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Agri Overview 

Food and fibre market     
By Siraj-ul-Hasan

The food and fibre market system in Pakistan works with the participation of both public and private sectors.

In the public sector, its functions are shared by the federal and provincial governments, which relate to agricultural administration, crop prices, procurement, data collection, and dissemination. These are performed through a number of departments, directorates and autonomous and semi-autonomous bodies.

Agricultural administration: Although, agriculture by constitution is a provincial subject but the federal government has taken upon itself to develop a policy framework in consultation with the provincial governments.

At the federal level it is the ministry of food, agriculture and livestock (Minfal) which is headed by a cabinet minister. Agricultural Price Commission is another important organization of Minfal.

The ministry works in close cooperation with the Planning Commission. Besides, there are a number of semi-autonomous bodies and most permanent among them are Wapda, the ADBP now renamed as the Zarai Turraqiati Bank of Pakistan (ZTBP) and the Pakistan Agricultural Research Council (Parc).

One of the most important functions of the federal government is to provide and manage food security by fixing production targets and ensuring the supply of inputs. Any shortfall is met through imports.

The government keeps a watch on production and in case of a pessimistic production outlook arrangements are made to import food grains and other essential commodities.

The involvement of the public sector in the storage, and distribution varies. Most imports and local supplies are handled by the government. Their retail marketing and sales are done through private sector.

Production, storage and distribution of seeds are also in the public sector although private sector is now being encouraged to enter into this area. The Punjab and Sindh Seed Development Corporations produce recommended variety of seeds through the registered growers which are then distributed through their own retail outlets.

Water is a major input and its resources are developed by the government. About a quarter of the total water available at the farm-gate is made available by the tubewells in the private sector.

Crop prices and procurement: Crop prices and procurement programmes were started in early 1950s. Over the time these covered all major crops like wheat, rice, cotton and even the non-traditional oilseeds such as sunflower, safflower and soyabean.

Among minor crops potatoes and onions were covered. The marketing of wheat, rice, cotton and surgar cane were handled through the Rice Export Corporation of Pakistan (RECP) and the Cotton Export Corporation (CEC) which have now been disbanded and their functions are performed partially by the Trading Corporation of Pakistan (TCP).

The Pakistan Central Cotton Committee advises the government on various matters of cotton marketing. A cotton grading institute has also started working since two years back.

Data collection: Various agencies, both at federal and provincial levels are engaged in data collection and dissemination. Crop production estimates are prepared by Crop Reporting Services in Punjab, the Bureau of Statistics in Sindh and the Statistical Sections of Agriculture Departments in the NWFP and Balochistan.

These estimates are sent to the federal ministry where these are consolidated. Their publication is the responsibility of the Federal Bureau of Statistics (FBS) The arrangements for collecting harvest prices are, however, very weak. Most of the data is collected on the daily, weekly, and monthly basis.

However, many commodities experience seasonal shifts in supply and demand that are not actually reflected in the reported prices. In general, flat price trends across a crop suggest that the price levels are not being reflected due to either the non-representative samples or the misquoted prices.

The methods for averaging prices, over time, are also flawed because of the non-monitoring of quantities being sold in different markets at various times. Functions performed by the private sector in the food and fibre system are enumerated and specified in brief as under:

1. Production: Agricultural commodities production is a private activity. It benefits from public investments in supporting infrastructure and services but responds directly to investments in farm capital.

Agricultural technology introduced so far, seems to have reached a plateau. Further increase in production will probably be not so fast and easy as the public policies and investment programmes attempt to secure a much wider adoption of the proven technological packages.

It will also be useful to improve the technological package. The present package is chartered by tractors, cultivators, tubewells, plant protection and improved seed supported by relatively stable prices. This has served usefully in the case of four major crops (wheat, rice, cotton and sugar cane) but the gap between potential and actual achievements is still wide.

Private sector plays an important role in providing various agricultural inputs. About 30 per cent of the fertilizer is manufactured in private sector. The importance of a sound seed programme capable of supplying quality seed to farmers cannot be over-emphasized. Despite its vital importance the percentage of improved quality seed in the total is pretty low.

2. Transportation: The private sector largely contributes in transportation to far flung areas where means of transportation are scarce or defective, farm products are generally sold in the primary markets.

These markets are capable of absorbing small and large quantities which are moved to secondary markets. All transport between villages and markets or villages to sugar mills, cotton ginneries and rice husking mills is done by private carriers.

3. Storage: Farmers and village traders have developed little storage capacity. It is difficult for small farmers to withhold small marketable surpluses for better prices.

Grains are stored in earthen containers, in pots and jute bags or underground pits. It is estimated that the producer gets upto 65 per cent of the consumer price for non-perishable commodities and about 25 per cent for perishables.

Storage capacities present in markets can be attributed to private sector alone. Private sector carries credit in providing storage arrangement for the perishables as a number of firms have constructed cold storages in and around fruits and vegetable markets.

4. Processing: At present all flour mills are in private sector, along with rice husking and sugar mills. Other industries include jute goods, cotton ginning, cotton textiles and meet processing.

5. Trading/marketing: Marketing structure ranges from free operations to substantial government intervention by way of fixation of floor prices, procurement quotas and prices, export quotas and credit control.


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