Ch#5

Agriculture: Critical Issues

Instructor: Adnan Ahmad

Major Trends
• Five subsectors;
Share in Agriculture as percentage of GDP
1980/81 2003/04

Major Crops 51.87 40.64 Largest share as % of GDP but dropped

significantly
Minor crops 17.22 15.90

Live stock 26.36 38.85

Fisheries 3.53 3.48

Forestry 1.02 1.13

• Major crops are wheat, sugarcane, cotton, and rice, which together
account for more than 75% of the value of total crop output.
• Minor crops are typically high-value crops such as fruits, vegetables,
tree nuts, nursery plants and ornamental crops.
• Livestock is domesticated animals raised in an agricultural setting to
produce labor and commodities such as meat, eggs, milk, fur, leather,
and wool.
• Fisheries is raising or harvesting fish and other aquatic life.
Commercial fisheries include wild fisheries and fish farms, both in
fresh water and the oceans.
• Forestry is the production, distribution, and consumption
of forest products and services.
Seasonal Division of Agriculture
1. Rabi; sown in winter and harvested in the summer e.g. wheat,
tobacco etc.
2. Kharif; mainly harvested in summer or the monsoon season e.g.
rice, cotton etc.
• Kharif crops are more exportable comparatively due to cotton and
rice
• Kharif is monsoon crop and so more affected by floods
• Due to floods the Kharif’s exports and supply to industry is not stable
Food Crops vs Cash Crops
1. Food Crops are mainly to feed the farmers’ families
e.g. wheat, rice, maize etc.

2. Cash Crops are grown to earn money

e.g. cotton, sugar cane, tobacco etc.
Land Utilization 1947-2003
Year Reported Not Total Area Area Sown Total
Area Available Cultivated more than Cropped
for once Area
Cultivation
1947 46.7 20.82 14.69 0.95 11.63
1960-1965 50.52 18.94 17.78 1.68 15.08

1965-1970 52.98 19.08 19.19 1.99 16.28

1970-1975 53.53 20.50 19.21 2.54 17.04
1975-1980 54.27 20.62 19.84 3.30 18.44
1980-1985 56.29 21.29 20.32 4.09 19.68
1985-1990 57.87 23.97 20.78 4.79 20.49
1990-1995 58.04 24.49 21.17 5.70 21.86
1995-2000 59.12 24.51 21.90 6.37 22.83
2002/03 59.45 24.36 22.13 6.71 22.15
• Total geographic area of Pakistan is 79.61 million hectare
• Reported area in 2002/03 was 75% of the total area
• Non-reported area was 25%, due to unsettled lands
• Not all of the reported area is cultivable
• In 2002/03, 42% of the reported area was not cultivable
• In 1948, 48% area was not cultivable
• In 1980/81, 37% was not cultivable
• From 1990, uncultivable area increased
Reasons for up/down in uncultivable area
• Decrease in uncultivable area:
Commercialization of Agriculture due to Green revolution
decreased the amount of uncultivable area
• Increase in uncultivable area:
Urbanization;
Water logging and salinity
Land Utilization (% of reported area)
Total Area Cultivable Forest Area Not Available
Cultivated Waste for Cultivation

1959/60 34% 21% 3% 42%

2002/03 37% 15% 6% 42%

Index of Agriculture Production
Year All Crops Food Crops Fiber Crops Other Crops
1959/60 100 100 100 100
1969/70 186 177 185 214
1979/80 239 245 250 210
1985/86 298 290 418 212
Area Under Major Crops (000 hectares)
year wheat rice Sugar cane cotton Percentage
of total
cropped
area
1950-1955 4,154.0 947.0 245.6 1,275.8
1965-1970 5,591.8 1,426.6 559.0 1,635.6 56.58
1975-1980 6,272.0 1,797.6 747.0 1,916.4 58.20
1985-1990 7,418.2 1,986.6 833.0 2,459.6 62.26
1995-2000 8,306.6 2,333.8 1,029.8 3,002.4 66.21
2002/03 8,069.0 2,226.0 1,086.0 2,796.0 64.51
Production of major crops (000 tones)
Year Wheat Rice Sugar cane Cotton (000
bales)
1950-1955 3,235.8 837.2 7,192.6
1965-1970 5,175.6 1,512.6 20,718.0 2,625.0
1980-1985 11,330.6 3,292.8 32,651.6 4,926.6
1990-1995 15,724.0 3,412.0 40,901.6 9,648.4
2002/03 19,235.0 4,478.0 52,049.0 10,211.0

