A report appearing in this paper the other day quotes a research study that makes the disquieting disclosure that the incidence of rural poverty is the highest in the cotton and wheat growing areas of Punjab as well as Sindh. In the poorest zones, people rely mainly on crop incomes, which account for 67.3 percent and 64.26 percent of the total income in the cotton/wheat growing districts of Sindh and Punjab, respectively.
Most of these people grow only food crops while the big landowners diversify their cultivation activities to include the production of cash crops. Resultantly, income inequalities and poverty keep on increasing, casting a negative impact on the agricultural sector's overall performance.
The study lists a number of factors that are responsible for the pervasive rural poverty, such as rising population pressures, a low agricultural growth rate since the 90s, skewed land distribution, etc. It also points out that the small farmers have to deal with highly variable crop incomes, especially in the case of cotton. And it takes a farmer several years to recover from an income shock. The problem, though, is not only variable crop incomes, which may be caused by natural calamities, like droughts or untimely rains.
What keeps the small growers at a constant disadvantage is the fact that, unlike the big landowners, they do not get the prices for their produce that are their due. Also, even though they may be entitled, in theory at least, to acquire loans from the Zarai Taraqiyati Bank (agricultural development bank) not many get to benefit from this facility.
As a matter of fact, the list of agricultural loan defaulters that came to light not too long ago included many prominent names from our landed aristocracy even though this bank is supposed to help only small and medium level farmers. Provincial co-operative banks are there too; they have provided some useful service to small farmers, but it remains a lot less than necessary.
For all major crops, the government offers support prices with a view to encouraging the cultivation of these crops to meet the national needs, and in the case of cotton, also to provide a sustained flow of the raw material to the textile industry, which is the main source of our foreign exchange earnings.
Those whose sole source of income is their standing crops - as noted earlier, 67.3 percent in cotton/wheat growing areas of Sindh and 64.26 percent in Punjab - obviously are the ones who are supposed to benefit most from the support price. But that is not how things work out in actual practice.
The increasing costs of agricultural inputs, food staples and other necessities of life make it difficult for this class of growers to wait for economic returns on their crops till the harvesting/marketing time. Hard pressed for cash, they turn to commodity traders to take advance money against their standing crops.
These middlemen exploit such opportunities and offer minimum prices. So, by the time the crops are ready for sale at the support price, there is not much left in the hands of the small growers to sell.
This cycle is repeated over and over again, perpetuating rural poverty as well as economic and social inequalities.
It is plain that, as the study recommends, the government has to undertake a multifaceted plan towards agricultural reforms such as redistribution of land, crop diversification, modernisation of the irrigation system, capacity building of farmers, new research and extension programmes. But it is also clear that rural poverty will not subside unless and until the government pays special attention to need of improving the condition of the small farmers.
Towards that end, it must ensure that these people have easy access to loans to cope with urgent needs: to recover from the after-effects of a bad crop or to tide over problems which push them into taking advance from exploitative middlemen.