Financial lawlessness & IMF Yatra

Post Source: Pakistan Observer

Ali Ashraf Khan

When the time for formulation of budget proposals for 2011-12 was coming close and domestic resources were not matching with those demands, a big team of financial managers left for their Washington Yatra to convince the IMF to release the next tranche which had been withheld since last year, and to meet their near and dear ones living abroad. The President in a surprising move promulgated three ordinances in mid March 2011 to impose 17% Sales tax on agricultural tractors, pesticides, plants, machinery & equipments as well as on import of their spare parts. Secondly, he imposed a 15% surcharge on Income tax for the year 2011, which means that this surcharge will be imposed on all tax deductions from the salaried class, at import stage, profits received from banks investments and dividends, all utility bills including mobile phones including goods falling in the category of advance tax, while zero-ratings were restricted to five sectors of exports including, textile, leather, carpets, surgical and sports goods with reduction in GST rate from 17% to 10% only for these five sectors, and third was to raise Special Excise duty from 1% to 2.5% for the remaining period of the current fiscal year meaning that zero-rated sector of exports will be entitled to a refund of 19.5% at the end.

Already there is huge amount stuck-up in refunds due to very cumbersome procedure leading to corruption. Whereby through such a major development just 75 days before launching of the next budget, the federal government has introduced a Rs120 billion ‘mini-budget’ through presidential ordinances by-passing the parliament, envisaging Rs53 billion of additional taxes on income, imports, agriculture and domestic sales of export-oriented items, after having failed to introduce Reformed General Sales Tax (RGST) through parliament. This action is in violation of the fundamental law of Pakistan as provided in the Pakistani constitution, which is another example of the bad governance of this sitting government and its administration.

As a matter of fact the budget 2010-11 which had been prepared by the same financial managers of the government was not even worth the paper on which it is written. It was either a lie or it has been thrown into the rubbish bin by the rulers who have exceeded their funds by their extravagant lifestyle leading to an increase in trust deficit between the rulers and the nation, by their negligence of tax collection from agricultural sector, by imposing capital gain tax and their by their corruption. Ministers and bureaucrats who do not feel committed to any law of the land even not the traffic signals or speed limits on Pakistani roads why would they accept and respect the budget which is just another law of the land?

Another visible source of money wastage is of course our defense budget that is anyway swallowing most of the money and is always in need of another aircraft or what not in addition to the huge amounts they are consuming on agricultural and urban land allotment at throw-away prices. In order to contain the budget deficit which is out of control none of the perks of defense services or civil bureaucracy and politicians in the corridors of power were taken away; it is much easier to milk the public and especially the salaried people and small businessmen with something called flood tax.

This very same government had assured the people to impose tax on agricultural income but instead of doing that it has imposed tax on agricultural inputs like fertilizers and others, which will surely result into another raise in the production cost. It again makes land improvement for better yields more expensive and impossible for many small farmers and it leaves out taxation of the absentee landlords who live from the produce of the land tax free but never care about land improvement. State Bank Governor Shahid Kardar has expressed his concern about structural shift of incomes towards the untaxed sectors, this shift of income from tax paying sectors will hover to lower levels structurally destined tax-to-GDP ration, which is lowest in the world at just 10%.

The slap on the face of our financial & economic managers received on Thursday in Washington from IMF is not at all shocking for those who know that our these managers are more loyal to these donor agencies from where they have been borrowed to bring down our system to suit the donor agenda. One may recall that in January 2011 the World Bank, Asian Development Bank and Islamic Development Bank had withheld budgetary support to Pakistan and requested the government to provide them a letter of comfort from IMF before they disburse the remaining funds. IMF works according to the mood of US-Pak relationship, when Pakistan was in the center of focus due to removal of a democratically elected government in 1999 by General Musharraf strongest support was extended by US to Pakistan and the IMF showed great generosity by easy facilitation in release of funds to Pakistan. We fail to understand what has gone wrong with PPP that they had presented a very balanced budget in 1974, a performance which they could not achieve again since then.

IMF was first allowed to expand its tentacles in sixties during Ayub Khan era, when Mohammad Shoaib was the Finance Minister & M. M. Ahmed the head of the Planning Commission, both had links with Washington. Now in 2011 our foreign liability again stands at $ 54 Billion. Pakistan had last agreed with IMF in 2008 to raise its GDP to 13% by 2013 and 15% by 2015, which is standing at 2.8% in 2011 due to negative approach in our planning; in fact the PPP government has not been able to formulate an industrial policy during last three years and our engine of growth- the industrial productivity has come to a stand still due to artificial shortage of gas, electricity, water and the deteriorating law & order situation. The second thing agreed with IMF was that Government will stop borrowing from State Bank of Pakistan, which against this commitment has continued at a pace of around Rs. 2 Billion a day, third and last condition agreed with IMF was to impose Value Added Tax (RGST). Our Finance Minister leading the team of top economic and financial managers on the sidelines of the spring meetings of the Breton Woods Institution, and with the IMF & World Bank made a sweeping statement on reaching Washington on Sunday the 17th March that government had strived to bring the budgetary deficit down to 4.5% and to impose further tax reforms but was hindered by a reluctant parliament; the reason for this blame game he must be knowing well as the outcome of this meeting is zero. His earlier statement published in newspapers on 18th April after failing to convince IMF has been denied by our Finance Minister.