• Total production increased but the rate of change shows that the growth
rate has fallen
• In short amount of time there is volatile growth rate
Area Irrigated (million hectares)
Year Canal Tubewells Others Total
1950-1955 7.77 0.03 1.81 9.42
1965-1970 8.92 1.02 2.31 12.25
1975-1980 10.29 2.82 1.08 14.18
1985-1990 11.48 3.88 0.82 16.18
2001/02 14.05 3.48 0.51 18.04
Per capita availability of main food
Year Wheat Rice Meat Milk
1986 112.11 20.22 12.15 56.86
1990 115.18 16.36 13.90 60.93
1994 122.46 10.55 16.51 66.07
1999 131.45 20.78 14.23 82.40
2001 118.51 13.97 14.47 83.14
Agricultural Pricing Policy
1. Govt fixed retail consumer prices of food grains at low levels
2. Heavy export duties levied on cotton; reduced the domestic prices
3. To minimize subsidies to comsumers, govt fixed the lower prices of wheat
and rice. Producers sold production on lower prices for cash
4. Inter-district and inter-province restrictions of movement imposed
5. Prices of vegetable ghee were controlled at low level
6. The overvalued fixed exchanged rate increased the agricultural exports but
due to export duty the benefit was transferred to industrial sector
7. No systematic attempt for the development of Agriculture
8. International trade was made by giving agricultural products to get
industrial machinery and inputs
9. Govt supported the import of Agricultural products
Rural Financial Markets and Agricultural
Credits
• A 1972/73 survey shows that 90% of the credit to agriculture is from
informal sources
• A 1985 survey shows 68% of the credit is from informal sources
• A study (1985) shows that 85% of the small farmers and 40% of the
large farmers get credit for agriculture from informal sources
• Over 30% of the loans distributed through formal sources are either
proxy loans or roll over funds
Rural Financial Markets and Agricultural
Credits
• World bank (1995)
1. Credit plays an important role in agricultural productivity
2. Rural credit reaches few rural households, and institutional sources
provide credit to only a small proportion of rural households
3. Only 32% of rural households take loans, of these merely 10% take
loan from institutional sources
4. The main sources of institutional credits are; ZTBL 76%,
Commercial banks 17% and co-operative societies 6%
5. 90% of the households take loans from informal sources
Rural Financial Markets and Agricultural
Credits
6. Both these sources of credit tend to be short term
7. 94% of institutional loan is meant for production
8. 47% of the non-institutional loan is for consumption
9. Rich households in rural areas have better and cheaper access to institutional
credit
10. Poor households depend upon expensive non-institutional loans
11. To poor households, institutional credit is more complex while non-
institutional loans are easier
12. 76% of the institutional credit was against the security of landed property
while 21% against personal surety
13. 96% of the informal credit was against personal surety
Mechanization
Use of mechanical technology in agriculture, mainly tractors
Impact on output
Impact on employment
Nature of social relations of production
Mechanization
• At start mechanization was slow due to govt restrictions
• Govt argued, it would displace labour and cause unemployment
• International agencies also recommended that small farmers should
not purchase tractor
But the concern was misguided, because
• Mechanization increased farm income
• Labour productivity increased
• Positive impact on employment
Mechanization
Number of private tractors in Pakistan (2001/02)
Pakistan 251,812

Punjab 210,019

Sindh 23,041

KP 14,421

Balochistan 4,331
Mechanization
A study suggests;
• Tractors were used mainly for land preparation
• Income of farmers is not significantly different between tractor and
non-tractor farms
• The average yield levels of major crops are not different on tractor
and non- tractor farm
• Cropping intensity is significantly higher on tractor farms
• Labour productivity is higher on tractor farms
• Considerable displacement of animal labour by tractors
• The use of tractors did not decrease the level of employment
Mechanization
Tractors Tubewell/Pump

Farm Size All Farms Owned Rented Owned Rented

(acres)
All sizes 4,379 285 3,288 479 1,421
Under 5 2,097 31 1,617 113 745
5-12.5 1,521 82 1,151 181 485
12.5-25 553 77 375 101 144
25-50 198 57 112 54 38
50-150 69 31 30 25 9
150 above 11 7 3 5 1
Agricultural Tax
• Taxation is economic issue
• Govt is concerned about revenue collection and budget deficit
• Taxation is also a political issue
• Agriculture is a volatile sector due to seasonal risks
• High dependency on natural factors creates uncertainty
• Majority of the households associated with agriculture is poor
• Agricultural sector is bearing the indirect taxes
• Should agricultural income be taxed?
Agricultural Tax
• Some of the land owners escaped the land reforms
• Bigger landowners are enjoying better income
• Many agriculturists have established orchards, fruit gardens, vegetables,
horticulture etc. which yield higher incomes
• Due to green revolution and mechanized farming, the agricultural
productivity increased and is profitable
• High income agriculturists are residing in urban areas and investing in real
estate
• Those agriculturists are not paying taxes, it is not acceptable for
industrialists and others
The Water Crisis
• 81% of the cropped area is irrigated through canals and tubewells
• In 1960s, water developing water resources was a major focus of
public investment
• The increased availability of water was a key factor led to green
revolution
• The increased number of canals and tubewells increased the level of
agricultural productivity
• But Pakistan is facing the emerging water crisis from the past few
decades
The Water Crisis
• Poor maintenance of canals reduced the capacity of carrying water
• The water efficiency from canal head to crop farm was 35%-40%
(world bank 1994)
• Water is being lost due to canal seepage, spillage, breaches, and
watercourse losses
The Water Crisis
Five major issues:
• No capacity to store flood water
• Water wastage due to salinity and water logging
• Limited drainage system for excess water to drain out
• Large landowners are powerful and take extra share of water while
small farmers get limited water
• Insufficient maintenance of canal system
Land Ownership, Power and Land Reforms
• Pakistan is not a feudal economic structure but still reforms are
needed
• Land and agrarian reforms are dependent upon the size of land
holdings
• The land and agrarian reforms must go on regardless of the mode of
production
• The rural elite has greater influence on social, political and
administrative structure
Land Ownership, Power and Land Reforms
• Most of the poor people are living in rural areas having no access to
bureaucracy, local, provincial or central govt.
• Land owners have greater access comparatively
• 75% of loans from ZTBL towards farmers with holdings of more than 5
acers
• Small farmers could not get loans and could not mechanize their
farming
• Subsidy transferred to small number of large land landowners
• Loans were given to large landowners to minimize risk of repayment
Thank you