By Younus Sandeela
Published in Pakistan Today
All interventions must be made simultaneously
Agriculture happens to be the most misunderstood sector of the economy. Unfortunately, we still see it as the “profession of villagers”. Our subsidy-centric approach to supporting agriculture has backfired and has severely restricted growth. The seemingly impressive contribution of agriculture to national GDP, which hovers around 20 per cent, is based on sheer size. If only efficiency could be added to size the sector’s contribution to the economy could increase manifold.
At present agriculture suffers from extremely poor yield across all crops. Multiple factors are responsible for this dismal situation. Disengaged private investors; low level of mechanisation; unavailability of affordable finance; limited marketing options, lack of technical knowhow on part of farmers; and poor-quality farm inputs, are a few obvious reasons for the dismal situation prevalent in the sector.
At the policy level, we have consistently failed to devise a methodology that could lift agriculture on sustainable basis. We have failed to think beyond subsidy-based support. This not only drains away the initiative from the farmers to struggle for economic progress as they get used to charity disguised as subsidy, but also the approach fails to deal with the root causes of the problems and only addresses the effects, that too only temporarily. As soon as a subsidy is withdrawn, the situation gets reversed and everything is back to square one.
If agriculture’s true potential is to be tapped then policy makers will have to think beyond subsidies and work at the root causes. In order for support system to be self-sustaining it should be built around the commercial interests of stakeholders rather than putting the whole system on crutches.
Landholding pattern in the country limits the scope of large-scale corporate farming that necessarily requires large tracts of land. However, extremely profitable projects can be developed in the agro-processing sector. It is critical that the private sector is encouraged to play a more active role and invest in viable downstream agro-processing projects.
Farmers need to be trained on modern crop management concepts as well as on postharvest handling of produce to not only improve yield but also to save the produce from postharvest losses
Private sector engagement has a ripple effect on the sector it invests in. It becomes a vested interest for investors to work on removing the irritants in the supply chain. In order to get good quality raw material for their processing business, the investors do handholding for the farmers and do their capacity building. Even arranging working capital for these suppliers of raw material becomes part of their self-interest. Agro-processing companies arrange supply chain credit through commercial banks or offer advance payment against future delivery to ensure smooth supply of raw material. This, if done in a systematic way and with the support of the central bank, can relieve farmers from the exploitative middleman (aarthi) financing– the biggest menace in the agriculture sector of the country.
A vibrant downstream agro-processing industry also creates alternative marketing channels for farmers. This helps in streamlining wholesale pricing. Wide fluctuation in wholesale prices, which is not always due to market forces and many a times is the outcome of manipulation by the powerful middleman mafia, is one of the biggest reasons for unsatisfactory performance by the agriculture sector. With an active agro-processing sector there would be competing buyers for agricultural produce which will improve pricing for farmers. This in turn will improve their ability to invest in improving their operations.
Quality of farm inputs like seeds, fertilizers, pesticides etc. have a huge impact on the final yields. Controlling counterfeits and ensuring timely availability of good quality inputs at reasonable prices will support farmers far more than offering them a subsidy on just one item. A farmer’s economics will not improve if a urea bag is provided to him at 25 per cent subsidised rate, when the seed he buys from the market is of poor quality and incapable of giving optimum yield or if the pesticides he buys are fake. The idea should be to improve the output through better yield and to remove market inefficiencies and exploitations, rather than trying to only focus on reducing production cost.
Water plays a pivotal role in agriculture. One cannot even start thinking about agriculture if there is no water. In Pakistan unfair and inefficient distribution of water is a bigger problem than its availability. Mismanagement and corruption in irrigation departments results in unpredictability about water availability. The farmer is perpetually guessing about the water situation at the time when he would be needing it to irrigate his crop. If the situation is better managed by the irrigation departments, there could be better predictability about water. This would help farmers plan their crops accordingly. If water is likely to be in short supply and the situation is effectively communicated to farmers in a timely manner, then farmers are likely to choose crops that are less water intensive. If water shortage is expected then it is better for farmers to abandon lucrative water-intensive crops and grow a more suitable, maybe less-paying, crop. This way they can at-least obtain a maximum yield of a less-paying crop which is better than growing a lucrative crop and ending up getting nothing due to non-availability of water.
In today’s world mechanisation is key to efficient agriculture. Unfortunately, this is another area where Pakistan lags behind in a significant way. Small average landholding is the biggest hurdle in rapidly increasing the level of mechanisation in the country. Innovative ideas, where high-efficiency farm machines like harvesters and planters are made available to small farmers on rentals through common facilities, maybe established under Public Private Partnership mode, could kick in the required efficiency into the farming sector.
Last but not the least, farmers need capacity building. Agriculture extension services are almost non-existent in the country which results in farmers either learning through costly trial and error method or relying solely on the advice of commercial input suppliers. Farmers need to be trained on modern crop management concepts as well as on postharvest handling of produce to not only improve yield but also to save the produce from postharvest losses. Their marketing and selling skills need to be sharpened so that they can fetch better returns for their produce. It is critical that all of the above listed interventions are made concurrently if agriculture productivity is to be increased on a self-sustaining basis. Leaving out even one intervention will compromise the effectiveness of all other interventions.