Pakistan's economy has undergone considerable diversification over the years, yet the agricultural is the largest sector of the economy. With its present contribution to GDP at 23.3% it accounts for 42.1% of the total employed labour force and is the largest source of foreign exchange earnings by serving as the base sector for the country's major industries like textile and sugar. What happens, therefore, to agriculture is bound to have a substantial impact on the growth of overall GDP.
For the agricultural products, Agreement on Agriculture (AoA) was integrated into the General Agreement on Tariffs and Trade (GATT) in 1994. From GATT in 1995 WTO came into being. The WTO is an international body dealing with trade rules. It aims at facilitating trade among countries by creating conditions of competition that are fair and equitable. Towards this end, it encourages countries to enter into negotiations for the reduction of tariffs and the removal of other barriers to trade. It requires them to apply a common set of rules to trade in goods and services.
WTO agreements spell out the principles of liberalisation, and the permitted exceptions.
The WTO agreements, by increasing competition and opening markets, change the conditions for doing business in all member countries.
It is difficult to make a precise estimate of the impact of the trade liberalisation achieved in WTO on Pakistan's economy. It is evident, however, that the lowering of tariffs and removal of non-tariffs barriers, not only in developed but also in developing and transition countries have an important effect on the access to international markets.
THE LOOPHOLES IN EXISTING SETUP:
Pakistan is a developing country; hence farmers are not fully aware of the advancements taking place in the world. They don't have knowledge about the rules and regulations of WTO. They should know how to compete in the world in the WTO regime. Keeping in view the lack of advanced technology, lack of infrastructure, and non availability of pre-requisites, the world scenario has created a competitive and compelling environment for Pakistan's agriculture sector, which has to be dealt with at utmost urgency.
Pakistan lacks research work hence farmers don't use proper varieties recommended for specific areas. Research laboratories are not available for testing the quality of seeds and other finished products.
Proper recommendation of fertilisers is not provided by the soil testing laboratories. Also there is no access of inputs (seed, fertiliser and pesticides) for small landholders and in our country 65% farms are less than 10 hectares.
Modern technology is required for enhancing the productivity of our agricultural products. Unfortunately, our farmers are not in a position to use modern technologies. They don't have any information about these technologies. They are usually working with old methods which can create a lot of problems for them.
Another major problem is the shortage of irrigation water, surface water at canal head is 96.41maf whereas at farm gate is 84.46maf and total water availability is 134.48maf. There is a net loss of 11.95 million acre-feet of water. Cultivable land is 24.32 million hectare out of 50.48 MH of total area whereas 4.04 under forest, 9.00MH is barren due to cultivable waste and 21.97MH total cropped area.
There are also problems related to soil and due to water logging (4858 ha area has less than 10 feet of water table) and salinity (3369.7ha uncultivated). There were schemes to install tube well to reclaim the soil but on marginal basis and only 8.01maf land is irrigated by SCARP tube well scheme.
If we probe deeply we will come to know about a big flaw in our marketing system due to the non-fixation of rates, presence of middleman, fluctuation of rates, lack of godowning capacity, insufficient cold storage system and the black marketing. These are the main problems, which increase post harvest losses and proper flow of produce from producer to the hands of consumers. The other misfortune is mismanagement and lack of planning. Our policies are not compatible with the field conditions. The channels from policy making to implementation do not function within time due to lack of accountability and a feedback system.
Due to the ignorance of farmers, there are huge pre and post harvest losses in Pakistan. Our farmers don't use recommended doses of irrigation, fertilisers, pesticides, and insecticides. Therefore, their yield and quality are not comparable to international standards.
A great risk for small landholders is of corporate farming, which will make them tenants from landowners. According to SPS agreements the seed should be hybrid and produced only by multinational companies. It has three adverse effects on the economy. First, the local input industry will be destroyed second, the hybrid seed of multinational companies will not be compatible with our local climatic conditions resulting in low yield, third, this seed will be more expensive and unapproachable for small land holders.
It is, therefore, necessary for our farmers to use ISO certified pesticides, insecticides and seeds. We are bound to using certified products for fulfilling the pre-requisites of international standards. But there is not enough infrastructure that can support the new demand. On the one hand we are facing supply side problems and farmers are not aware about these issues and are not ready to purchase certified seed yet.
Before the implementation of WTO, farmers could share the agricultural inputs between themselves, but now they are bound to use the inputs of Multinational Companies for ISO certified products. This will raise their cost of production as well. If our farmers use local products then, importing counties can prevent check our exports for health and hygienic conditions under the SPS measures.
Another aspect that needs our consideration is that other countries are using genetically modified products while we are still using indigenous methods. How can we compete with them as they are using the latest genetically modified products? Our farmer does not the resources to buy these genetically modified products over which the Multinational Companies have acquired complete control.
Unfortunately due to a lack of funds, the government is not in a position to provide all kinds of facilities to farmers. Farmers have not adequate storage, packing and distribution facilities.
Another misfortune is that the credit providing agencies give credit to their own contact persons and the poor farmer remains behind.
The cost of production and productivity are focal points in the WTO. Unfortunately, due to mismanagement, the cost of production of our products is very high as compared to our close competitors like India and China. The input per acre of different items is very high. India and China can dump their products in Pakistan due to their low cost of production.
The developed countries with their advanced methods of cultivation and crop yield can adversely influence crop export. The high cost of production is a negative factor as far as Pakistani farmers are concerned, there is a chance that foreign products will get a greater market share due to a low price of products.
POLICY OPTIONS:
As we know in the WTO scenario, the government cannot fix the support price as is happening at present. The government cannot protect the small farmers by providing awareness and access to modern infrastructure required to meet the conditions of the WTO. Awareness is the first thing as far as our farmers are concerned.
They don't know the requirements of the WTO. The government should make certain policies for the awareness of farmers. There should be Kissan boards at the village, tehsil and district level, which raise agriculture issues against the WTO.
They should know what are the different agreements related to agriculture. For this purpose the role of the extension worker should be reorganised. He should personally visit the farmers and tell them all the basics of the WTO. They should tell them various issues and finally advise them to overcome these issues.
The government should invest more on research activities. Our scientists must develop varieties which are resistant and which are also certified. Resistant varieties will increase our productivity; therefore, an emphasis should be more on proper research work. There is an urgent need for the establishment of standardised high-tech laboratories for testing the quality of inputs and outputs.
As we know other countries are producing genetically modified (GM) products. Scientists should develop GM products so that Pakistan can compete with other countries in this competitive world. More agriculture techniques should be developed at research stations to make cost effective the agricultural Production, like tunnel farming, to save the land and inputs.
Our Government should ensure that farmers get agricultural inputs at the appropriate time when they are required e.g. pesticides, insecticides and irrigation water. Farmers should know the standard level in the application of these inputs.
Standard and quality are the main things in this era of free trade. It is now necessary for our farmers to use ISO certified products for pesticides, insecticides and seeds.
Pakistan has an edge in exporting rice, cotton and fruits. Raw cotton is mainly directed to the Middle East. We can enhance our rice export capability by searching for new markets in Korea, Japan and Indonesia.
More dams should be built up and drought resistant varieties should be developed to combat the water shortage problem.
Finally, we should reduce our cost of production, for we have cheap labour. We should trade in items having a comparative advantage. We need to effectively take care of the ever-increasing utility charges and surcharges, which are responsible for pushing our cost of production on the higher side and thus making our national products uncompetitive in the international markets. Only those products now will capture the markets whose quality is good and are available at the minimum price.