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The sectoral share of agriculture sector in GDP has consistently been falling since independence. From over half of GDP in early fifties, sector’s share has averaged at a little under one-fifth (with a downward trend) during last five years.

For developing countries, this is usually a positive sign as greater share of population shift towards manufacturing and services sectors which have higher returns to scale. Except, in Pakistan this shift has been unaccompanied by a decline of rural share in labour force, which has averaged close to 40 percent of total for nearly two decades.

Recall that that decade-wise average growth rate of agriculture sector has been falling sharply since early 80s, when the sectoral GDP growth rate averaged over 5.4 percent, to just 2.2 percent for decade ending FY19 (For more, read: “Facts, fiction, and poor press management”, published on June 11, 2019).

Combined with a population growth rate of over two percent, the obvious implication is that the per capita income of the rural demographic segment may soon begin to fall in real terms unless the slowdown in agriculture growth rate is quickly arrested.

But what is the driving force behind slowdown in agriculture? While the livestock sector contributes up to three-fifths of agricultural GDP, given the doubts raised on the reliability of these estimates, this column will restrict its review to farming sector (For more, read: “Falling livestock GDP”, published on June 17, 2019).

Four out of five major crops - which include cereal grains (wheat, rice, and maize) and sugarcane - have witnessed slow but positive change in productivity (or yield) over past thirty years. Yet, together these account for no more than half of net sown area. The largest contributor to the other half is cotton - once Pakistan’s largest kharif crop – which has recorded a sharp decline in both yield and acreage over past decade.

To fully appreciate cotton’s contribution to farming GDP, it is important to understand why, at 5.4 percent, 1980s saw the best growth spurt in sector’s history. Consider that for cereal grains such as wheat and maize, yield improvement during that decade was under 1 percent, and negative for rice. Yield improvement for sugarcane was just as abysmal, at close to half percent. In contrast, cotton’s productivity during the same period rose by the highest magnitude of 1.15 percent, which by decade-end had resulted in addition over half a million to cotton acres, a growth over 25 percent in acreage.

The great leap forward in cotton acreage during the period accounted for more than two-thirds of increase in net sown area. Wheat acreage also followed suit, as it is the primary off-season/rabi crop in cotton sowing areas.

Factors that drove farming productivity and acreage during this period include rise in irrigated area; greater mechanization; and completion of large dams. However, if these factors alone were responsible for cotton’s improved acreage, why did acreage for other kharif crops such as rice and sugarcane not grow by a similar margin?

The answer is introduction of high-yielding seed varieties for cotton first introduced during 1980s, which made cotton farmer’s preferred crop during kharif season for the better part of next 30 years. The country touched a peak of 16.5 million hectares of net sowing area by end of millennium, which coincided with a peak in area under cotton at 3.2 million hectares. Both have fallen sharply since: while net sown area has declined by 1.1 million hectares by FY19(E), cotton acreage has plummeted by 0.8 million hectares.

The last two decades have seen cotton’s most tumultuous years: introduction (albeit illegal) of Bt. cotton during mid-2000s led to promising rise in productivity, before reaching an inflection point when subsequent crop failures occurred as pests gained resistance against Bt. variety due to lack of stewardship.

The long spell of poor cotton productivity during last ten years has thus pushed brakes on farming GDP growth. While competing crops such as maize and sugarcane have noted impressive jumps in productivity during this period, higher yield can push acreage only so far in absence of concurrent rise in domestic consumption or demand by export-led sectors.

Pakistan’s farming sector policymakers thus face a duality of choice: either invest in improving cotton productivity or increase demand for competing crops by incentivizing commercial consumption. While the former may seem to be the obvious choice given cotton’s crucial role in textile value chain, the absence of cotton from Agricultural Emergency document points which way the tailwinds are blowing. (For more, read “Whither cotton emergency?” published in this section on June 26, 2019).

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