan's economy, have become manifest. Nowhere is this more evident than in the rural sector. In this article we will examine the crisis in agriculture and its relationship with institutional decay. We will indicate policy actions which can be undertaken to deal with the crisis.

The overall economic performance of Pakistan in the past and in the foreseeable future continues to depend on agriculture growth. This sector fulfills most of the country's food requirements, contributes 26% of GDP and employs 54% of the labour force. Agriculture is also a source of raw materials for major domestic industries particularly cotton products which account for 80% of the value of exports.

What is the nature of the crisis in agriculture? My earlier research for the ILO showed that there is a slow down in output growth of the major crops and this has been associated with declining factor productivity as well as increased instability of output growth. The moment of decline in growth of yields per acre of major crops gives cause for concern. It has come at a time when the extensive margin in the crop sector has been reached, and further growth will have to depend on increasing the efficiency of input use. Yet the available evidence suggests that the yield response to input use in Pakistan's agriculture is declining.

This crisis is indicated by the fact that the average annual growth rate of major crops declined from 3.34% during the 1980s to 2.38% during the 1990s. At the same time, the frequency of negative growth in some of the major crops during the last 17 years has been significantly higher than in the preceding two decades. These trends are more sharply illustrated in the case of wheat which is by far the largest of the major crops (it contributes over 30% of value added in major crops). The average annual growth rate of wheat output fell from a high point of 7.42% in the 1960s to only 2.33% in the 1990s. Underlying the decline in the growth of wheat output is a steady decline in the growth of yield per hectare: from 4.38% in the decade of 1960s to 1.81% in the 1990s. The frequency of years in which an absolute decline in wheat yield per hectare occurred was as high as 7 in the period 1980 to 1997, compared to 5 in the preceding two decades.

This pattern of slow and unstable growth in agriculture has a direct adverse effect on the poorest farmers. Under conditions of declining input productivity, when higher input use per acre is required to maintain yields, small farmers with fewer resources are likely to suffer a relatively greater decline in yields than large farmers. At the same time, due to lack of savings to fall back on, they are relatively more vulnerable to bad harvests under conditions of unstable growth.

Consequently, slower and more unstable growth is likely to be accompanied by growing inequality in rural income distribution, poverty and unemployment. This is why it is important to initiate policies on an urgent basis to counteract these tendencies in both the farm and off-farm sectors of agriculture.

Underlying the phenomenon of slow and unstable growth in agriculture is the emergence of three major institutional constraints:

1. Reduced Water availability due to deterioration in the Canal Irrigation System

Delivery efficiency (from the canal head to the root zone of crops) is now as low as 35% to 40%. The deterioration in the canal irrigation system is worrisome in view of the fact that the extensive margin on agriculture has been reached and future growth will have to rely on improving yield per acre. This is indicated by the fact that since the 1980s, both total cultivated area as well the irrigated acreage has remained virtually constant. Opportunities of expanding use of ground water are also limited. Therefore, overcoming the crisis of irrigation efficiency has become a crucial policy challenge for sustainable agricultural growth in the 21st century.

The poor maintenance and operation of the canal irrigation system is associated with not only a decline in the efficiency of the irrigation department but also a serious shortage of budgetary funds. For example, in the early 1990s the shortfall between the required and actually available funds for operations and maintenance has averaged at 25%. Given the lack of management capability, and adequate funding, an institutional strengthening of the irrigation department may be necessary.

2. Seeds and Agriculture Research

It is now well known that high yielding varieties of seeds gradually lose their potency through reuse, and changing micro structure of soils. At the moment, there is no organized seed industry in Pakistan to meet the needs of farmers for the supply of vigorous varieties of seeds for even the major crops. Consequently the average age of seed is high and the potency low. For example, in wheat, the average age of seed varieties is 11 years compared to 7 years for all developing countries.

The existing institutional framework for agriculture research suffers from a proliferation of research institutes, which are inadequately funded, often lack professional expertise, proper equipment and the research environment necessary to produce significant results. It can therefore be argued that Pakistan's lower factor productivity growth compared to India can be attributed to the poorer level of research and extension in Pakistan compared to India. It may therefore be necessary to restructure the existing institutional framework for agriculture research to: (a) bring greater professionalism and (b) improve monitoring and evaluation of research work.

3. Soils and Agricultural Practices

One of the most important constraints to growth of the crop sector is the degradation of soils, resulting from improper agricultural practices such as: (a) lack of crop rotation and the resultant loss of humus in the top soil, (b) stripping of top soil associated with over-grazing, (c) water erosion along hillsides and river banks.

Degradation of soils may be an important factor in low and declining growth in yields per acre in Pakistan. For example, average annual yield increase per acre of wheat during the 1990s in Pakistan has been 1.8% compared to 2.9% in the Indian Punjab, and 2.7% for all developing countries. Recent study suggests that the observed declining yield response to input use in Pakistan's agriculture is indicative of increasing soil degradation.

It is clear that in order to create a sustainable basis for accelerating agricultural growth in Pakistan it would be necessary to establish improved extension services with an outreach to the farm level in order to induce agricultural practices through which the organic material in the soil can be replenished and maintained.


If the crisis in agriculture is to be overcome the institutional framework for irrigation, seed development, and extension services would have to be restructured. It is therefore not just a question of allocating more finances but equally important it is a question of improving the management capability of the institutions that can enable a high and stable agricultural growth in future.


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