NationalVolume 14 Issue # 10

A boost to the farm sector

According to a report, the Ministry of National Food Security has formulated a Rs 82 billion plan for the agriculture sector aimed at enhancing crop yields, improving water efficiency, livestock and fisheries development, and creation of agro-markets with the objective of uplifting small farmers and reducing rural poverty. Giving the salient features of the plan, Mehboob Sultan, the Minister for NFS, stated that the specified goals were achievable and the plan will be implemented within two to three years. In the area of crop yield, an investment of Rs 4 billion will be made for promoting mechanisation and a 50 percent subsidy will be given to small farmers on the purchase of crops-specific machinery; development of high yielding varieties and improved provision of certified seeds. An amount of Rs 4 billion was sanctioned for the Pakistan Agriculture Research Council (PARC) to produce better seeds for farmers. Rs 8.6 billion has been allocated for the development of fisheries sector to promote shrimp farming, cage fish culture, and trout farming in the northern areas.

Water efficiency will be improved under the Rs 68.60 billion National Programme for Improvement of Water Courses by water course lining, enhancing command area of small and mini-dams in barani areas and water conservation in barani areas in KP. Laser-levelling will be provided to small farms on subsidised rates and the government will arrange 12,000 new lasers over the next two to three years. A livestock initiative project will be launched for Buffalo Calf Fattening Programme, Backyard Poultry Programme and Small and Medium Dairy Farms. A Foot and Mouth Disease Project will be launched with the help of the UN’s Food and Agriculture Organization (FAO) at a cost of Rs 763 million. The government will also develop six markets in collaboration with the private sector to facilitate consumers in purchasing produce. A state-of-the-art market is being developed in Lahore that will be replicated in five other locations.

The Rs 82 billion plan for the agriculture sector appears to be very ambitious, particularly when it has to be implemented within a short period of two to three years, but seems necessary in view of the fact that other countries in the region and elsewhere have increased their agricultural productivity immensely while we have not been able to make much progress in the area despite comparable quality of land and the hard work our farmers have been doing. Besides, it needs to be highlighted that the agriculture sector in Pakistan plays a crucial role in the economy as it contributes about 19 percent to GDP and absorbs 42.3 percent of the labour force. It is also an important source of foreign exchange earnings and stimulates growth in other sectors like manufacturing and services. It may also be recognised that it is not the first time that the government is focusing on supporting small and marginalised farmers and promoting innovative technologies in this sector.

Past governments, realizing the importance of the agriculture sector, had also tried to develop this sector by initiating a number of measures like crop diversification, promotion of mechanisation and high value crops, reduction in mark-up rates, enhancement in agriculture credit, subsidised fertilizer prices and cheap electricity for agri-tube wells. As a result, this sector’s performance has witnessed a moderate growth over the years but not to the extent as desired by the government or as per the requirement of the economy. One of the prime reasons for the slow growth in the agriculture sector, despite a number of initiatives, could be the reluctance of small farmers to adopt new technologies. However, there is some difference between the present and previous approaches to agriculture boost. The new measures have been taken on the recommendations made to the prime minister by MNFS. The ministry has promised to make all- out efforts in this regard and international experts will be engaged to set up new facilities and upgrade existing research institutes while extension services at all levels will be provided to gain better production with less input. While these are good steps, it will need to be ensured that the funds earmarked for the purpose are optimally utilized and richer farmers with big land holdings are not allowed to pre-empt the resources meant for small farmers and reduction of poverty. The net result of these measures could, however, be assessed after a period of three years.

 Lately, the government has also been giving special attention to the farmers’ credit needs. According to State Bank data, there has been good growth in agricultural loans recently. The banks have achieved the overall annual target of Rs 1 trillion. With fresh disbursement, the outstanding portfolio of agri-loans also increased to Rs 444.465 billion by the end of January 2018 compared to Rs 367.547 billion at the end of January 2017. Experts say that affordable bank credit along with better availability of basic inputs such as fertilizer, seeds, pesticides and government support prices would provide the needed support to the agricultural sector. The SBP has already adopted a long-term strategy to disburse maximum amount under agri-credit to facilitate farmers, while banks are also making all-out efforts to meet their targets following the SBP’s guidelines.

The SBP is closely monitoring the banks’ performance, besides follow-up of indicative targets with the top management of banks and their agricultural heads to achieve a Rs 1 trillion target. A detailed analysis shows that in addition to traditional formal channels, disbursements through microfinance banks and institutions are also picking up pace. Five large banks collectively disbursed agri-loans of Rs 255.209 billion or 49 percent of their annual target in July-January of FY18. The disbursed amount is some 44 percent higher than Rs 177.711 billion disbursement made during the corresponding period the year before. Under specialized banks, ZTBL disbursed Rs 42.569 billion (34 percent of its annual target) and PPCBL achieved 37 percent of its target by disbursing Rs 5.616 billion during the period under review.

Fourteen domestic private banks as a group achieved 50 percent of the target and disbursed some Rs 100.27 billion. Five Islamic banks as a group disbursed agri-loans of Rs 8.745 billion or 43.73 percent of their annual target of Rs 20 billion, while 11 microfinance banks disbursed Rs 71.08 billion and achieved 71 percent of annual target of Rs 100 billion. Microfinance institutions achieved 64 percent of the target with a Rs 16 billion agri-credit disbursement.