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Changing role of government in agriculture
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By MUHAMMAD ISMAIL QURESHI
The global order is changing fast and consequently challenges
facing agriculture and becoming increasingly demanding. The
future of the sector and its contribution to the economy
will depend on how agriculture is positioned to meet the
challenges of market, internal and external.
 In
Pakistan, agriculture, which account 22 percent of GDP and
provides more than 50 percent of jobs, has a special role to
play in growth, poverty reproduction, and environmental
protection. In recent years, agricultural output growth has
varied. Although livestock sub-sector has experienced a
robust rate of growth, the overall long-term trend shows a
decline in growth rate, especially in crop agriculture. For
example, average growth rate of agriculture during 2000-06
is almost one percentage point lower than the growth rate in
1990s.
With limited chance of increasing land and water resources,
future growth has to come largely from diversification in
line with market demand and productivity increase, which
will require major changes in systems, policies, and
institutions for agriculture. And the most important change
required is redefinition of the role of Government in
agriculture, which would be crucial in making agriculture
competitive in the global market.
The appropriate role of Government is to become the enabler
of smoothly functioning markets through institutional and
regulatory reforms that facilitate private sector activities
and market efficiency. Where market failure is not an issue
and where intervention in the past led to marked
inefficiency, the strategy to be adopted now is to reduce
the government's role through policy reforms and
strengthening market liberalisation.
This means that recognising the role of the private sector
is the first step toward rationalising public sectors' role
in agriculture. This also means that government must reshape
its investments and public expenditure on agriculture.
Public spending is primarily focusing on the provision of
public goods and the correction of market failures and not
on activities that are better suited to the private sector,
even if such activities may be profitable.
In areas such as poverty alleviation, small farmer
development and environmental protection, where the
government has a legitimate role to play, market-friendly
policy reforms are being adopted to ensure economic
efficiency and growth and to achieve the Government's
millennium development goals.
Agricultural output prices are now market determined,
allowing market signals to be transmitted to farmers without
distortion. The government has largely liberalised internal
wheat market and has ended the subsidy on wheat imports.
The Government has minimised its level of intervention in
agricultural input markets, as it has moved toward
privatising urea production and distribution. The Government
is developing an institutional and legal framework that
would allow efficient lending by commercial banks to
agriculture, unhindered by highly restrictive collateral
requirements and seasonal credit regulations.
Let me now turn to the other side of rationalising public
sector's role in agriculture - how to make it move
constructive and effective in making agriculture more
competitive leading to a much higher rate of growth. This
objective is reflected in Medium-term Development Framework
(MTDF) 2005-10, which enjoins Ministry of Food, Agriculture
and Livestock to perform roles such as: enhancing
productivity of crops and livestock; promoting efficient use
of water, promoting production and export of high value
crops and livestock, ensuring availability of credit to
small and medium farmers, improving market structure and
efficiency of agriculture input distribution and
strengthening agriculture and livestock institutions. Let me
now outline the key roles of the public sector in pursuance
of these goals of MTDF.
The Government has an important role in agriculture research
and extension. As most sub-sectors of Pakistani agriculture
have entered a post-green revolution stage of development,
Pakistan requires new strategies to enhance input efficiency
and to maintain and improve the quality of the resource
base.
Greater importance is now, therefore, attached to making
research demand-driven. Productivity and sustainability are
being enhanced by improvement in crop and
resource-management research. With that objective in view,
the Government has undertaken institutional changes and
reforms by making research institutions more autonomous. The
incentive structure is being drastically reformed to permit
the research system retain its best human resources.
Private and public sector research financing will, where
possible, be provided on a competitive basis, so that
funding to institution would be tied to performance. The
reform programme will ensure coordination among both
national and provincial research institutions improved so
that unnecessary duplication is avoided.
The reform programme is also putting in place a system of
monitoring of research under a system of greater
decentralisation. Likewise, agriculture extension services -
an important responsibility of the public sector - is being
reorganised by making extension services major decentralised
under devolution. Under the reformed system, farmers will
have to play a larger role in controlling and evaluating
these services.
The Government has a role in development of infrastructure,
especially rural infrastructure for agricultural growth. In
this area, the Government has undertaken a major programme
of lining of watercourses to improve water delivery, in
addition to programmes for better water management (through
user's association). Another significant public sector
programme is farm-to-village road construction, which would
improve the distribution of inputs and the marketability of
outputs, especially high-value agricultural products. The
programmes are going to be financed partly by saving from
the rationalisation of public expenditures.
The Government's role in agriculture is going to be
influenced by its mandate to reduce rural poverty. In a
labour-abundant economy such as Pakistan, subsidies on
capital (heavy machinery such as combine harvesters) are
inappropriate because they distort factor markets and lead
to labour displacement. It is, therefore, important that the
government pursues a policy of removing subsidies to
mechanisation that displace labour without increasing output
significantly. The Government has a role to undertake
directed development spending toward the small farmers and
rural poor.
