Agriculture sector lacks efficiency, competitiveness

"Loss in efficiency is denting the country’s self sufficiency in production of
various farm goods," PTI Senior Vice President Asad Umar

By: Shahram Haq

LAHORE: Despite immense potential, the agricultural sector of Pakistan lacks efficiency and global competitiveness, former CEO of Engro Corporation and current member of Pakistan Tehreek-e-Insaf Asad Umar said on Wednesday. The loss of efficiency is denting the country’s self sufficiency in production of various farm goods, he asserted.

Umar was giving a presentation to members of the Agricultural Journalists’ Association (AJA) on “Agriculture – a mainstay of Pakistan’s economy”. He claimed that production of various farm products has been as low as 90%, if compared with the global benchmark. Sugarcane yield is 40% lower, wheat yield is 20% lower, non-basmati rice yield is 40% lower, cotton yield is 20% lower and milk yield per animal is 90% lower than global standards, he added.

Pakistan, once dubbed a ‘great bread basket’, is now struggling due to these factors, and has increasingly becoming an importer of a large number of agri-commodities, he noted. At the same time, Pakistan’s agricultural sector also faces larger post-harvest losses of 40-80%, if compared with the global benchmark. This double blow — low output and high losses, diminishes the income of growers further, he explained.

Much to their dismay, agricultural credit disbursement to farmers in Pakistan declined from $3.4 billion in 2007/08 to $3.1 billion in 2010/11, said Umar. During the same period, agricultural credit in India increased from $63.3 billion to $103.4 billion, he said. Agricultural credit in Pakistan is 8% of agri-GDP; while in India, it is 31% of agri-GDP.

Water – a major input for the agricultural sector – was also overlooked; as far as increasing supply for farmers is concerned. Losses of water are as high as 40% before reaching farm gates, Umar complained. He stressed the need to plug these wastages on a priority bases. Emphasising efficient use of water for optimal benefits, Umar said irrigating an additional 5% of land can generate an extra Rs100 billion in farm incomes.

Sharing his vision about farmer cooperatives, Umar said economies of scale in agriculture can be achieved by encouraging formation of vibrant clusters of farmers.

Indian cooperatives receive around 50% of total agricultural credit disbursement and 60% of sugarcane procurement is done by cooperatives, he said. In France, 75% of agricultural producers are members of at least one co-operative, and co-operatives handle 40% of food and agricultural production, he informed.

Existing legislation in Pakistan allows formation of farmer cooperatives which can buy inputs, sell produce and obtain credit for member farmers, he pointed out. Pakistani farmers can benefit from this model by ensuring lending to cooperatives from commercial banks, and the provision of crop insurance.

Published in The Express Tribune, May 10th, 2012.