Misinformed agriculturalists
By Dr Sarah Ali

Pakistan’s agricultural sector makes up about 23 per cent of its Gross Domestic Product. Many agricultural producers in Pakistan face land and productivity constraints, which result in low or inefficient yields. Farmers are typically subsistence agricultural producers who grow and sell commodities contributing to the food supply. Many subsistence farmers face issues such as agricultural productivity, credit constraints, poor infrastructure, information asymmetry, limited bargaining power with regard to prices of outputs and inputs, and market distortions due to inefficient government policies.

The asymmetric information and credit markets result in misinformed farmers who do not make the best decisions about harvest and post-harvest conditions. The ability to purchase inputs such as fertiliser or pesticide, or using mechanised equipment such as tractors is a result of the difficulty in obtaining credit. Often times, farmers do not have a sufficient amount of collateral to borrow, instead relying on informal sources of credit that might not cover the cost of physical capital such as tractors. Furthermore, large landowners generally benefit from the capitalistic structure of farming, however, smaller landowners tend to be subsistence farmers, who struggle each season. This type of subsistence farming does not result in profits. Farmers in Pakistan tend to rely on government price supports, however, liberalisation of markets will help to increase economic growth.

Traditionally, farmers receive information about inputs and outputs through their personal contacts or trips to physical markets where inputs and outputs are sold. Transaction costs could be lowered for Pakistani farmers if they used mobile technology to learn about prices regarding inputs, outputs, physical location of markets, number of buyers and sellers present in the market and information regarding agricultural education. Mobile phone application in agriculture is prevalent in Sub-Saharan Africa, yet it has been slower in Pakistan. The use of mobile phones could help famers disseminate information regarding cropping practices and other agricultural practices.

Many farmers are living in rural areas that are far from metropolitan cities. Thus, this type of technology would enable Pakistani agricultural extension services to reach more people. For example, a farmer could take a picture of his crop and send it to another farmer or extension agent who could give feedback as to whether the crop is ready to be harvested, exhibits any disease from a superficial view, or any other information that can be discerned from the photo.

The diffusion of information is vital for farmers to produce high yields that will result in surplus crops, and higher income. Often times, young people are ready to leave the rural areas of Pakistan given the level of uncertainty regarding farming and its low income return; however, young farmers are needed as many older farmers retire and farms are bought out by larger landowners. Economic literature indicates that farmers who are young and educated own their land and have large sales are likely to adopt agricultural technology and it is imperative that the new generation of farmers learn more about agriculture. It takes a level of intelligence to understand the science of agronomy and all the specific, technical details regarding crop production.

The agricultural industry in Pakistan has the potential to flourish in terms of value-added net exports. Information is power, and certainly in Pakistan, connections and money open doors. Often times, the opportunities for subsistence farmers do not arise given their lack of resources and the general information asymmetry that exists in the markets. Transparency from governmental and monetary institutions with regard to legal procedures of operating businesses, or obtaining credit will alleviate the problems many farmers face. Pakistani agricultural producers still face obstacles, but there are more resources available to farmers than a decade ago.

Published in The Express Tribune, January 28th, 2014.