Peshgam Pakistan

Agriculture provides sustenance to many, food to all, and employment to 42%+ of Pakistan’s workforce. In addition to these intrinsic positive reasons to invest in agriculture, there are other instrumental reasons: poor agricultural performance can lead to inflation, political and social disaffection, and restiveness— all of which can hold back the economy and scare of food security. There are intrinsic as well as instrumental reasons for prioritizing agriculture.

The Nobel Prize winner, Sir Arthur Lewis, showed that economic development is always and everywhere about getting people out of agriculture and of agriculture becoming over time a less important part of the economy (not in absolute terms but as a share of GDP). But this must happen along with rapid productivity growth, farm mechanization, human resource reduction by ensuring rising farm incomes and adequate food supplies for the people. The reason why agriculture cannot be the dominant source of livelihood is that levels of productivity and hence living standards can never approach— and have historically never approached— those in manufacturing and services. That, of course, means that we must get our industrialization and urbanization right for the alternatives to agriculture to become meaningful, prosperous alternatives. We add to the value addition to the agri-products and have higher productivity linked to the value chain focus. In Pakistan we have to strive for industrialization and value addition linked to agriculture for a sustainable economic growth.

Pakistan’s economy remains hugely dependent on the agriculture sector and overall economic growth is directly related to the performance of the rural economy. According to the Economic Survey of Pakistan, published by the Ministry of Finance (2016-17), The Ag-sector contributes 19.53 percent to the country’s GDP directly and accounts for 42.3 percent of the labor force.The agricultural sector recorded a positive growth of 3.46 per centcompared to 0.27 per cent last year.Specifically, cotton ginning witnessed growth of 5.59 per cent against thenegative growth of 22.12 per cent in previous year. Livestock growth was recorded at 3.43 per cent against 3.36 percent last year.Growth in the forestry sub-sector increased by 14.49 per centcompared to growth of 14.31 per cent last year. Fisheries registered a growth of 1.23 per cent togrowth of 3.25 per cent.A look at the industrial base of the country shows that both large scale manufacturing and SME have deep links with the agriculture sector. For example, textiles – the largest industry accounting for 46 percent of the manufacturing sector alone – is directly connected to agriculture. Agriculture also contributes heavily towards Pakistan’s exports.

The government recognizes the agriculture sector for its “vital role in ensuring food security, generating overall economic growth, reducing poverty and the transformation towards industrialization”.

Provision and use of financial services is well recognized as a key catalyst for agricultural growth. The Economic Survey recognizes that lack of access to agriculture credit can lead to “exploitation of poor farmers at the hands of informal sources of credit, to a slowdown in the adoption of modern farming techniques and inputs, resulting in slow development of this chief sector of our economy”.The National Agriculture Sector Strategy prepared with assistance of the Asian Development Bank cites the lack of a focused and well planned rural finance policy as one of the reasons for the rate of agricultural development remaining below the potential rate of growth.

Although the sector’s productivity and output grew significantly during the 1970s and 1980s, there are clear signs of stagnation in productivity growth. The average yield of Pakistan’s major grains and other crops—wheat, rice, maize, pulses and sugarcane—is less than the world average. Although this gap has narrowed in the case of some crops, it has grown in others. This gap is quite large in comparison to the highest world averages exhibited in developed countries, but even in comparison to developing countries, the yield levels of crops are lower in Pakistan. If these gaps are to be reduced, access to technology, information about modern farming techniques and the latest extension services are needed. All this is not possible without timely access to finances, resulting in the growth of rural economy.