Commercialisation of
agriculture
By Mahmud Ahmed
Crop
prices are falling, as opposed to the rising cost of farm
inputs.
This is eroding farmers’
earnings and savings and is bound to impact the pace of
investment required to modernise agriculture and improve
productivity.
And will make it more
difficult for primary commodities to become globally
competitive.
It will also result in the cash-strapped government being
forced to continue to subsidise the export of surplus wheat
and sugar etc, while domestic prices remain higher than the
international rates.
In the absence of adequate
storage facilities and modern supply chains, a significant
quantity of grains stored in open grounds would also be
lost.
The government has failed to
come up with a policy to stimulate the private sector or
farmers to invest in logistics.
No doubt, the increase in support prices of wheat — a staple
food serving as a benchmark for the pricing of other crops —
along with rising bank credit and micro-financing, have
raised growers’ incomes.
But it has also provided an
opportunity to the manufacturers and dealers of fertiliser,
seeds, tractors etc to manipulate the rural market at the
cost of the farmers.
This has resulted in a significant transfer of resources
from agriculture to industry and trade, and provided an
impetus to agri-business, as indicated by the number of
agri-business companies being registered by the Securities
and Exchange Commission of Pakistan (SECP).
Yet, the commercialisation of
agriculture is slower than is required to put the farm
economy at an even kee.
Tough
the inefficient mode of crop-sharing between the landed
gentry and the peasant-tenant is gradually getting out of
fashion.
Its replacement by cash contracts needs to be speeded up to
increase farm productivity through mechanisation.
The provincial governments do provide subsidy on tractors,
but a whole range of farm implements are required to
modernise agriculture.
The rural market cannot
be opened up much for private sector/farmers’ investment
without the creation of a market for the sale and purchase
of agricultural lands for corporate farming.
The computerisation of land
records can help move in this direction and encourage banks
to lend money. But the provincial revenue departments are
taking things easy on this front.
However, corporate farming should not come at the cost of
small farmers. Sometime back, there was a move to encourage
small farmers to join corporate farming, with their equity
commensurate to their share in the corporate landholding.
But nothing is being heard about it.
The proposal should be
revived to ensure an inclusive agricultural economy.
Somehow the government’s pro-farmer policies get to benefit
big growers much more than the smaller ones. No doubt, some
specific schemes have been introduced recently by the State
Bank/government for financing small cultivators.
But this is not enough. There
is a strong need to establish clusters of common facilities
in the private sector to provide modern farm implements on
rent to small farmers who cannot afford to buy them.
In the realm of marketing, a major barrier to boosting
investment and productivity in agriculture is the conflict
of interest between farmers, trade and industry — with each
trying to benefit at the cost of the other, rather than
cooperating mutually to boost ‘agricultural manufacturing’.
Forgotten is the message of
the IT era: sharing in the value-chain is a win-win for all.
The industry is dependent on agriculture for raw materials
and rural markets for the sale of its products. This serves
as the basis for cooperation between rural folks and urban
dwellers.
Currently, agriculture’s
share in national income is in the range of 21-22pc, and
about 44pc of the country’s population depends on farming
and livestock for its livelihood.
This indicates the level of
rural poverty and the low purchasing power of the rural
dwellers. The prosperity that the industry radiates owes
much to agriculture.
One of the ways in which the
underutilised domestic manufacturing capacity can be
utilised is by turning the rural market — which has already
become an attractive one for motorcycles and home appliances
— more prosperous.
To sum up, the overarching goal should be to establish a
modern, prosperous, inclusive, globally efficient and
competitive ‘agriculture manufacturing’ economy.
Agriculture should be at the
centre of the development strategy.
The survival and growth of
the country’s traditional industries like textiles, sugar
and leather goods can be traced to agricultural raw
materials.
And now, food processing is coming up fast because of both
domestic demand and export potential. In a way, agriculture
is serving as the foundation of the industrial economy.
March 2015
Source: Dawn
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