Pakistan: Farm wealth on the rise

EDITORIAL

Farm incomes have risen in recent years due to what is generally accepted as the PPP government's support price policy that makes major crops more attractive for farmers to grow relative to other crops. The major crops that have benefited from high support price are wheat, rice, sugarcane and cotton. In 2007-08, the acreage under cultivation of the four major crops was 8.5 million hectares, 2.5 million hectares, 1.24 million hectares and 3 million hectares, respectively, which by 2011-12 registered 8.9 million hectares, 2.36 million hectares (decline), 988,000 hectares (decline) and 2.68 million hectares (decline). However, barring total wheat output which rose by 4.2 million tonnes between the two years reflecting the rise in acreage under cultivation the remaining three major crops suffered a decline in output: rice by minus 740,000 tonnes, sugarcane by negative 8.6 million tonnes and cotton by negative 33,000 tonnes of cotton no doubt indicative of a decline in area under cultivation of these crops. However what should be a source of satisfaction to the government was a marked increase in the yield per hectare of wheat, sugarcane and cotton: between 2007-08 and 2011-12 wheat yield rose from 2,451 kg per hectare to 2,833 kg per hectare, sugarcane from 51,507 kg to 55,981 kg and cotton from 649 to 724 kg per hectare. Rice witnessed a decline in yield from 2,212 kg per hectare in 2007-08 to 2,039 kg per hectare in 2011-12. Farmers have complained vociferously of a rise in their input costs that surpassed the benefits accruing from a high support price. It is relevant to note that fertiliser consumption declined as price of fertilisers rose last year: urea by 81.4 percent, DAP by 38.8 percent, CAN by 75.5 percent and NP by 45.7 percent. However, in the current fiscal year, the budgeted subsidy for Fauji Fertiliser Bin Qasim Ltd is 3.4 billion rupees as opposed to 162 million rupees in the revised estimates of last year. The fact that the gas supply crisis is acute at this stage with concerns that the shortage in the coming winter is likely to be much higher than last year, it is unlikely that the federal government would be able to provide the gas required for operating the public sector fertiliser company. And in that event the subsidy may be redirected to other sectors. A subsidy of 26 billion rupees is earmarked for TCP's import of urea fertiliser. Additionally, all other major crop inputs witnessed a dramatic increase in price over the past four years particularly electricity and transport. And coupled with the floods last year, output was negatively impacted. These factors had an impact on consumer pricing and necessitated commodity operations to ensure that the price of food items remained affordable. The government has budgeted a major reduction in subsidy to Passco for wheat and paddy operations: from 14.626 billion rupees in last fiscal year to 1.1 billion rupees in the current fiscal year. However, the government cannot allow food prices to escalate at the levels that would reflect the existence of free market conditions, conditions that incidentally are allowed to control the price of farm produce in the developed countries. Thus the government would continue to provide subsidy to the end consumer through manipulating the consumer market. The actual focus of the government however must be on increasing the yield per hectare. At present, the Punjab has lower average yield than the Indian Punjab. The major difference between the two regions is that the Indian Punjab is taking full advantage of genetically-modified foods that are said to have the capacity to increase yield, discourage growth of weeds, and what should be of considerable interest to our farmers seeds have been developed which are said to be drought-resistant, requiring much smaller quantities of water to grow. The situation, therefore, underscores the need for efforts towards promoting agri research. And to achieve this objective, the government must strengthen and speed up the approval process of the National Bio-safety Committee to enable it to promptly deal with policy matters relating to agriculture.