SIFC push for agriculture, can it deliver?

After decades of ignorance, agriculture is in the limelight. Pakistan has realised that agriculture has the potential to provide immediate relief to the economy and pave the way for sustainable development.

Agriculture can help Pakistan secure food, combat poverty and boost foreign reserves through the export of multiple commodities and products. Hence, the State has decided to exploit the potential of agriculture sector to turn around the fate of the country. It is a good omen for the agriculture sector and the country. However, the question is how State will achieve the goal.

Let's start by analysing the current status of the sector. Right now, the agriculture sector is facing problems at four tiers – low-quality inputs, outdated agriculture practices, financial constraints and a pathetic supply chain. These factors are hindering the growth and development of the sector.

First of all, the State should devise right set of policies and tools to tackle these problems. Second, it will have to come up with a policy and plan which can ensure a win-win proposition for all stakeholders and people. For that purpose, Pakistan should pursue a dual-goal policy that equally focuses on growth and development.

To explore growth potential, the government will have to go for modern farming and create a state-of-the-art supply chain. Technology should lead the implementation. One plausible option is corporate farming, as Pakistan has a huge culturable wasteland.

According to government data, Pakistan has 8.89 million acres of culturable wasteland and Balochistan holds the biggest chunk (4.26 million acres). Jhal Magsi, Sibi, Kharan, Chagai and Gwadar are the leading districts with culturable waste. Pakistan can work out a policy to use this waste. The best available option would be to go for a public-private partnership model.

For that purpose, Pakistan needs a proper corporate farming policy. Right now, the government has no policy, and the corporate ordinance has expired. The lack of policy is also a blessing in disguise.

It provides an opportunity to Pakistan to devise policy by applying sustainable development and climate-smart agriculture principles. Moreover, the government will have to include clauses in policy which strictly prohibit the use of genetically-modified and terminator seeds.

If Pakistan considers genetically-modified seeds are required to give a boost to the sector, it has to come up with measures to protect local varieties from cross-pollination and their long-term impacts on humans.

For the implementation of growth policy, Pakistan should work on trilateral cooperation formula. It can engage Middle Eastern (Saudi Arabia, Qatar, Kuwait and UAE), and China for trilateral cooperation. It would be an ideal formula. Pakistan has huge culturable wasteland. Middle Eastern countries have financial resources; China has modern technologies and inputs, and knows the modern practices very well.

On the development side, Pakistan needs to be very careful and should work diligently, as corporate farming can be counterproductive. The government will have to devise tools which can satisfy the needs of small farmers. It is important because they constitute the biggest portion of the farming community.

According to data, about 89-90 percent of farms hold less than 12.5 acres of land. Further segregation of data shows 1.25 million farms have less than 1 acre and 2.3 million have less than 2.5 acres. Most importantly, poverty is also higher among small farmers.

It is suggested the government should subsidise small farmers at two levels – production and procurement. The subsidies should be limited for small farmers with landholding up to 12.5 acres, in different slabs.

For example, farmers with less than 1 acre should be provided free-of-cost essential inputs, and farmers with 2.5 acres should be given inputs at half price.

Similarly, farmers with less than 7.5 acres should be given a subsidy of 30 percent and farmers up to 12.5 acres a subsidy of 20 percent. Farmers with 25-50 acres should be only entitled to a 10 percent subsidy. There must be an end to blanket subsidies.

On the pricing side, the government will have to divide producers into four categories. For example, in the case of wheat, the producer categories would be like 1) farmers with sellable wheat up to 15 maunds, 2) 30 maunds, 3) 50 maunds, and 4) above 50 maunds.

The government should buy wheat at the price of 6,000/40kg from group-1, 4,500/40kg from group-2, 4,000/40 kg, and at market price from group-4. A similar formula can be applied on the consumption side.

The government should also divide the consumers into four groups, 1) people connected with BISP, 2) people with a monthly income of Rs50,000, 3) 100,000, and 4) people with monthly income above Rs100,000.

The wheat distribution should be 1200/40kg, 1800/40kg, 2200/40kg, and wheat at market price, among groups respectively. This strategy will not only assist farmers, but also shield the urban poor. The same formula can be devised for other commodities like grams, onion, garlic, meat etc.

In conclusion, a balanced approach will help tackle the issues of growth and development simultaneously.

A growth-oriented policy can create resistance among small farmers. This (corporate farming) cannot tackle the issues of small farmers, particularly of poverty.

Hence, pro-small farmer policy is a must. It will help attract public support.