Agriculture: catering to the rich
Despite branding agriculture as the backbone of our economy, agricultural output per worker has been almost unchanged since the 1990s. A recent World Bank report notes that Pakistan’s agriculture worker productivity went up by a meagre 0.7 per cent every year between 1991 and 2019. While some may blame the impact of climate change events on productivity, the rest of the South Asia region saw agriculture output rise by 2.8 per cent every year i.e. four times as much.
The World Bank report is actually quite direct in blaming terrible policymaking by the successive governments, including concentration on just four crops — cotton, sugarcane, wheat, and rice — and the pillaging of resources to benefit “insiders” such as big landowners and banks at the expense of the 99 per cent people of the country. Among the most obvious examples of pro-rich welfare painted as a pro-poor measure is the support price regime, whereby the government procures a large quantity of domestic wheat at a fixed price. While this is intended to keep farmers from running losses, the support price often hovers above import prices — something which means that domestic farmers, especially large farmers, are making excess profits through a subsidy that is reducing cash available for investment in more critical areas, while also reducing private sector credit availability, since the control price margin is financed through bank loans which could have been more useful at financing entrepreneurial ventures.
Meanwhile, sugarcane remains one of the most astounding crop choices. Since the government under-prices water, according to the World Bank report, a water-intensive crop becomes more lucrative and popular, further increasing stress on our water-starved country. Besides, sugarcane also benefits from other government-provided subsidies, such as those on fertiliser, and easy credit policies for purchase of farm equipment. Despite all this, it is still not sufficient given a control price, which again, is often high enough that the government then needs to provide export subsidies to keep prices competitive on the international market. Similar issues in other areas have combined to discourage interest in innovation and adoption of new technologies, or even crop diversification — why take any risks when the government is guaranteeing profits?
Meanwhile, the entire agriculture sector remains largely untaxed, despite being controlled by billionaires, leaving less money and resources available for future generations. The fact is that the whole system is rigged in favour of rich farmers, which is unsurprising, given that, even today, the vast majority of parliamentarians, backbenchers and party leaders alike, owe their wealth to agriculture.
Published in The Express Tribune, February 17th, 2023.
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