NationalVOLUME 17 ISSUE # 42

An economy without solid foundation

Pakistan’s economy has been nondescript for the last four decades, mainly because successive governments ignored the agriculture sector and attempted to adopt ‘so-called’ industrialisation during the period. The attempts not only failed to shift the economy to an industrial base but also destroyed the farm sector to a large extent.

The political leadership failed to appreciate and recognise the fact that around 64pc of the population of Pakistan lives in rural areas. The country’s economy was the 23rd largest in the world in 2018 in terms of nominal Gross Domestic Product (purchasing power parity, PPP).

According to the Labour Force Survey, conducted by the Pakistan Bureau of Statistic, 39 per cent of the country’s labour force is engaged in agriculture (30.2pc males and 67.2pc females). In total, the agriculture sector contributes 22 per cent to the country’s GDP.

Out of the total area of 79.6 million hectares, 22.1 million hectares are cultivated; the rest of territory comprises culturable waste, densely populated forests and rangelands. The cropped area constitutes 23.3 million hectares, while forests cover 4.6 million hectares of the total land. The country has the world’s largest contiguous irrigation system with almost 80 per cent of the cultivated area irrigated.

Pakistan is also amongst the world’s top ten producers of wheat, cotton, sugarcane, mango, dates and oranges, and is ranked 10th in rice production. Major crops (wheat, rice, cotton and sugarcane) contribute around 4.9 per cent, while minor crops contribute 2.1 per cent to the country’s total GDP.

The livestock sector contributes 11 per cent to the country’s GDP (60.5 per cent to the agriculture sector) and employs approximately 35 million people. Fisheries and forestry sectors each contribute an estimated 0.4 per cent to the GDP (2.1 per cent to the agriculture sector).

However, despite its impressive growth in agricultural production in the past, the country is currently facing high levels of food insecurity, thanks to policies of the successive governments. According to a global report published jointly by FAO, WFP, UNICEF, WHO and IFAD in 2019, 20.3pc of Pakistan’s population (40 million people) is undernourished/food insecure. The prevalence of malnutrition amongst children aged 6-59 months is also very high, with an estimated 40pc children stunted, 28pc underweight, 18pc wasted and 10pc overweight. Further, around one-fourth (24pc) of the country’s population is living below the national poverty line and 39 per cent is poor based on the multidimensional poverty index (MPI).

The sector particularly faced stagnation over the last two decades largely due to the government’s policies to support industrialization as a development priority. The federal governments, from 2008 to 2018, turned their focus away from agriculture and toward the industry, taking away necessary financial resources and attention required for the development of the sector. Natural disasters, floods and droughts compounded the problem for the country. Severe flooding in September 2014 destroyed around one million acres of standing crops; the flooding also caused the destruction of irrigation canals and land erosion. In August 2010, floods triggered by heavy monsoon rains destroyed about one million hectares of crops in Punjab. The country’s principal food crops, such as wheat, sugarcane, and rice, were unable to overcome the impacts of the floods: exports of rice and wheat dropped significantly. To feed its own textile sector, Pakistan had to import cotton from its neighbouring countries.

However, even then the rulers failed to assess genuine problems facing its economy. Instead of developing its economy on its genuine base of agriculture, and promoting the sector with sincere policy efforts, the governments, one after the other, started depending on imports.

During the five-year tenure of the Pakistan Muslim League-Nawaz (PML-N) government (2013-18), the country could not attain its overall set growth target of 5.7 per cent, largely due to an overall decline in the agriculture sector. A Pakistani think tank, Social Policy and Development Centre (SPDC), even refuted the government’s claim of achieving 4.7 per cent GDP growth rate: “The GDP growth rate was 3.1 per cent, not 4.7 per cent in fiscal year 2015-16,” said the institute.

The government was known for its excessive and often interventionist policies in the agriculture sector, particularly with regard to ignoring the needs of small farmers and imposing additional taxes in the form of increased power tariffs and fertiliser prices. Despite military coups and changes in the government, the PML-N’s provincial government in Punjab – the most important agricultural region –ruled the province for almost two decades; however, the growth rate of the agriculture sector consistently lagged behind other sectors.

The government’s heavy-handed approach to suppress farmer’s demands was a matter of concern for all linked with the sector in any way. The Pakistan Farmer Association held protest demonstrations outside the Punjab Assembly, demanding an end to extra taxes on fertilisers and electricity. The protests were met with the government’s deployment of police.

Neglecting the agriculture sector and even use of force against farmers demanding their rights was primarily because of the PML-N leadership’s fixation with the industrial sector and imbalanced economic policies that treat the agriculture sector as an “obsolete” area, which did not merit the government’s state-level growth-oriented intervention. Adding to the problem was the lack of research support to increase crop productivity, outdated agricultural knowledge, erosion of the irrigation system — all resulting in lost competitiveness internationally.

The outgoing Pakistan Tehreek-e-Insaf (PTI) government made some efforts to revive the agriculture sector, but various policy matters proved big hurdles. Agriculturists faced shortage of fertilisers and certified seeds of crops. The country also faced severe shortages of wheat, sugar and pulses during the last two years of the PTI government. Those attacked with the sector believe the crises would multiply in the years to come if the national economy was not established on a genuine and strong footing of the agriculture sector.