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June 16, 2016

Sustaining agricultural growth


June 16, 2016

With the publication of the latest official data on Pakistan’s economy in the year 2015-16, a matter of serious concern for policymakers has arisen: the negative growth in agricultural output.

Despite the reduced share of agriculture in GDP over the years, agriculture continues to constitute the spine of Pakistan’s economic structure. Over 60 percent of Pakistan’s population is either directly or indirectly dependent on agriculture. It provides raw material for the country’s largest industry as well as its largest export: textiles. Agriculture-based products account for 76 percent of Pakistan’s exports. Thus, the performance of the agricultural sector not only affects the livelihoods of the majority of the population but also accounts for most of the export earnings.

Considerable concern is being shown in official circles about the negative growth during the financial year that just ended. But the real issue is the pattern of agriculture growth over the last fifteen years. The evidence shows an increase in both the amplitude as well as the frequency of fluctuations in agricultural output. This means that the frequency of bad harvests have not only increased but that bad harvests, when they occur, are much worse than before. This, given the important role of agriculture in the economy, is the key constraint to the stability and sustainability of overall economic growth.

It is also noteworthy that whenever a bad harvest occurs, small farmers suffer a deficit in their household food requirements and are obliged to borrow money to buy grain in the market. Consequently, they have inadequate resources to invest in seeds, water and fertiliser for reconstituting the production cycle the following year. Thus the increased fluctuations in agriculture output have created a structural tendency for the impoverishment of the peasantry.

Let us now consider the main causes of both the slowdown and the increased instability in agricultural growth. The single most important reason for increased fluctuations in agriculture output is global warming. This has increased the variability of the monsoons in terms of the timing, location and precipitation levels. Crop output in Pakistan, and indeed South Asia, critically depends on timely and adequate monsoon rains. Therefore increased variability in the monsoons is a key factor in the observed variability of agriculture output (Cf my recent interview in TNS).

A second constraint to agriculture growth is that global warming is reducing the river flows in South Asia. In Pakistan, the reduced water availability in the Indus basin is exacerbated by the fact that 63 percent of the water pulled out from the rivers is lost during transportation to the farm gate. A large proportion of the water entering the farms is wasted during transportation to the root zones of the crops due to inefficient on farm water management.

Thus, a sharp reduction in water availability is being experienced by the farmers. Accordingly, the farmers have become dependent on timely and adequate rainfall even in the irrigated areas. This is ironically occurring at a time when the variability of both has increased due to global warming.

A third cause of concern which has not yet been adequately considered by our policymakers is that, given the sensitivity to temperature increase of the seeds currently being used in Pakistan, higher average temperatures tend to reduce crop yields per acre – other things remaining the same. According to the landmark research embodied in the Nobel Prize winning Fourth Assessment Report of the UN Inter-governmental Panel for Climate Change (2003), the temperature effect alone of global warming on seeds is expected to reduce the grain crop yields per acre in South Asia by up to 30 percent in the decades ahead. The yield reduction effect of global warming is accentuated in Pakistan because the seeds being used have depleted potency: their average age is as high as 11 years, compared to the average for developing countries, of 5 years.

If such a yield decline does occur, Pakistan could be facing a serious food shortage in the years ahead. The national food deficit even with a 20 percent decline in grain crop yields per acre would be so large that our available foreign exchange resources would come under critical strain in the face of a sharp increase in the food import bill.

In the light of these sobering facts, the following initiatives are necessary. We need to substantially improve the delivery and application efficiencies of irrigation to reduce water wastage. Water storage needs to be increased through dams as well as by digging large ditches in the river beds to store water during the high flow season. Water must be used efficiently – that is, GDP generated per unit of water used. This requires shifting cropping patterns towards crops that are high value added and at the same time require less water per unit of output.

We need to also develop new heat-resistant varieties of food grains and replenish the potency of these seeds periodically. Storage losses of food grain can be reduced by storing grains in modern fibre glass food silos. Such silos can be set up in every tehsil to establish geographically proximate food stocks in preparation for major food shortages.

And, finally, institutional mechanisms should be set in place to deal with a situation where these food stocks at the tehsil level cannot be accessed by the poor population due to inadequate purchasing power. These procedures should include making food available – at no cost – from these stocks to the poor population in case of a food emergency.

These initiatives are vital for a strategy of stabilising, accelerating and sustaining agricultural growth while at the same time preparing contingency plans to face food shortages in the decade ahead.

The writer is a professor of economicsat the Forman Christian College University, Lahore.

Email: [email protected]


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