Solution to rural poverty

[HASEEB ANSARI]

Solution to rural poverty
By Muzaffar A. Isani

IN her article titled ‘Land Rights and Democracy’, (Dawn, Feb 4,) Zeenia Shaukat has referred to my earlier letter in Dawn and has posed two pertinent questions which deserve to be in the forefront of a vigorous public debate.

The first is whether abject poverty, particularly in the rural areas of Sindh, symbolises a failure of the state towards its obligation to its citizens. The second question relates to the means by which to address such poverty. The answer to the first is an emphatic yes. In fact abject poverty in our society is not only symbolic of the failure of our political system to address the issue, it is symptomatic of its failure to address all crucial questions of public policy.

The second question, however, is infinitely more problematic and begs more serious introspection. Let me admit at the outset that I see nothing wrong with the goals outlined by the writer. Political and social progress and the empowerment of the people are all laudable goals of public policy. I do take umbrage, however, to the obsession with the expropriation and redistribution of land as the ultimate means of alleviating rural poverty.

If land rights associated with ownership are a necessary concomitant to an empowered citizenry, we need to look first and foremost in the direction of state-owned land. Millions of acres of land in Pakistan is either fallow or in the illegal possession of politically powerful individuals. Before we disinherit legal owners of land and discourage any possible future investment in agriculture, we should allocate all available state land, including land in possession of powerful individuals, to landless peasants.

However, while acknowledging its significance as a political, social and economic asset, mere ownership of land will be meaningless without ensuring that it becomes an efficient factor of production.

The manner in which our agricultural sector is organised is patently inefficient and admittedly inequitable. However, expropriation and redistribution of land is definitely not an answer to the conundrum of persistent and growing rural poverty. The only way we can address both efficiency and equity in the agricultural sector is to carry out thorough agrarian reforms.

These reforms must be comprehensive and address all relevant issues such as those of land tenure, land tenancy, rural infrastructure, policies relating to taxes and levies including income tax, marketing arrangements and commercial credit policies. We must also examine our attitude towards commercial agriculture and ascertain an optimal mix of cash crops and food grain production to address the issues of malnutrition.

A crucial issue associated with the organisation of the agricultural sector is whether there is an optimum size of a farm which will address the issues of both efficiency and equity. Admittedly, many studies have concluded that small-size farms are more likely to exhibit greater production efficiency if incentives for more intensive farming and disincentives for non-utilisation of farm land are put in place. Similarly, the question of returns to scale may indeed suggest that there are few if any efficiency gains in the case of large-size farms particularly since these farms are, almost without exception, organised as an agglomeration of many small farms.

In fact this conclusion is basically warranted by the very use of primitive technology and the organisational and managerial structure of traditional production modes in agriculture. But the issue of farm size addresses only the short-run static efficiency of agricultural production. It is the long-run dynamic aspects of the development of the agricultural sector which is pertinent to the goal of rural poverty alleviation.

The marginal rate of return from agricultural investment in Pakistan is near zero. As a result there is virtually no private commercial investment in agriculture in Pakistan. At the same time, rural infrastructure is in an abysmal state because of inadequate public-sector investment. Irrigation canals and drainage channels are almost never dredged and tend to overflow with the slightest rise in water levels, causing regular flooding and devastation.

There is no R&D from the private or the public sector in new seeds for existing crops or for new crops or cropping patterns. Extension services are no longer available and credit planning is non-existent. Barring the use of tractors and threshers no meaningful technology is being employed in production. Indeed, the use of these implements has only had the effect of increasing the redundancy of labour without much productivity gains.

It is difficult to visualise a subsistence farmer owning less than, say, 50 acres carrying the burden of the massive investment required for the uplift of the agricultural sector. Indeed, even the so-called large farms of, say, 500 acres, are incapable of undertaking any meaningful level of investment. The main burden of investment must be borne by the public sector.

The political and social landscape is another factor to be reckoned with. In the case of Sindh in particular, the predator urban elites are in perfect agreement with the dysfunctional rural elites on the necessity to keep the surplus agricultural labour, both unemployed and underemployed, tied to the land. While the need for agrarian reforms is acute, the ultimate emancipation of the landless peasants must come from greater urban opportunities in industry and the service sector. The Sindhi society is being kept rural and poor by design.

The writer is a professor of economics at Iqra University, Karachi.