The plight of the small farmer

Just consider this: 18,606 big landlords got agricultural credit worth Rs222.7 billion in the last fiscal year. Against this, 1.752 million small farmers got just Rs183.6bn. A little more than 110,000 mid-sized landowners received Rs76.3bn.

Small wonder then that our agriculture sector’s productivity remains wanting on almost all counts.

We must keep in mind that big landlords are defined as those holding more than 50 acres of land in Punjab and Khyber Pakhtunkhwa and over 64 acres of land in Sindh and Balochistan. Small farmers are those who hold up to 12.5 acres in Punjab and KP, up to 16 acres in Sindh and up to 32 acres in Balochistan. Mid-sized landowners of each province fall in between respective provincial categories of small farmers and big landlords.

Small farmers remain neglected and that makes fuller exploitation of growth potential of agriculture all the more difficult.

The average farm size in Pakistan is 5.6 acres, less than half of what it was back in 1972. This makes it difficult for banks to reach out to the under-served segments of agricultural borrowers

Since the Pakistan Tehreek-i-Insaf (PTI) is in power at the centre and in Punjab and KP, people expect more from it. But other provincial governments will also have to play an active role in setting things right in agriculture.

The plight of small farmers of our country is visible everywhere — in landholding and in the form of bonded farm labour, in access to irrigation water and in access to inputs and markets to name a few. But how banks continue to neglect them in agricultural lending also often comes as a shock for many.

The fact that less than 20,000 big landlords get more bank credit than 1.75m small farmers is often justified on the grounds that financial needs of the farming sector must be seen in the context of the land area.

Naturally, a landlord who controls 50 acres of land needs more finance than a small farmer working on 12.5 acres.

But a 2010 World Bank study reveals that only two per cent farm households control 45pc of farmland and 98pc control the remaining 55pc. This pattern of land holding and the tenure system in Pakistan’s agriculture are just too skewed in favour of big landlords.

As such, it is responsible for many of the problems of small farmers, including their inability to get their due share in irrigation water and, to some extent, bank financing as well.

According to 2010 Census of Agriculture, which is the latest, 75pc of Pakistan’s total farm area belonged to owners whereas the remaining 25pc was cultivated by tenants or owners-cum-tenants. Farmers’ lobbies, such as Sindh Abadgar Board and Pakistan Kissan Ittehad, say that an apparently high percentage of the farmland being controlled by owners does not mean that landless farmers have acquired pieces of land on a large scale over the years. They claim that in most cases it showed the transfer of parts of the land held by big landlords to their younger generation.

This means that the practice of tenure farming or the tilling of land of big landlords by poor farmers of their area still continues on a large scale. Farmers’ lobbies lament that in practice such land tenancy, which should ideally be a decent partnership between owners and tillers of land for a certain period, turns out to be nothing short of poor farmers’ slavery.

Big landlords, particularly those in Punjab and KP, contest this allegation. They say that with the ongoing digitisation of rural land records at a rapid pace in their provinces, anyone can check the genuineness of land titles. Members of the landed gentry argue that with corporate farming now taking root, the so-called enslavement of poor farmers by big landlords holds little truth at least in the case of Punjab. But in smaller provinces, poor farmers continue to receive unfair treatment at the hands of big, politically influential landowners, they admit.

Issues in landholding, tenure farming and genuineness of the titles of farmland are a big reason for low lending to small farmers. Offering collateral-based crop loans to farmers that work on others’ land or jointly own land with unclear ownership titles becomes too difficult for banks.

Regardless of the accuracy of data on agriculture landholding, the breakdown in terms of small, medium and large farms presents another disturbing fact: according to Agriculture Census 2010, 90pc farms are categorised as small, 6pc as medium and only 4pc as large.

A higher percentage of small farms in the country’s total stock of 8.35m farms spread over 55.6 acres means the average size of farmland is quite small. In fact, the average farm size in Pakistan — 5.6 acres as of 2010 — is less than half of what it was back in 1972 — 13.06 acres.

This makes it difficult for banks to reach out to the under-served segments of agricultural borrowers which, in turns, results in poor farm care and little investment in farming innovation.