|
Pathetic agriculture performance
A. K. Sial
The economic managers are well justified to blazon certain successes on economic front, including strong currency, record high level of foreign exchange reserves and rebirth of stock exchange bulls.
But these achievements could neither impress nor satisfy common man, so far, since he is yet to see any positive impact of these policies on his life.
Despite higher level of foreign exchange reserves, stable currency and slightly improved exports performance the economic growth is not visible, at least, to the general public and poverty is continuously on the rise.
This fact is well admitted by the policy makers of the Ministry of Finance and the State Bank of Pakistan. One of the major reasons behind slow economic growth is sluggish performance of agriculture sector.
Since livelihood of majority of the people of this country depends upon farm sector therefore the poor are taking the government claims of economic stability as jokes, finding their purchasing power continuously shrinking day by day.
Now the recent State Bank of Pakistan Report for the year 2001-2002 has uncovered the real truth about the performance of farm sector. According to the report Agriculture sector showed growth of mere 1.4 per cent in 2001-2 against the target of 2 per cent. During 1999-2000 6.1 per cent growth was recorded in agriculture which reduced to negative growth of 2.6 per cent by the end of fiscal 2000-2001.
On the other hand as far as performance of the major crops is concerned it remained highly pathetic during two years. During year 2001-2 the growth declined by 0.5 per cent. However in 2000-2001 major crops showed record decline of 9.8 per cent compared to the growth of 15.4 per cent of 1999-2000.
Can any sane economist declare country's economy as healthy when a single major contributor to GDP is showing such lackluster performance in a situation where over 52 per cent people are directly involved in farming while remaining are dependant to this sector in one way or the other.
Almost all the leading industries and trading businesses have to rely upon farm output. Despite availability of a comprehensive industrial structure Pakistan's economy is still dependent on agriculture and most of the industries rely on the farm materials to produce finished products for the exports or local consumption. Importance of food security dominates all other issues.
During the year 2001-2002 the large scale manufacturing growth also remained just 4 per cent against the target of 6.5 per cent, obvious reason being dependence of large scale manufacturing upon the agriculture production.
In the past two years wheat, rice and cotton crops have shown declining trend. The record production of wheat of over 21 million tons achieved during 2000, which enabled the country to enter in wheat exporters' club, could not be followed in subsequent years. Rice production is also undergoing a declining trend since past two years.
The case of cotton is not very much different from the above crops. The production level of 11.24 million bales achieved during 1999-2000 could not be realised again. However the sugarcane remains sole major crop to show a positive outlook for the previous as well as current fiscal year. However it is still behind the record performance of 1998-99. This situation is the result of lack of interests of the economic managers and absence of coordination between the Ministries of Finance, Commerce and Agriculture.
These policy makers seem least interested in formulating any effective strategy to properly utilise agriculture potential existing in the country for the economic well being of its people. Through proper planning country's exports can be doubled within three years.
As far as reasons behind poor performance of agriculture sector are concerned the State Bank of Pakistan officials failed to mention the major factors involved in depressing the agriculture growth during past two years. The compilers of SBP report held only drought as single factor responsible for the declining farm production which is not true.
While the reality is that irrigation water supply has shown improvement during the past two years compared three years earlier drought situation. While the reality is that troubled farming sector is the result of negligence and laxity on the part of Ministries of Agriculture and Finance coupled with government's various anti farming policies.
Repeated and continuous increase in price of diesel and fertilisers is the prime factor behind sluggish agriculture growth. After natural sources of irrigation, such as canal water and rains, tube-wells are the mean source of irrigation which are run by high speed and low speed diesel. Due to successive increases in prices of oil during last two and half years by the present government the growers have been burdened with extra costs for irrigation.
The government increased the price of High Speed Diesel from Rs10.66 in October 1999 to over Rs19.00 at present despite almost same prices in dollar terms in the international market. This 79 per cent increase in oil prices in just three years is unmatched in the history of country.
This single act of the government proved more deadly for the growers than all other factors put together. Hence in areas where tubewells are only means of irrigation the cost of irrigation has increased by almost 79 per cent. Same policy was adopted in case of tube wells run with electricity.
Over 50 per cent increase in electricity tariffs has been observed during past three years. On the other hand due to higher gas charges and ruthless taxation policies the prices of fertilisers and pesticides have surged enormously. What results was expecting the present regime out of these policies?
