The agriculture sector serves as the backbone of Pakistan’s economy, addressing food security issues and supplying crucial raw materials to industries. Moreover, it significantly contributes to foreign reserves and provides employment opportunities. According to the recent economic survey (2022-23), this sector has accounted for 22.9 percent of the GDP and directly engaged approximately 37.4 percent of the labor force. Nevertheless, the sector is not operating at its full potential.
The agriculture sector’s inability to achieve higher growth, employ more labor, and generate increased foreign reserves can be attributed to several obstacles. Chief among these is climate change. Despite Pakistan’s relatively low greenhouse gas emissions, it ranks among the top ten most vulnerable countries globally. Severe droughts and catastrophic floods are direct consequences of climate change in Pakistan. The devastating flood of 2022, which primarily affected the agriculture sector, underscores the urgent need to reform and make it more sustainable.
While the government has been offering more incentives and credit facilities to the agriculture sector, many deserving small-scale farmers are still denied access to these benefits for two main reasons. Either they are unaware of the available incentives, or landowners intentionally keep them in the dark to exploit these incentives for their personal gain. This situation masks the actual performance of the agriculture sector.
Another significant issue plaguing the agriculture sector is the lack of research and development. Many farmers lack knowledge about proper fertilizer usage and end up applying two to three types of fertilizers, such as urea and ADP, without understanding their soil’s specific nutrient requirements. Consequently, they degrade their fields by continually using the same types of fertilizers. To prevent substantial losses in agricultural land fertility and productivity, the government should promote research and development within the sector.
Furthermore, excessive government intervention has disrupted the agriculture sector’s smooth functioning. The government should reduce its involvement in the sector to allow for a more free market. Government interference affects the output market significantly, through measures like minimum support prices, input subsidies, and tariffs/subsidies on imports and exports, ultimately impacting both consumers and producers negatively (PIDE’s Reform Agenda for Sustained Growth).
In the 2023-24 budget, the government announced an increase in agricultural loans for farmers, from Rs 1800 billion to Rs 2250 billion. However, mismanagement and a lack of proper oversight have resulted in wasted funds with no productive use in agriculture. To combat loan misuse, the government should implement strict monitoring of loan disbursements to ensure access for small-scale farmers. There are two main issues with the current loan system. First, most farmers are illiterate and unaware of this subsidized loan facility, allowing landlords to exploit small farmers and secure loans for themselves. Second, the borrowing process from banks is cumbersome, and high-interest rates discourage small farmers from seeking loans. It is now up to agricultural policymakers to streamline the borrowing process and prevent loan misuse.
In summary, reforming the agriculture sector requires a clear and concise policy tailored to modern needs. To address these challenges, the government must not miss the available opportunities. One such opportunity is the potential for improved trade relations with Brazil. Brazil is highly advanced in agriculture, offering opportunities for knowledge and technology exchange in the sector. The government should seize these opportunities in the Brazilian market to benefit Pakistan’s agriculture sector.
In a nutshell, the government should prioritize the development of the agriculture sector, considering its significant contribution to the country’s revenue, employment opportunities, and gross domestic product. By addressing the challenges mentioned above, the government can boost revenue, foreign reserves, and employment opportunities, unleashing the full potential of Pakistan’s agriculture sector.