Weak agricultural growth

Letter February 11, 2016
Challenge for our economic planners is to devise policies for the revival of the agricultural sector

HAYATABAD: Pakistan is an agricultural country. Agriculture is the backbone of its economy and contributes more than 21 per cent to the GDP, employs 45 per cent of the national labour force and comprises around 60 per cent of our exports. However, despite highly improved macroeconomic stability, growth in Pakistan is well below expectations due to underperformance of the agriculture sector. According to the Food and Agriculture Organisation (FAO), the rates of agricultural commodities are at their lowest since 2009. The sugar price index fell by 4.1 per cent in December, 2015 compared with the corresponding month of 2014. While dairy rates eased by three per cent, a decline of 1.7 per cent was witnessed in the rates for cereal, whereas vegetable and meat prices declined by 1.7 and 1.1 per cent respectively. Despite these developments globally, the rates of agricultural commodities are very high in Pakistan. These commodities are produced in sufficient or surplus quantities, but our consumers pay about 40 per cent more for wheat, 20 per cent more for rice and 30 per cent more for milk.

A little attention paid towards the agriculture sector can increase our GDP growth from a projected 4.5 per cent to 5.5 per cent. Increasing agricultural growth is important from the perspective of eradicating poverty as well. According to the World Bank, the majority of the poor reside in rural areas. In Pakistan, the incidence of poverty is, accordingly, much higher in rural areas where the majority of our farmers live. By increasing the growth rate of agriculture, we could reduce much of the rural poverty. In view of the above, the challenge for our economic planners is to devise policies for the revival of the agricultural sector, keeping climate change in mind, and create quality employment in the non-farming sector.

Khan Faraz

Published in The Express Tribune, February 11th,  2016.

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