Actually all this was done in pursuance of IMF and World Bank prescriptions which, according to them, were necessary for macroeconomic stability. But at the same time these actions have aggravated the poverty situation.
In other words population below the poverty line has increased tremendously during the past 10 years.
Damaging marketing network of farm produce by the government was another blow to the agriculture sector during the past two years. Procurement of wheat by the PASSCO and provincial Food Departments was restricted by the policy makers, again, as a part of donor agencies'
conditionalities. The government was directed to curtail the responsibilities of government sector procurement agencies and leave it to the 'market forces' to fix prices of wheat and paddy.
Long queues of trollies were seen near the procurement centres as pace of wheat purchase was slowed down. Growers were humiliated in the course of sale of their produce. As a result the production of wheat declined from 21 million tonnes in fiscal year 1999-2000 to 19 million tonnes in 2000-2001 and it further came down to 18.47 million tonnes in 20012002.
It may be recalled that in early October 1999, before sowing season of wheat crop the previous government had announced raise in procurement price of wheat from Rs270 per 40 kilogramme to Rs300 per 40 kilogrammes which induced the growers to cultivate more wheat. Anyhow the present government remained stick to that announcement and people responded quickly and the country bagged a record production throughout the history of the country. But that level of production seem unachievable in present environment of high input costs.
The other reason behind declining agriculture growth is ineffective policies for the major crops such as cotton, rice, wheat and sugarcane. During the previous year sugarcane policy was announced by the government but it could not be implemented because it lacked true spirit in the minds and hearts of the formulators of the policy.
This policy could not enforce prices of the sugarcane as decided by its architects. Moreover the major problem of the growers regarding delayed payments could not be solved. The growers had to move from pillar to the post for over six months to receive their payment from the sugar mills. Such attitude will invite reaction from the growers next year in the shape of less sowing since in case of sugarcane each sowing gives production for two consecutive years.
In case of cotton several other factors, along with higher prices of diesel and fertilisers are contributing to depress the production. Cotton needs more pesticides than any other crop. Over the last three years prices of pesticides have shown almost 50 to 70 per cent increase discouraging growers to sow cotton in a situation when price of diesel was increased unjustifiably. Diesel is also a prime input in production of cotton due enormous ploughing and spraying.
Moreover marketing of cotton is controlled by big industrial tycoons who are instrumental in depressing prices of phutti (seed cotton). They always are threatening or contemplating to import raw cotton from abroad if prices in the local market are higher. But the reality is that imported cotton has never been a profitable business in the past.
However manipulation of the industrialists and big cotton traders has been successfully pressing down the prices of silver fibre in the country. During the past three years the cost of production for one acre of cotton has been increased by almost 40 to 50 per cent but price of phutti is almost the same. Obviously the indifferent attitude of the government towards growers' problems has resulted into poor agriculture performance.
The economic managers are not bothering to fully explore export potential of cotton crop. Pakistan can be a leading exporter of clothing and textiles in the international market utilising its efficient and hard working labour force.
The situation of rice crop is also not very much different from other major crops. During the year 1999-2000 the rice production was recorded at 5.16 million tonnes which was reduced to 4.8 million tonnes during 2000-2001 and further declined to 3.89 million tonnes. This time again the policy makers blamed natural factors, especially drought, to the poor performance of agriculture sector. But this was not true as water supply improved each subsequent years than three years earlier as already discussed.
The economic managers must keep in mind that if the indigenous production of all sectors of the economy is not enhanced the living standards of masses would not improve. Absolute dependence on foreign remittances and loans would be a risky affair in days to come. Therefore a comprehensive strategy must be evolved to boost agriculture production which, ultimately, would lead to growth in manufacturing and export sector.
Successive increases in prices of oil, gas, electricity, and taxes on fertilisers and pesticides, just to please donor agencies, is no service to the nation. This policy is also deepening poverty in the country through cutting down purchasing power of the common man.
Generating revenues to the tune of 50 to 70 billion through taxing oil is burdening the economy manifold and the net result is slower growth.
The policy makers must understand the importance of agriculture sector in this country and should strengthen the backbone of the economy to reap its benefits for the development of the country. There must be an end to day by day rising trend in prices of oil, electricity, fertilisers and pesticides through excessive duties and taxes.
Day by day rising agriculture taxes, water cess and land revenue must also be avoided and marketing, procurement of farm produce must be ensured if the government wants betterment of the whole poor community of this country.
|
Pakissan.com;
|
