The country's agriculture sector crisis is to deepen with coronavirus pandemic as the global economy is slowing down.
Pakistan, which is now entering into the fourth week since the first reported COVID-19 case, would not be insulated from the developments. In particular, the agriculture sector which contributes 20 percent to the GDP is expected to witness an unprecedented decline.
The crisis faced by Pakistan's agricultural sector is set to worsen as the coronavirus (COVID-19) pandemic will have severe repercussions for the market dynamics of agricultural inputs, availability of rural labour force and smooth supply chain of vegetables and fruits to the market.
In the wake of COVID-19, the government has time and again emphasized the need to ensure food security. While the government is taking measures to avoid any disruption in the supply of daily essentials and food items, a deep dive into historical data shows that a decline in the country's agricultural output is inevitable.
Two events that replicate the effect of a calamity and disastrous situation similar to COVID-19 are the tragic earthquake in 2005 and the floods in 2010. Both the events depicted a rather similar story pertaining to the downtrend in agricultural sector.
Between 2005 and 2007, the urea off take fell by 6 percent from 5.18 million tons to 4.91 million tons, on the back of poor agri sector performance. According to a joint report by the Asian Development Bank and World Bank, the agriculture and livestock sectors had suffered sizeable damage due to the earthquake, totalling Rs 19.9 billion (US$335 million), and Rs 12.9 billion (US$218 million), respectively.
Similarly, the urea off take fell by 3 percent to 5.9 million tons in 2011 as the agri sector underperformed the overall economy after the massive floods. According to FAO, the agriculture sector was hit the hardest by 2010 floods with the loss of 2.4 million hectares of un-harvested Kharif crops, and damages estimated at USD 5.1 billion. Agriculture was also the basic livelihood for 80 percent of the affected population.
Based on the historical trends, it is estimated that the urea industry, which has averaged 5.8 million tons over the past five years, will now record a significant reduction. The demand is expected to stand at an estimated 5.4 million tons for the current year if the trend is to be followed.
However, as the COVID-19 pandemic is the first of its kind with no geographical boundaries, the impact is expected to be much higher and could curtail the demand to even 5.2 million tons. This would additionally imply that the country would not only be self-sufficient in urea supply but also be able to generate safety stocks, required to support the revival of agri-sector next year.
The agriculture sector will face another setback from the slowdown in exports of Pakistan's textile sector. The local and international demand of cotton is set to weaken, which in turn will also have negative repercussions for changes in crop patterns.
Further, a recent study by the Pakistan Institute of Development Economics (PIDE) reflects that 12.82 million jobs are vulnerable in the agriculture sector alone due to the impending slowdown in economy. If the lockdown situation continues in the coming months and the death toll from COVID-19 surges, the average monthly wage loss for agriculture sector will also exceed Rs 85 billion.
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