ECONOMY: Agriculture and poverty

[uzma khan youzaf zai]

ECONOMY: Agriculture and poverty —Miguel Loureiro

There is an inverse relationship between farm size and productivity and land reforms tend to improve the development potential of large agrarian societies, both socially and politically. There is not a word in the PRSP on land reforms. It does mention giving state land to small farmers but it also says the land will be leased to corporate farming

What are the outputs of Pakistan’s agriculture, and how can we improve them and make the whole process pro-poor?

Again oversimplifying and generalising, I will mainly mention staple foods, cash crops, niche products, livestock, and the land issue. What do Pakistanis eat? It depends on the region, but the main staples are wheat, rice, and lentils (daal). Regarding the latter, Pakistan is the 13th biggest producer of lentils and the 4th largest importer, which means that there’s something to be done here.

Pakistan is also the 10th biggest wheat producer in the world, but the 60th in terms of yield per acre. Wheat consumption is a bit over 20 million tonnes per year. The provincial food departments and PASSCO procure less than 10 million tonnes, but since they don’t have enough storage capacity (which hasn’t changed much during the past two decades) a large part of this wheat is lost and spoiled as it is stored in the open. Even worse, these government agencies tend not to buy the wheat unless the growers produce documents proving land ownership. So for many farmers their only option is to sell their produce to the middlemen at prices lower than the support price fixed by the government. We have been importing and exporting wheat at the same time which doesn’t make much sense unless someone is making money out of importing and exporting.

Cash crops are sold rather than consumed or exchanged by farmers. In the case of Pakistan, the main ones are cotton, sugarcane, and to a certain extent tobacco and tea. We are the 5th biggest producer of sugarcane in the world, despite the average national yield being about 27 percent lower than Asia’s average. In fact there is a gap of 74 percent between actual and potential yield for sugarcane and of 56 percent for cotton.

But Pakistan’s agriculture is not just wheat, rice, cotton and sugarcane. There are two other types of agricultural products that despite little interest shown by the successive governments (they’re even called minor crops) have a huge potential to improve agricultural growth and help poorer farmers: vegetables and fruits. Out of curiosity, Pakistan is the 5th largest producer of mangoes and the 3rd of peppers.

Particularly, vegetable production tends to be pro-poor, as it improves the consumption of essential nutrients at lower prices, can have higher returns as they’re usually produced in shorter duration of time, and eventually help reduce unemployment. Another important factor is that vegetables tend to be managed by women, so an increase in their importance could also help women’s empowerment. Unfortunately, lack of storage and transport infrastructure (accounting for 40 percent of horticulture losses) and highly fluctuating prices (the beauty of the free market) don’t help the situation.

The Pakistani Poverty Reduction Strategy Paper says that milk is more valuable than major crops. Therefore, their conclusion is that milk production is pro-poor and the government’s strategy will be focused on genetically improving livestock breeds, developing feed and fodder, vaccination campaigns, improving storage and processing facilities, and marketing. It all sounds fine, but I just have one question: how many among the poor own cattle? Poor farmers (with or without land) tend sometimes to own small stock (sheep, goats) and poultry, but there’s not a word on this in the PRSP. For the ones who do own dairy cattle, often the only escape is to sell their milk to the multinationals at not-so-optimal prices.

There is a slight mention in the document of improving the management of communal grazing. Looking at Pakistan’s rangelands, severely depleted due to overgrazing and mismanagement, one would expect more than just a few words.

Where do all these products come from? This, I feel, is the biggest barrier to the improvement of agriculture (and diminishing rural poverty). More than half of Pakistan’s agricultural land is owned by less than 5 percent of the landowners (plus the army - apparently the biggest landowner in the country). According to the agricultural census of 2000, 63 percent of the remaining agricultural land is owned by small, subsistence- and below-subsistence-farmers. Add to this the number of landless farmers, which has been increasing over the years.

Let me mention two more (proven) factors. First, there is an inverse relationship between size of farm and productivity. Second, land reforms tend to improve the development potential of large agrarian societies, both socially and politically. There is not a word on land reforms in the PRSP. The paper does mention giving state-owned land to small farmers (maybe they will start with Okara), but 4 pages ahead of that they mention that they will lease state-owned land to corporate farming.

At the end of the day, Pakistan needs more than a land reform (although that is the base of the iceberg). What is needed is an agrarian reform. Taking into consideration the impact of agriculture in the economy of the country and in the livelihoods of the majority of the population, the whole agricultural policy must be reconsidered. This reconsideration should be participatory and nationally-owned and should lay out a policy framework and agenda for improving agriculture and tackling poverty. And participatory does not mean consulting only a few, but involving all main stakeholders (big, medium and small landowners, landless farmers, consumers, agricultural scientists, government officials, input suppliers, industrial lobbies) in the planning, design, implementation and monitoring of a sound agriculture policy.

