Agriculture posts lacklustre growth of 1.55%

Aggregate damage in the sector amounts to approximately $3.725 billion

LAHORE:

The agriculture sector in Pakistan experienced below-average performance during the fiscal year 2022-23, primarily due to a heavy monsoon spell in July-August 2022 that caused significant damage to two key sub-sectors, namely crops and livestock. As a result, the sector only achieved a growth rate of 1.55%, compared to the 4.40% growth recorded in the previous fiscal year.

According to the recently released economic survey of Pakistan, the damage in the agriculture sector had a spill-over effect on the industry and its allied services sectors. Domestic production fell below the required levels, leading to a historic increase in the prices of essential food items. The total damage inflicted on the agriculture sector amounts to approximately Rs800 billion ($3.725 billion).

To address the domestic demand for food items, the government swiftly responded by allowing the fast-track import of essential food items from neighbouring countries. The Rabi season of 2022-23 presented significant challenges for farmers in Sindh and Balochistan, which were the most affected areas due to flooding.

In an effort to alleviate the hardships faced by flood victims and revive the agriculture sector, the government introduced the Kissan Package 2022.

The economic survey highlighted a decline of 3.20% in important crops. Cotton and rice, in particular, suffered extensive damage from the floods. Cotton production plummeted by 41.0%, resulting in the production of 4.910 million bales, compared to 8.329 million bales the previous year. Similarly, rice production saw a decline of 21.5%, reaching 7.322 million tonnes (MT) compared to 9.323 MT last year. However, the decline in important crops was somewhat compensated by growth in wheat (5.4%), sugarcane (2.8%), and maize (6.9%) production.

Wheat production reached 27.634 MT, sugarcane production stood at 91.111 MT, and maize production amounted to 10.183 MT, compared to 26.209 MT, 88.651 MT, and 9.525 MT, respectively, in the previous year.

There was a 0.23% increase in the production of other crops, mainly due to a 53.15% increase in oilseed production. Cotton ginning, which contributes 0.97% to the agriculture sector and 0.22% to GDP, declined by 23.1% due to the decrease in cotton production.

Livestock, accounting for 62.68% of the agriculture sector and 14.36% of GDP, grew at a rate of 3.78% compared to 2.25% in the previous year. The fishing sector, with a share of 1.39% in agriculture value addition and 0.32% in GDP, recorded a growth rate of 1.44% compared to 0.35% in the previous year. The forestry sector, representing 2.23% of agriculture value addition and 0.51% of GDP, grew at 3.93% compared to 4.07% last year, primarily due to increased timber production.

Water availability during the Kharif season of 2022 decreased to 43.3 million-acre feet (MAF) from 65.1 MAF compared to the previous Kharif season. However, water availability during the Rabi season of 2022-23 increased by 7% to reach 29.4 MAF compared to the previous Rabi season.

The overall domestic production of fertilisers during FY2023 (July-March) decreased by 8.3% compared to the same period in FY2022. Additionally, fertiliser imports decreased by 26.2%, resulting in an 11.2% decrease in the total availability of fertiliser during FY2023 (July-March). The offtake of fertiliser nutrients also saw a decrease of 15%, primarily due to high prices of Phosphatic and Potash fertilisers in the international and domestic markets.

Punjab accounted for 67.7% of urea offtake, followed by Sindh (24.4%), Khyber-Pakhtunkhwa (K-P) (4.4%), and Balochistan (3.5%).

During FY2023, the government provided subsidies in the form of cheap natural gas and budgeted subsidies for two urea plants and imported urea. Agricultural lending institutions disbursed Rs1,222 billion, which is 67.2% of the overall annual target and 27.5% higher than the amount disbursed during the same period last year (Rs958.3 billion). The outstanding portfolio of agricultural loans increased by Rs80.2 billion, reaching Rs712.9 billion by the end of March 2023, indicating a 12.7% growth compared to the previous year. The number of outstanding borrowers reached 3.04 million in March 2023.

In the face of these challenges, the government aims to enhance the Public Sector Development Programme (PSDP) to over Rs1.15 trillion in the upcoming year, with a particular focus on investments in education, IT, and green energy. The finance minister expressed optimism about the future, aiming for GDP growth of 3.5% and a commitment to achieving sustainable development goals.

Although the Pakistani government has made strides in stabilising the economy, challenges such as inflation, currency depreciation, and political instability persist. It will require sustained efforts from the government and stakeholders to ensure long-term economic growth and stability for Pakistan.

Published in The Express Tribune, June 9^th, 2023.

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