Agriculture has potential to give boost to economy

Despite decline, it is still the largest contributor to emploement in Pakistan

ISLAMABAD: Since its inception, Pakistan has been struggling to realise the dream of economic growth, development, and prosperity. Experiments accompanied by the self-interest of powerful groups have brought the economy to its knees. Self-interest groups are not limited to politicians, they also include all segments of society.

The government is searching for a feasible and affordable way to combat the economic slowdown. It is looking to revive the economy in the shortest possible time. However, it needs to acknowledge that there is no short-cut.

An economic turnaround is only possible through consistent interventions and a policy of sustainable development. The most plausible way for economic revival is to develop domestic policies, models and plans, tailored according to needs and ground realities of the country.

Unfortunately, Pakistan has been the victim of “fancy models”, which do not correspond to the needs and ground realities. Therefore, the country must concentrate on two types of “what” before devising any future policy or an implementation framework.

First, what is required to lift the standard of living and ensure prosperity for everyone? Second, what resources Pakistan has in its kitty to invest to realise the first goal?

To cater to the first case, the government will have to invest in poverty reduction, combating food insecurity, promoting education and providing health care. These are the most urgent needs of people.

However, the government needs financial resources to pour into these areas and for that purpose, it will have to look into its pocket to meet the requirements of the second case.

The problem is that the government has very limited financial resources and people’s expectations and needs are very high. The government will have to prepare a plan which can cater to urgent needs of the economy and people, and which also provides support in achieving the long-term goal of economic development and prosperity.

Most importantly, the plan should be devised in a step-wise manner and every step should be given a certain time frame.

The government should formulate a vision titled “Agenda 2047” and plan strategic interventions for low-hanging fruits for a period of two years, for the short term (eight years), medium term (15 years) and long term (28 years).

There are two sectors which can be extensively explored and exploited in the first phase, which are agriculture and livestock and tourism. They can provide immediate relief to the economy as well as people.

The agriculture and livestock sector has a multiplier effect on the economy and society. Although its contribution to the country’s gross domestic product (GDP) is declining (18.9% for 2018), it is still the largest contributor to employment (42.3% in 2018) followed by services (34.25%) and the industrial sector (23.74%).

Agriculture is the main source of employment for the unskilled and uneducated labour force. Investment in agriculture will help to cope with challenges of food insecurity, poverty, unskilled and uneducated workforce and lack of raw material for industries, especially for textile and leather industries.

Owing to these factors, agriculture has the potential to give a fresh impetus to the economy in a very short period of time on a sustainable basis.

Interest-free credit

In a bid to capitalise on the potential of the agriculture and livestock sector, the government will have to take a few immediate steps. The most urgent and serious issues facing the farming community are lack of interest-free credit, poor marketing and market structure, very weak or absence of supply chain management, lack of land reforms and ability to combat climate change.

A majority of the farmers are small landholders - 89% of them have less than 5 hectares of land - and poor. They cannot go for surplus production without a substantial credit facility from the government.

Governments in the past offered different credit schemes but these could not produce the desired outcome. The main reason was the interest rate. Most of the farmers follow Islamic teachings and do not want to take credit on interest.

Therefore, the current government will have to come up with a credit scheme which does not require interest payments. It is exactly in line with the concept of “Riyasat-e-Madina” being promoted by Prime Minister Imran Khan.

Marketing, market structure

The second major area which requires attention is marketing and market structure, both in terms of policy and implementation. Agriculture and livestock marketing have been one of the weakest links. Small farmers cannot afford to invest in marketing, therefore, the government will have to introduce tools to assist the farmers.

The proposed interventions can be restructuring (merger) of agricultural extension and marketing departments and the inclusion of civil society organisations and chambers of commerce. The merger will result in two-way communications and timely availability of information. It will help the farmers and consumers to get the right information at the right time. Simultaneously, the government should also work on refining the market structure.

The existing market structure is in a very bad condition and is biased against farmers, especially small farmers. Interventions should be of two types - farmers should be included in policymaking, decision-making, and implementation, and market facilities should be upgraded and modernised.

The markets lack cold storage facilities, which are a prerequisite for agricultural products. Most of the agricultural and livestock products like vegetables, fruits and milk are perishable, which require proper storage facilities. Therefore, the government should invest in storages for improving the shelf life of farm commodities.

Sophisticated transport

Supply chain management and transportation are the other key areas, which have been neglected in the country. Pakistan is still using obsolete means of transportation and supply chain management. As we have already discussed, most of the agricultural and livestock products are perishable, which require a sophisticated transport system.

The transport system must be equipped with modern standards of hygiene and proper cold storage facilities. A modern transport system can help to increase the shelf life and demand for products. It can also contribute to enhancing exports of the country and can be a good source of foreign exchange earnings.

The government needs to invest in road infrastructure and quality transport system. It can also seek the help of the private sector, which can assist in setting up the food and fruit processing industry on a wider scale.

However, to attract the private sector, the government will have to offer some incentives like tax exemption on import of transport vehicles with cold storage facility.

Land reform

Last, the most important and critical area of intervention is land reform. It is the key to a meaningful revival of agriculture sector and the overall economy. We can learn from China which started the reform process with the introduction of land reform. It helps to reduce poverty and increase food security, especially in rural areas.

In Pakistan, there had never been any serious effort to undertake land reform. To realise the real potential of the sector, the government will have to introduce land reform with a true spirit and without any ifs and buts.

THE WRITER IS THE CHIEF OPERATING OFFICER AT ZALMI FOUNDATION

Published in The Express Tribune, May 27^th, 2019.

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