In this connection, participatory community-based
organisations offer great promise. The Government is,
therefore, supporting these initiatives and also proposing
to initiate programs to promote livestock, which especially
helps the poor. Recently, the Government has adopted a
pro-poor livestock policy and has initiated major investment
in this sub-sector.
The Government has a role in protecting the environment. The
Government is particularly placing more emphasis on natural
resource management problems in agriculture. Environment and
natural resources management problems are often associated
with market failure and require public regulation. Increased
pesticide use has created growing resistance among pests and
destroyed natural predators.
The Government, is therefore, putting a major emphasis on
integrated pest management (IPM) techniques that is
effective against pest problems as well is more
environmentally friendly.
The Government has a role in correcting distortions in land
market. Confiscatory land reform did not do well in the
past. But some important measures can and should be
implemented immediately. Foremost is providing security of
tenure to may farmers, especially tenants-at-will, thereby
improving responsiveness to incentives and creating better
incentives for long-term investments. Property rights can
also be reinforced by improving and streamlining land
registration by establishing a system of permanent title
deeds and computerisation of land records.
Along with improved land records, their proper maintenance
and easier access to them, procedures for settling land
disputes could be streamlined as well. Finally, the
government needs to consider eliminating artificial
incentives to large holders, such as low machinery prices
and unequal access to credit.
Lack of property rights and institutions to manage common
property resources can result in on-site damage and create
negative externalities. Government is aware of that and
taking responsibilities for preparing appropriate framework
to safeguard common property.
Finally, the government has a key role and responsibility in
quality control and implementing internationally accepted
norms and regulations. This role of the public sector has
become all the more important in the light of WTO agreements
and regulations. Future of Pakistan agriculture depends on
how well we can compete successfully in the global market
and for that quality control to comply with international
norms and standards is crucially important.
Given this new reality, the Government's role in agriculture
is shifting toward facilitating trade and marketing and
meeting WTO challenges. A key challenge of new global world
to meet is the requirements as per the agreement on sanitary
and phyto-sanitary (SPS) standards, which requires that all
food-hygiene measures and food safety measures, such as
content of veterinary residues, pesticides residues and
other chemical residues/additives are observed. The
agreement sets rules to ensure that the national measures,
to protect the human, animal and plant life and health, are
consistent with the obligations.
THE GOVERNMENT HAS
TAKEN SOME MEASURES TO IMPROVE THE IMPLEMENTATION OF SPS
STANDARDS IN PAKISTAN:
A joint national quality policy and Plan has been prepared
by the Ministry of S&T. Instructions have been issued to
Health Testing Laboratories to get accreditation with
Pakistan National Accreditation Council (PNAC); Government
has earmarked Rs 300 million to MINFAL for this purpose.
To prepare National Quality Testing Laboratory
profile/Directory, the list of labs and a questionnaire have
been developed by MINFAL to identify laboratories having the
requisite equipment and manpower for accreditation. Ministry
of S&T and PNAC have started a comprehensive training
programme and courses for lab experts dealing with testing
and certification of food products.
With rationalising the role of the public sector, supporting
public sector institutions needs to be changed as well. This
latter task is always most challenging because of resistance
of government officials to change their practice and
orientation. At present, efforts are being made to set up
private-public sector agencies with leadership role given to
the private sector. Government has undertaken this process
in setting up business oriented organisations, such as
Livestock Development Board, Dairy Board and Agri-business
Development Fund. In keeping with enabling role orientation,
the Government is also reforming other agencies such as PARC
to include more active participation of stakeholders in its
management. In keeping with more emphasis on trade, a WTO
cell is being set up in MINFAL.
To conclude, the appropriate role for government is to
encourage the development of a smoothly functioning markets,
through institutional and regulatory reforms that facilitate
private sector activities and market efficiency. Where
market failure is not an issue, and government inefficiency
is clearly evident, the strategy will require that
government's role must be reduced.
Similarly, where public sector has a legitimate role (eg
public goods and market failures) its role has to be
strengthened. Accordingly investment and public expenditure
on agriculture will have to be reshaped. Government spending
will focus on provision of public goods and addressing
market failures, and not on activities better suited to the
private sector.
The Government will continue to have an active role in areas
such as: development and dissemination of new technology'
infrastructure development; poverty alleviation; small
farmer development; protection of environment; and quality
control and implementing international rules and
regulations. With rationalisation of public sector's role in
agriculture, supporting public sector institutions are being
reformed and reoriented. An adoption and effective discharge
of the appropriate role of the Government will usher in a
new era for Pakistan agriculture by increasing its overall
productivity and competitiveness in the global market.
(The writer is Secretary, Ministry of Food, Agriculture and
Livestock (MINFAL).)
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Courtesy: Business Recorder
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