Mainstreaming the poor

In an article on inclusive growth a fortnight ago, I had argued that if the middle classes and the poor could be given access to productive assets, they could begin to engage in savings, investment and productivity increase to enable an inclusive growth process. As broad sections of society, rather than just the elite, drive the growth process it would achieve a higher growth through equity. In the pursuit of this strategic aim, I had proposed the provision of land for the tiller as part of a new medium and a small farmer-based agriculture growth strategy. In this article, I will indicate policy initiatives that can be undertaken to establish large corporations owned by the poor and managed by professionals, which could provide livelihoods to a large number of the underprivileged. At the same time, they could provide substantial export earnings to release the balance of payments constraint that prevents sustained growth and makes the country perennially dependent on foreign loans.

There are three key sectors which have a considerable potential for simultaneously reducing poverty, accelerating GDP growth and increasing export earnings: milk and dairy products, livestock development for the production of meat and meat products and marine fisheries. It is proposed to establish large corporate enterprises in which the poor are enabled to acquire equity through loans to be paid back from the dividends with management by high quality professionals.

Pakistan is the fifth largest producer of milk in the world and with an annual output of Rs177 billion, milk is the largest product in the agriculture sector. But unlike agriculture crops, milk output can be doubled in a couple of years through scientific feeding as has been demonstrated in the field. What is required is an institutional framework for training the farmers in scientific feeding and breeding and providing the following logistics: collection of milk from the farm door, refrigerated transport, domestic marketing, refrigerated storage at airports and subsequent air freight to export markets. Pakistan is a potential star at the centre of a crescent of milk deficit countries in West Asia, Central Asia and East Asia. If a large corporation owned by the poor and which buys milk from poor farm households could be established with the capacity to export milk and milk products, hitherto excluded sections of rural society could power a new export-led growth process. It would overcome poverty, accelerate GDP growth and earn over $5 billion in foreign exchange annually.

There is also great potential in livestock development for the production and export of meat and meat products. A similar large corporation owned by the poor and run by professionals could be established whereby small and medium-sized owners of livestock could be networked across the country and provided extension services to improve breeding and meat quality, credit to enlarge their herds and then the livestock acquired by the proposed corporation for production, packaging and export of both raw meat, as well as meat products.

Finally, marine fisheries development also provides a potential for poverty reduction of coastal fishing communities, contributing to GDP growth and increasing export earnings. The expansion in the export of marine fisheries is constrained by lack of storage facilities for transportation at an international standard. A large corporation whose equity is owned by the poor fishermen themselves, but which is run by professionals, could overcome these constraints by providing shelves for layered storage of fish in boats, topped by dry ice with fibreglass covers to achieve European Union standards of minus seven degree centigrade temperature during transportation. Pakistan could earn about $500 million annually from an improvement in the output of fish, its refrigerated transport and packaging for export.

These proposed initiatives, if successfully undertaken, could substantially increase the incomes of the poor, accelerate GDP growth and resolve Pakistan’s recurrent balance of payments problems.

Published in The Express Tribune, November 22^nd, 2013.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.