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Agriculture of pakistan & micro finance
By ABID SHOHAB
AHMED
Micro finance for
agriculture would also facilitate growth in employment and
output
Like many other developing countries where 45 to 80 per cent
of the population derives its livelihood, agriculture is the
key-determining sector in the economy of Pakistan.
Contribution of agriculture to GDP in 2000-2001 was 24.6 per
cent and in 2001-2002 it has declined to 24.1 per cent. Size
of land holding in Pakistan is very small and has decreased
over time. According to Agricultural Census, there are 5.1
million farms in the country and 93 per cent of these are
small and marginal farms accounting for 60 per cent of the
total cultivated area. The large farms are only 7 per cent of
the total farms accounting for 40 per cent of the total
cultivated area. There has been further subdivision of farms
because of inheritance and transfer. Since land in agriculture
production process is natural agent, therefore decreasing size
of holding has detrimental effect on investment, farm
productivity and farm income resulting in 52 per cent poor
Pakistanis.
Over the last one decade, agriculture grew at an annual
average rate of 4.5 per cent. This low growth rate is
attributed to poor weather conditions and pest attack on
crops. Agriculture has also been suffering from various
problems. Such as traditional methods of farming, low yields,
shortage of key inputs (credit, fertilizer, improved seed),
adulterated pesticides, improper plant protection measures
etc. All these factors in turn stem from lack of funds and
technical know how. About 81 per cent farmers being small are
not in a position to remove all these constraints because of
lack of funds.
Like previous year, the catastrophic drought hit the
agriculture this year as well. The acute shortage of water
affected the performance of agriculture, which grew by 1.4 per
cent in 2001-02, as against a decline of 2.6 per cent last
year. Amongst the major crops, the wheat production is
estimated at 18,475 thousand tons last year showing a decline
of 2.9 per cent. However sugarcane has increased by 10.2 per
cent in 2001-02 and estimated at 48,024 thousand tons in
2001-02 as against 43,606 thousand tons last year.
Micro finance for agriculture would also facilitate growth in
employment and output. This would, however, require rapid and
broad-based land and labour augmenting technological change in
agriculture. This is because under such conditions
institutional credit would have more favourable impact on
employment and output growth.
The transformation from conventional to modern day farming
methods demands a change in agronomic practices to enhance
productivity per unit area of cultivation. This leads to cash
based transactions for the purchase of quality seeds, chemical
fertilizers, pesticides and mechanical equipment.
The small farmers whose farm income is small and family size
is relatively large are generally constrained for want of
funds to meet their farm input requirements like seed,
fertilizer, pesticide, etc. To improve productivity and income
of these tillers of the soil, who constitute more than three
fourth of the farming community, appropriate measures should
be taken on great priority basis for a country like Pakistan.
Credit is also needed by the medium and large farmers in order
to increase their productivity and for developmental purposes.
To increase agricultural production, it is imperative to
increase the level of use of agricultural inputs. However, the
financial position of small farmers is such that they are not
in a position to raise the level of inputs to the desired
level without the availability of agricultural credit.
The government and a number of NGOs are operating and making
concrete efforts to alleviate poverty, increase productivity
and create employment for the poor people of Pakistan. In this
regard the most successful is the Gramean Bank (Bangladesh), a
bank for the poor that lends money to the needy poor men and
women. Since its establishment in 1983, it has become a model
that is unique, most productive and more effective in
alleviating poverty.
After the success of Gramean Bank of Bangladesh, the micro
financing programme has become very popular in developing
countries as a tool to enhance incomes of farming and
non-farming rural communities. It generates the opportunities
of self-employment, boosts agricultural growth and provides
the poor with basic amenities of life. In the light of
successful experience of Bangladesh regarding the role of
micro finance institutions in poverty reduction, increasing
production and incomes, Pakistan launched Micro finance
programme through National Rural Support Programme (NRSP) and
Punjab Rural Support Programme (PRSP) in 1991 and 1997
respectively as non-governmental organizations.
The government of Pakistan initiated Rural Support Programmes
(RSPs) in early 1990's for improving the social and economic
conditions of rural masses throughout the country. The Rural
Support Programmes are government-funded programmes that have
been established to mobilize rural communities. The largest
among these is the National Rural Support Programme (NRSP)
followed by the Sindh Rural Support Corporation (SRSC),
Balochistan Rural Support Programme (BRSP) and Punjab Rural
Support Programme (PRSP). All these programmes follow the
successful model of Agha Khan Rural Support Programme (AKRSP)
based in Pakistan's northern areas and Chitral.
Poverty reduction has always been a priority area for
Pakistan. The government is taking measures to address the
problems of the poor and thus improve the socio-economic
status of the population. These measures include establishment
of Pakistan Poverty Alleviation Fund (PPAF), Micro Finance
Bank (Khushhali Bank), and Food Support Programmes. Micro
finance is being given for initiating sustainable economic
activities and improvement of the agriculture sector.
The launching of Micro Finance Banks in the recent past is for
the sole purpose of promoting micro businesses among
disadvantaged segments of population by making available
banking services matching their peculiar needs. These banks
are poor-friendly and field staff has opportunity to guide the
clients in practical matters such as crop production, disease
prevention, animal husbandry and education.
Maximum loans must be available to small farmers because they
have good repayment behaviour. Special care must be given to
small farmers who constitute the backbone of agricultural
sector.
Micro finance allows farmers to smooth their cash flow and
provide their access to productivity enhancing techniques. It
increases choice, empowers clients, like marginal and small
farmers, who are mostly ignored by formal financial sector.
At the moment problem is that the credit which is disbursed to
the farmers is not on the time of sowing or other applications
and this credit must be according to the input requirement of
farmers without any service charges. Credit disbursing agency
should have regular check on the loanee for proper utilization
of the credit.
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Pakissan.com;
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