Inclusive agricultural growth in Pakistan - understanding some basic constraints

Type Journal Article - Pakistan Development Review
Title Inclusive agricultural growth in Pakistan - understanding some basic constraints
Volume 55
Issue 4
Publication (Day/Month/Year) 2016
Page numbers 889-904
Inclusive agricultural growth is important for overall economic growth and particularly critical for rural socio-economic stability and poverty reduction in Pakistan The majority of Pakistan's population and 44 percent of the overall labour force are dependent upon agriculture which only accounts for a little over 20 percent of national GDP. The paper highlights some basic constraints that have not been explicitly addressed in the policy research and implementation and have impeded inclusive agriculture growth. A descriptive analysis based on data from the Agriculture Census of Pakistan and the Pakistan Household Income and Economic Survey--both of which were conducted in 2010-11--is used to show how high levels of poverty and its disparity across regions, combined with the declining size of operated holdings and associated fragmentation especially in the smallest size categories which now form over 60 percent of the agricultural holdings in Pakistan, are fundamental constraints. Poverty is both the result as well as the consequence of fragmented markets, weak institutions including governance; and, inadequate policy research and implementation. A better research based policy understanding of some basic constraints, and the variations across regions in such factors such as the declining size and fragmentation of operated farms, rural poverty; and, the levels of market development and institutions is essential along with effective implementation. One size fits all policies have not and will not work. JEL Classification: 040, Q15,132, P46 Keywords: Inclusive Growth, Land Holding, Land Tenure, Income Distribution, Poverty 1. INTRODUCTION Pakistan is primarily an agricultural economy despite the structural transformation of the economy which has reduced the share of agriculture in GDP to around 20 percent. Over 44 percent of the labour force is still directly dependent upon agriculture as is the bulk of the country's manufacturing and trade [Pakistan (2014)]. It is widely believed that the dismal performance of the economy and particularly that of the agriculture sector in recent times has been accompanied by increasing poverty. Poverty in Pakistan is high and increasing and rural poverty is higher than urban poverty and increasing [Malik, et al. (2014)]. The large proportion of the labour force that is dependent upon the shrinking share of agricultural GDP could be one of the reasons for this. Why has agriculture growth failed in Pakistan? Is inclusive agriculture growth (1) possible? What are the most fundamental constraints not explicitly addressed in Pakistan's policy and implementation. The obvious challenges to agriculture growth in Pakistan have been known for decades. The flat (low) yields despite the large yield gaps relative to demonstrated potential [see Annex Figure 1]; the lack of diversification away from the four major crops wheat , cotton, sugarcane and rice [see Annex Figure 2]; (2) the low productivity of water and non-reliability of water services; the under-performance of rural factor and input markets; the rapidly declining investment--especially public investment, including the serious under-investment in research and technology development; and the inadequate dissemination of this technology and decayed extension services are all well documented. These results are shown in documents such as the Report..

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