Why Is Pakistan’s Agrarian Portfolio In A State Of Stagnation?

Why Is Pakistan’s Agrarian Portfolio In A State Of Stagnation?
The global economy is reeling from an unprecedented food crisis that has been exacerbated by the pressures of the Russia-Ukraine War, the global climate crisis, and the impacts of Covid-19 on trade.

Russia and Ukraine produce around 30 percent of the world’s wheat supply, and the conflict in the region has greatly damaged Pakistan’s ability to source cereals from the area. While these global pressures have indeed had an adverse impact on Pakistan’s food supply, our own food crisis has been brewing for decades. Factors such as low-yields, inefficient water supply networks and a nonchalant attitude towards climate change have been reducing the competitiveness of Pakistan’s agrarian sector for decades. To add to this, nonsensical subsidies, a lack of focus on farmer education and technological innovation have contributed to creating an agrarian sector that is unsustainable.

According to the most recent edition of the Pakistan Economic Survey, agriculture contributes to 22.7 percent of our GDP and employs around 37.4 percent of our labour force. Considering the broader economic crisis that plagues our nation, the agrarian sector has to play a huge role in resuscitating our economic future. However, this sector is trapped in a state of malaise. A lack of emphasis on encouraging exports and finding new markets has led to the decline of this sector. Moreover, while other states in the region continue to improve their yields and focus on developing climate-resistant crop variants, Pakistan’s agrarian portfolio is in a state of stagnation.

Given the impacts of the rise in fuel prices and unreliable shipping networks on the global food supply, regional trade and cooperation is the obvious road that must be taken. However, this is easier said than done. In order to gain the most out of agricultural trade from our neighbours, it is necessary to reconsider the structure of our agrarian setup. If we are to consider enhancing our agricultural trade with India, then another barrier to consider is the presence of large subsidies in the Indian market that make their produce much cheaper than our crops. In fact, opponents of enhancing agrarian trade with India, which mainly includes large cultivators, have used the existence of such subsidies as an excuse to lobby against greater connectivity.

At the same time, these large cultivators in Pakistan enjoy a wide range of subsidies on crops such as wheat and rice, while adding limited value to the market. In fact, yields for these crops remain extremely low compared to the global average. The government continues to buy wheat at prices higher than the market-rate and sells it to flour mills at subsidized rates. While liberalising inefficacious sectors such as these is necessary, it will also be prudent if the government incentivises the production of those crops in which we hold a comparative advantage and export them regionally.

In the case of rice, it is clear that our current models of production are unsustainable. Due to the use of outdated growing techniques, a lack of awareness and governmental mismanagement, Pakistan is laying an undue emphasis on the growth of a crop that is depleting our water resources. Aside from focusing on providing better technology to farmers, the state should prioritise the growth of high-quality export-grade Basmati Rice and import lower quality varieties of rice from countries such as Bangladesh and India.
If we are to consider enhancing our agricultural trade with India, then another barrier to consider is the presence of large subsidies in the Indian market that make their produce much cheaper than our crops.

Keeping the nature of our economic crisis in mind, Pakistan needs to reduce its dependency on costly dollar-based imports and strategically enhance its exports. There is a huge market for Pakistani edible fruits and nuts in India. Taking this into account, Pakistan should prioritise the production of high quality and desirable products such as citrus fruits. In the 2012-13 fiscal year fruits comprised 48.40 percent of our exports to India. At the same time, fruits imported from India represented only 2.30 percent of our imports sourced from our neighbouring country. Thus, the trade of such goods needs to be maximised.

Edible oils represent a large share of our agricultural import bill. In 2020, Pakistan imported USD 2.15 billion worth of palm oil. There are numerous ways in which this excessive cost can be reduced. Instead of buying refined palm oil, it would be more prudent to source crude palm oil as Pakistan does have the capacity to refine it locally. However, Pakistan should also pivot towards other sources of edible oils that can be produced locally. The growth of our olive oil industry over the last decade has been quite remarkable. However, this level of production is still nowhere close in meeting local demand for edible oils. The government needs to continue to provide incentives that induce growth in this sector, as well as encourage the production of other sources of edible oils such as sunflower and cottonseed.

