The idea of drafting the five-year agricultural policy is commendable. Due to be formally announced later this month, the policy would hopefully benefit some 70 million of population linked with farming industry and may help many lift themselves above the poverty line.
But a word of caution here perhaps won't be playing devil's advocate - not at least considering the series of ineffective policy frameworks Pakistan has seen. While, in theory the policies have been visionary, in practice they have had little or even negative impact on the welfare of the farmers.
Measured by the Nominal Rate of Assistance (NRA) -- which is defined as the percentage by which government policies raise gross returns to farmers above what they would be without the government's intervention -- government policies have been rather unsuccessful in yielding adequate results for most part of the country's history.
In fact, when it comes to tradable parts of agriculture and non-agriculture sectors, government assistance have been more effective in case of latter than of the former, according to a recent study by Asian Development Bank.
One major problem is that policy objectives are generally outlined rather broadly. The key elements include: obtaining a high agriculture growth rate (in excess of population growth), increasing productivity, pursuing an export-oriented strategy, promoting institutional development, and focusing on small farmers.
While these broad objectives may be worthwhile on paper, many, according to a World Bank study, lead to conflicting policies. For example, maintaining a low flour price is a policy that the government pursues to ensure food security, while at the same time the government wants to promote domestic wheat production -- leaving them with a difficult balancing act, often burdened by high subsidies.
Although, subsidising wheat has been a successful experiment so far, the government must ensure that such subsidies are channelled to the right people, as a bulk of the amount has historically gone to unintended recipients. "Anecdotal evidence from the field suggests that procurement agents exploit farmers by absorbing most of the difference between the market price and support price when support price regime is in effect -- thus intermediaries and not farmers absorb the rents in the system", noted an earlier World Bank working paper.
Lastly, there is a need to increase the outreach of farming loans. The central bank's recent drive to expand the scope of agri-financing to undeserved areas of the country is notable, but the central bank can't manage agriculture alone. A broader policy action on part of the government needs to be taken pronto. Such a measure should ensure that agri-loans aren't just used for working capital requirements, as is the case mostly, but also on investment and research.
And while bringing land reforms may be a politically sensitive long-term project requiring careful consideration, at least some seeds should be sown to ensure that land is operated and managed by the most efficient user.
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