Reforming agricultural sector

Agriculture is the backbone of Pakistan's economy. Unfortunately, for long it has been neglected by successive governments. This could not build up the resilience needed in this sector, for sustainably ensuring food security, and establishing resilient, and in turn, reliable supply chains for transporting raw material to industry, and goods to market. The pandemic has only widened the fault lines of these weaknesses in the agricultural sector. The PM, recently, reportedly held a meeting for ensuring greater food security in these times of crisis. Although a welcome step, yet a comprehensive reform strategy for the uplift of this sector has long been overdue.

While it is important to look to China - as the PM points out and rightly so given the rapid progress made by them in this sector, among many others - for innovativeness and technological support, the underlying reform should be aimed at addressing fundamental institutional issues, and approaching the role of government in more non-neoliberal of being more active. Above all, the reform strategy should be intrinsically tailored to meet the indigenous political economic issues of this sector. Traditionally, markets left on their own in certain aspects, and half-hearted, inefficient intervention mechanisms of government in other areas of this sector, have all too often not allowed correct governance and incentive structures to come to the much needed assistance of this sector.

A national agricultural reform strategy with provincial contextualization is needed for both dealing with local issues, especially with regard to undoing cartels that create artificial and therefore wrong market signals, and for seamless inter-provincial supply chains. The Ministry of National Food Security and Research, along with provincial agricultural departments, should provide the institutional environment in the shape of laws, rules and procedures so that underlying organizations in the public and private sector, and the markets are provided with optimal governance and incentives; where incentives are seen in terms of both 'positive'- like well-targeted and broad-based subsidies, and ensuring proper price signals in both commodities and labour markets in the agricultural sector, and 'negative'-like meaningful progressive income taxation, and for checking environment-related externalities.

The pandemic has only exacerbated the need for such reform, not just in Pakistan, but mainly in other developing countries as well. In an article 'Building food security during the pandemic' published in Project Syndicate in June this year, Tony Blair and Agnes Kalibata pointed out: 'Protecting food supply chains is the key missing component of an effective COVID-19 strategy. Global partnerships - particularly among the private sector, governments, development banks, and farmers' organizations - must be established rapidly to prevent a catastrophic food crisis in developing countries.'

Hence, the reform strategy in Pakistan should also look to be inclusive in terms of all the relevant stakeholders. Having said that, a profound agricultural reform plan is needed to be formulated and aggressively administered, with government in the driving seat, since the pandemic has significantly increased vulnerability, income inequality, and poverty, especially rural economy, which has been traditionally lesser-hedged than urban economy for many reasons, including lack of meaningful regulation, agricultural financial innovation, competitive markets, and agricultural stock exchanges.

Relatively poor social indicators, greater issues in access to justice, and lack of media oversight have left the rural electorate more disenfranchised from the political process, and hence a weaker influence in policy formulation. On the other hand, strong welfare states like those in Scandinavia had strong agricultural influence, at the back of stronger unions of farmers, in their political processes, which ensured meaningful policy response to farmers. Such political pressure is quite missing in Pakistan, and needs to be built up by greater political activism from the rural chapters of political parties, or perhaps through political parties that have greater rural roots. The agricultural reform plan should look to include measures to improve social indicators, on both the economic and political sides, so that better rural participation is ensured going forward.

The importance of an effective agricultural reform plan, especially in the wake of the pandemic, and why this should at least now be among the top priorities of this government, could be gauged from an article 'Why sustainable food systems are needed in a post-Covid world' where it points out: 'Food systems are at the cross-roads of human, animal, economic and environmental health. Ignoring this exposes the world economy to ever-larger health and financial shocks as climate changes and global population grows. By prioritizing food system reforms in our "build forward" agendas, we can instead make concrete inroads toward the Sustainable Development Goals and the Paris Climate Agreement. Because as Winston Churchill once famously said: "Healthy citizens are the greatest asset any country can have."

(The writer holds PhD in Economics from the University of Barcelona; he previously worked at International Monetary Fund)

He tweets@omerjaved7

Copyright Business Recorder, 2020