Pivoting towards an enhanced degree of regional cooperation in the field of agriculture will also require Pakistan to clamp down on the gross mismanagement that plagues the agrarian sector. We need to reduce the overproduction of certain goods that do not pay us great dividends in the global market. Moreover, crops such as sugarcane are being prioritised at the expense of items such as cotton. The setting up of sugar mills in cotton-growing areas is decimating our local supply for cotton, and this in turn adversely impacts the textile industry. Currently, Pakistan has to import high quality cotton in order to fulfill foreign orders, as our current supply is not enough, and its quality is not up to the mark. On the other hand, sugar mill owners have an active incentive to influence the overproduction of sugarcane, as an overabundance of the product means that they will have to spend less on sourcing raw materials. Further, by encouraging the growth of sugarcane in areas close to the mills, owners can reduce their transport costs. However, the price of refined sugar does not go down proportionally and results in a high degree of profiteering.

Pakistan should prioritise the import of cheaper refined sugar, rather than taking on the burden of costly export subsidies and support prices that contribute to our burgeoning debt. At the same time, there needs to be a shift to the growth of high-quality organic cotton that reduces our dependency on chemicals and pesticides. The cultivation of organic cotton varieties also requires 62 percent less energy than the conventional crop. As a whole, the agrarian sector needs to pivot towards renewable sources of energy such as solar power. If the government incentivises these modes of energy then this will also reduce the burden of non-renewable fuel sources on our import bill.

The above highlighted proposals are examples of only a few ways in which we can use regional trade and efficacious policies to boost the fortunes of our ailing agrarian sector. However, Pakistan still needs to take actionable steps against the climate crisis, as the impact of changing weather patterns and poor water management will hinder our ability to resuscitate this lagging sector.
Our fixation with crops such as wheat is hindering the ability of our agrarian sector to pivot towards the changing realities induced by climate change and water scarcity.

Firstly, we need to adjust to certain realities that will take time to fix. For example, in areas where there is high soil salinity, we need to encourage the growth of crops that require saline conditions to grow, rather than cultivating low yields of rice year after year. Instead of giving subsidies to sugar mills, Pakistan should subsidise the growth of saline-resistant crops in these areas, while at the same time restrict these crops from being cultivated in other areas. As mentioned earlier, sunflower cultivation is a necessity in order to reduce our demand for imported edible oils and it happens to be one of the most salt tolerant crops.

Secondly, it is extremely worrying that for a country that has one of the largest contiguous irrigation systems in the world, we waste more than 60 percent of our supply due to the outdated nature of our conveyance system and poor application techniques. Certain steps such as the introduction of hydroponics, sustainable farming and updating our irrigation canals are the need of the hour. However, creating regional dependencies can incentivise the adoption of a cohesive approach to tackle this issue.

While the agrarian sectors of India and Bangladesh are much better off than us, they too are not immune from the pressures of the global food and climate crises. By focusing on regional agricultural trade and liberalising their respective sectors, these states can collaborate on a host of issues such as water management and technology transfers. India has managed to triple its cotton yield over the last two decades due to the adoption of hybrid seeds and more effective irrigation methods. Moreover, the creation of varied cultivation cycles can help meet regional demand for food products by utilizing the varied climates of South Asia.

The existence of mechanisms such as a regional food bank and collaborative policies regarding the climate crisis may seem like a distant dream. However, enhancing regional agricultural trade is the necessary precursor to move towards a scenario in which such cooperation may be possible. As a society, we need to shed the mindset of investing in crops that are less labour-intensive and require minimal inputs. Our fixation with crops such as wheat is hindering the ability of our agrarian sector to pivot towards the changing realities induced by climate change and water scarcity. Instead of focusing on ineffective subsidies for sectors that add little value to our economic outlook, the state should focus on using its finances to incentivise technological innovation that reduces our dependency on water and mechanises the cultivation process in order to boost yields. If we fail to move towards a more sustainable agrarian policy, then our inaction can lead to a great deal of social upheaval due to the dire state of our economy and food supply.

If cheaper imports are available in the region, then there is no need to continue to prop up unproductive sectors that will damage our economy in the long run. Instead, Pakistan should focus on enhancing the productivity of those items that are needed by regional stakeholders and can make inroads in new markets. For a country that claims to be an agrarian society, we are exporting an abysmal quantity of food items not only due to the existence of restrictive export regulation, but also due to our insistence on prioritising products that have multiple competitors in the global food market.