Productivity of the agricultural sector in Punjab is low in terms of efficiency of use of resources and inputs, and the rate of TFP growth at 1.5 percent has been lower than in other countries and regions experiencing rapid technological transformation, such as north-west India, China, and Brazil.
This was disclosed in an official survey report, which was prepared with the co-operation of Asian Development Bank, World Bank and DFID.
According to report, "Water has become the major limiting factor to further growth yet the productivity of water used in agriculture has declined in the past three decades", while land has been degraded by the use of poor quality water and continuous cereal mono-cropping.
Together, these factors have held back the growth of productivity-it is estimated that in the absence of resource degradation, productivity growth in the Punjab would have been 42 percent higher than the actual growth during 1970-1990s.
Agricultural exports have largely been provided by cotton and rice, and only recently has the Punjab begun to exploit the rapidly growing trade for high-value agricultural exports, despite a favourable ecology and geographic position.
Growing income inequality and stagnating poverty levels have accompanied low agricultural growth.
Part of the problem has been a high and growing concentration of land with 2.5 percent of large farmers (20 ha) owning one third of the land while small farmers with less than 2 ha own only 12 percent of the land although they account for half of the total farm population.
Because of its role in output, incomes, and employment, it is clear that agriculture will be a priority sector in any strategy that the Punjab adopts to accelerate economic growth and to reduce poverty. However, it is also clear that past approaches will not work for the future.
First, markets for agricultural products are rapidly changing. Not only does the sector need to respond to rapidly changing domestic markets with urbanisation and more affluent consumers, but also the Punjab with its irrigated agriculture, favourable climate and geographic position, has excellent prospects to expand exports into high value and value-added products. With self-sufficiency in wheat and sugar, the growth strategy must shift increasingly towards fruits and vegetables, value-added products, and livestock products, and to promoting the export orientation of these products.
Second, with ever more limited prospects for expanding land area and water supplies, growth strategies must increasingly rely on improved management and knowledge to increase the productivity of existing resources. Technological progress and institutional reform is central to better system-wide and location-specific management for enhanced input and resource use efficiency. Enhanced efficiency is also essential for improving Pakistan's competitive position in world markets as it adjusts to WTO rules.
Third, sustainable agricultural growth depends on improved management of land and water resources to reduce natural resource degradation. This will require political commitment at the highest level to mount a concerted effort across a wide range of government departments, as well as close co-ordination with federal agencies and local governments on a priority basis.
Finally, a major challenge is to ensure that the poor, both small farmers and the landless, participate in future growth. The move towards high-value products (which tend also to be more labour intensive) is one way of generating employment. Targeting public resources on poor regions, such as southern Punjab, and poorer farmers, can also help towards this end.
In terms of specific commodities, experts of ADB and World Bank mentioned following challenges being confronted Punjab.
-- Continue to ensure a moderate growth in wheat production, but recognise that under current yields and world prices it does not have a comparative advantage in wheat exports
-- Improve competitiveness of rice and cotton, especially in view of the aggressive efforts by other countries in these markets. This applies especially to India in Basmati rice, and to most major producers in cotton, that have sharply reduced their production costs by adopting BT cotton.
-- Judiciously seek opportunities in import substitution, especially oilseeds for more sustainable cropping systems, but only where they have a clear competitive advantage.
-- Diversify production toward higher value horticultural and livestock products to meet rapidly expanding domestic demand and generate employment, and
-- Exploit its excellent resource base and geographic advantage to tap into the rapidly expanding markets for high value products in Asia, the Middle East, and other high income countries.
They further said that the Punjab Government, especially the Department of Agriculture has already initiated many reforms to modernise public services to the future needs of the sector. The efforts to develop partnerships with the private sector in agricultural marketing and in promotion of conservation tillage, are especially commendable.
The Green Revolution strategy of input intensification in a few major crops, pursued since the 1960s has to a large extent been exhausted with limited prospects of increasing land area and water supplies, and rapidly diminishing returns, and in some cases serious environment and health implications to higher use of external inputs, especially pesticides, they concluded.
A prominent Agriculture Expert Sultan Ali Chaudhry, said that since partition, India and Pakistan had different psyche for development of Agriculture. The Prime Minister of India was conscious of the fact that India is deficit in food and in order to feed such a huge and galloping population, he declared agriculture as priority sector of the economy and hence larger funds were provided to agriculture, he added.
Sultan Ali Chaudhry said that the Indian Agriculture Industry is on the brink of a revolution that will modernise the entire food chain, as the total food production in India is likely to double in the next ten years. The agricultural food industry also assumes significance owing to India's sizeable agrarian economy, which accounts for over 35 percent of GDP and employs around 65 percent of the population.
Both in terms of foreign investment and number of joint ventures/foreign collaborations, the consumer food segment has the top priority. The other attractive features of the Indian agro Industry such as deep-sea fishing, aqua culture, milk and milk products, meat and poultry segments have the capacity to lure foreigners with promising benefits. On the other hand the psyche in Pakistan was different, he pointed out.
He said that we have already autarky in food and we have limited industry. High-level bureaucracy which took over charge of almost all the ministries in Pakistan has no knowledge of ground realities of agriculture prevailing in the country.
Such a very low yields of crops and 90 percent of farmers were poor and can not invest. In agriculture there was no credit facility for the farmers. They did not know that if agriculture is not developed, from where the industries will get the raw material, he added.
Sultan Ali Chaudhry said that it was not in their comprehension that they should establish industries like fertiliser, agriculture machinery, pesticides and seed, which will act as a vehicle for higher agriculture production. They paid attention only to consumer industries such as textile and sugar, no doubt, these industries were also needed to consume, agriculture production but such industries could be developed.
Sultan Ali Chaudhry mentioned that the Planning Commission of Pakistan allocated very meager funds to Agriculture. In the first five years plan from 1955 to 1960, only 9.46 percent funds were provided while agriculture was contributing 75 percent to GDP at that time. It is interesting to know that allocations in others plan period were also very low.