Investing in agriculture

The population of what now constitutes Pakistan has escalated from 30 million to 170 million. Food production should have kept pace with the rise, if not exceeded it. We are spending billions of dollars on imports of basic items like wheat, sugar, tea, spices, edible oil, pulses and vegetables. These imports are financed by ill-affordable loans at high rates. Furthermore, to make these commodities affordable for the common man, huge subsidies are given, putting further strains on the already unsustainable domestic budget resources. The import of food items at prices higher than those of the local market is also having an adverse effect on all sectors of the economy causing major inflation. (in July-December 2008 inflation on foodstuff was 31.2 percent). Long periods of load-shedding and high prices of electricity have proved to be the proverbial last straw that broke the camel’s back (i.e., the economy). With this, a vicious circle is started. Higher prices lead to higher wage demands, which lead to higher domestic production costs, which lead to decline in agricultural exports, which lead to layoffs of farm employees. All this apart from the adverse implications for the balance of payments.

In food autarky lies the remedy to removing fiscal deficits in our predominantly agricultural economy. Fiscal deficits lead to higher taxation affecting mostly the common man, who is already the victim of several types of indirect taxation. By the simple elimination of food imports, which is required within a short span of time if we are to see results, foreign exchange and budget deficits can at least be minimised, if not totally wiped out, and the economy stabilised.

According to the July-December 2008 Economic Review, which is available on the official website of the ministry of finance, imports under the food group escalated to $2,218,500 million–i.e., 38 percent higher than that of the same period of the previous year. Wheat alone was imported at a cost of $734 million. The Statistical Supplement of the Economic Survey indicates that subsidies during the fiscal year 2007-2008 rose to Rs407,485 million–i.e., more than half-a-billion dollars. This is more than the expenditure on defence, which stands at Rs296,077 million. A separate figure for agricultural subsidies has not been given, but it can safely be assumed that the bulk of the subsidy goes to agricultural products. If the agricultural sector is directly supported by initiating and executing new schemes, the need for this large amount in subsidies could be eliminated in 3-5 years.

Water resources

While large dams would require an eight-to-ten-year period of construction (and that too only if political and financial impediments can be sorted out), small dams are required in all the four provinces. These need not necessarily be made on rivers, where they would interfere with village life, and the flora and fauna downstream. Conservation and storage of rain- and floodwater would be sufficient. During the time of President Ayub Khan, the Small Dam Organisation of WAPDA did an excellent job in this regard. Now nobody knows whether or not this organisation still exists. Funds need to be allocated and programmes initiated to build small dams wherever feasible. During a bus journey early in the morning on way to Turfan in Xinjiang province in China in 2003, I saw hundreds of workers carrying out large earthworks with picks and shovels. These were villagers carrying out voluntary spadework to build an earth-filled dam. The rainwater thus stored would be used for growing paddy in an otherwise arid, Balochistan-like desert area. By the time we returned that same evening, visibly substantial work had been carried out.

Food storage

We lack adequate storage facilities, resulting in wastage of produce acting as a disincentive to farmers. In 2003/2004, after large wheat crops of 19.1 to 19.5 million tons were harvested, the provinces did not have proper warehouses and silos for storage and wheat was left lying at railway sidings, fields and open warehouses. Fearing that there would be major spoilage, since the monsoons follow immediately after the harvest and procurement season, I had advised the government of Gen Musharraf to distribute the surplus free to those poor entitled to zakat, to be paid for out of the zakat funds. My suggestion was not followed up, with the expected consequences. When we have again achieved surplus wheat targets. I would like to reiterate my previous suggestion of distribution to the poor, to be financed either from the zakat funds or the Benazir Income Support Programme. I would also like to suggest the building of large, prefabricated sheds for storage of food and agricultural products, which should be made available to farmers all over the country. A factory to produce such (and other) prefabricated structures would be useful and economical. Sharjah has such factories, which produce prefabricated, large sheds with excellent insulation. Such sheds were used at Kahuta and were found to be durable, practical and useful.

Setting up of provincial agricultural research councils

All the provinces should set up agricultural research councils and they should be given sufficient federal funds to provide local and foreign resources to carry out research and experimental work. Our provinces vary greatly in climate and social conditions. The provincial agricultural research councils would be better geared to solving local problems and experimenting with locally suited crops. However, federal financial and technical support is a requirement, as is also strict performance monitoring.

Agriculture investment board

To attract domestic and foreign investments in agricultural projects, the government should consider establishing an agriculture investment board solely to organise financial and technical reserves. It would be preferable for such boards to be established at provincial levels as well. The federal board could then act as a holding company to provide financial, technical and monitoring support. The setting up of such boards could also assist in the division of resources between the agricultural and non-agricultural sectors, thus building up a strong base for the agricultural sector. The engineering industry has an engineering development board at the national level. It is ironic that the agricultural sector, while being the backbone of the country’s economy, does not have a national platform where issues, policies, plans and projects can be formulated and articulated at a national level to serve the farming community.

I hope that at least some of these suggestions will be considered and be incorporated in future budgets.