And I guess that now that we are becoming enlightened its time for the feudal system to go. (On a positive note I would like to mention an excellent Pakistani website on agriculture, www.pakissan.com, from which I got much of my data for these two articles).

This is the concluding part in a two-episode article. The first part appeared on October 26, 2004.

Miguel Loureiro is a lecturer in development studies at the Lahore University of Management Sciences. This is the first of a two-part article

[zash]

Alleviation of Small farmers

• Small farmers can not afford production risks and have little to invest in crop production so
• they should be provided with a relief package in order to guarantee a minimum income to support families.
• These packages could be made conditional to participation in asset building initiatives. For instance, poor households may be offered free inputs on the condition that they send their children to school and/or vaccinate them and/or re-invest part of the resulting additional income in activities that further stimulate production and/or create local added value (e.g. improvements in irrigation infrastructure, village banks, small processing factories, storage structures, etc.). Examples could be taken from the FAO sponsored Special Programme for Food Security in Central America, particularly

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Food Security and poverty

The future challenge of Pakistan in the field of agriculture is Food Insecurity and one of the ultimate objective of Agriculture Development efforts at world level is to ensure Food security.

So what actually is food security??

1. Food availability: The amount of food physically available to a household (micro level) or at national level (macro level);

2. Food access: The physical (e.g. road network, market) and economic (e.g. own production, exchange, purchase) ability of a household to acquire adequate amounts of food; and

3. Food utilization: The intra-household use of food accessible and the individual’s ability to absorb and use nutrients (e.g. function of health status).

Since in Pakistan most of the literature is based on the analysis of quantitative data within a poverty-oriented framework, it is important to describe the links between food security and poverty.

Poverty is usually measured in monetary terms and defined as the degree of inequality in income distribution between households, either in relation to an agreed benchmark or as a measure of statistical dispersion of income or wealth.

In this context it is taken to measure the variability of consumption
expenditures, “since it is the inability to smooth consumption in the face of income fluctuations which is, to a substantial degree, at the heart of concerns about the role of vulnerability in creating or sustaining poverty” (World Bank Pakistan Poverty Assessment, p. 28).

To summarise this discussion, whether we refer to vulnerability to food insecurity or to poverty, the concept of vulnerability has two important features:

1. It defines conditions before a hazard; the risk of becoming poor and/or hungry if a shockoccurs.
2. It is a dynamic concept, which means that households that are not vulnerable at some pointin time may become vulnerable in future. In this respect, it helps to identify interventionsthat are more likely to reduce household vulnerability prior to a shock as opposed to responding to the needs that emerge after the shock in households that have been unable to cope.

Poverty therefore limits household access to, and control over, resources. It limits their capacity to directly produce food or to generate sufficient income to purchase it. It often also restricts households in their ability to rely on social networks, which typically involve some degree of reciprocity.

Finally, poverty is likely to affect the nutritional status of individuals not only by restricting their food consumption but also by limiting their access to education and health services.

According to the World Bank,

“Land, particularly irrigated land, is the most important productive asset in rural Pakistan and a major determinant of social status, political influence and income. Land ownership provides access to political power and public incomes for large landowners, and shas considerable pecuniary and non pecuniary, often invisible, associated returns.”

Land ownership in Pakistan is extremely skewed.

“The majority of Pakistan’s rural poor are neither tenant farmers nor farm owners”

“Non-farm households accounted for 57% of the rural poor.
Farmers comprised only 35 percent of households in the bottom 40 percent of rural per capita expenditure distribution.
The remainder (8 percent) were agricultural labourer households.

This distribution of rural poverty closely reflects land distribution, which is highly unequal in Pakistan.

Moreover,returns to land are estimated to be about half of incomes (value added) from crop agriculture, with only about five percent of value added paid to hired agricultural labour.”

Reasons for food security & poverty in rural area

According to the Ministry of Food,Agriculture and Livestock (MinFAL), wheat yields in Pakistan are reported to be below world averages for a number of
reasons, including:

1. Low farm gate prices, which do not provide adequate incentives to invest in wheat production.
2. Technical and technological inefficiencies, which are “mainly attributed to tenant arrangements and farm size”.
3. Limited access to credit by smallholders.
4. Unreliability of water supply.
5. “Shortage of good quality, high-yielding, insect and pest resistant varieties of wheat seeds”.
6. Limited use of ‘advanced’ technologies and agronomic practices, “primarily due to lack of awareness, resources, non-viable farm sizes, low level of formal education and training”.
7. “Ineffective extension services”.
8. Weak farmer networks.
9. “lack of balanced use of fertilizer”: Despite the fact that wheat is reported to consume about 50 percent of all fertilizer applied to crops, little Phosphorus and Potassium are apparently used to complement Nitrogen applications.
10. Overlapping between the cultivation period of wheat and cotton or rice, which could be minimised by implementing reduced or zero tillage technologies.
11. Post harvest losses, estimated at between 15 and 20 percent.