We have expressed our views in the past also that Pakistan going into the IMF & World Bank fold was a suicidal attempt but unfortunately our successive Finance Ministers in a democratically elected setup from 2008, including Ishaq Dar, Naveed Qamar, Shokat Tareen, and Hafeez Sheikh have miserably failed to understand the ground reality of our economic situation such as the availability and better utilization of national resources which are more then sufficient if we declare the IMF & World Bank as persona non-grata, it is a known fact that for almost three decades tax collection or recovery issue has not improved due to poor implementation and too much political interference. What sort of results the IMF and other donors want Pakistan to deliver when out of an allocation at the federal level of every Rs. 100 46 % is spent on interest payment to IMF & World Bank and 33% is consumed as expanse on administration or extravaganza of the government remaining 21% can not produce magical result giving satisfaction of Rs. 100 level, so the economic law of diminishing return has started applying fast, why can’t our leaders realize this hard fact to remedy the situation. Another hard fact, which suits the donors and our imported financial & economic managers is to create fear in the Pakistani nation in order to justify borrowing from foreign donors like IMF and other agencies; it is by design to bring Pakistan into their trap and demoralize the nation as to their possibility of survival.

Those clamouring thatPakistan is a failed state due to financial imbalance are the products of Western thinking and approach who believe that without West, we can not move an inch and declare our country as an over-burdened and a deficit economy. Just look at these figures, which are based on true facts and information gathered after reading the newspapers: Our Export income is around $ 22 billion, plus our official remittance from abroad is $ 12 billion, which makes it $ 34 Billion apart from un-official sources of remittance. Our annual imports, which can be reduced if our leaders are sincere in nation building program stands at $ 30 billion leaving a positive balance of $ 4 Billion. How can we go bankrupt or in default? Somebody has to ponder on these facts in their studies. This is not digestible for a student of Economics, who has the following figures on his table then why can’t we close our doors and formulate our own home grown policies and work out our plans by using our own manpower, which has done wonderful in Middle East and USA. What we need is honest and sincere leaders following real austerity so that people from top to bottom start living a simple life style and curtails all unnecessary expenditure and pomp and show, this is the way to progress which our friends inChina andIndia have adhered to achieve success, why can’t we do the same?

Pakistan: Priorities for Agriculture and Rural Development

Post Source: The World Bank

BACKGROUND

More than two-thirds of Pakistanis live in rural areas, of which about 68 percent are employed in agriculture (40 percent of total labor force). The agriculture sector accounts for about 22 percent of the national GDP and has enjoyed steady growth for almost three decades, substantially contributing to poverty reduction during the 1970s and 80s.

However, recent trend of agriculture incomes is far less encouraging and rural poverty was back to 38.9 percent by 2002, the same level where it was at the beginning of the 1990s. This has occurred despite generally favorable policies on prices and markets, and a relatively liberalized environment. While consecutive droughts have certainly played a detrimental role in the performance of the sector, it also faces significant structural constraints that hinder the sector’s contribution to economic growth and poverty reduction.

ISSUES & CHALLENGES

• · Poorly functioning factor markets and constrained access to assets limit opportunities for rural growth and poverty reduction. More than 60 percent of poor rural households are not farm households, with no access to land or water. 38 percent of small landowning farmers are also poor. Incomes from non-farm activities, including agricultural products processing, trade, construction, and transport services already account for 63 percent of total rural incomes. Well-functioning factor markets to facilitate access to assets (land, capital, water) and linkages with non farm sector are crucial for the growth.
• · Inequality and land concentration: The agriculture sector is characterized by strong inequality in the distribution of assets, particularly land and water. About 2 percent of the households control more than 45 percent of the land area. Large farmers have also captured the subsidies in water and agriculture, as well as the benefits of agricultural growth. Agriculture credit schemes have also mostly benefited large farmers who have capitalized the implicit subsidies through higher land prices and cheaper access to mechanization rather than labor.
• · Agricultural growth is constrained: The capacity of the agriculture R&D system has declined sharply during the last decade, and both the adoption of Green Revolution technologies and the extension of irrigation have reached saturation levels. Technology for rain fed areas and livestock is needed while the past focus has been the irrigation sector. Livestock has been the fastest growing sub-sector, and now comprises almost half of the agricultural GDP. Another constraint comes from inefficient output markets and rent seeking in the supply chain systems, with value being captured by intermediaries. Liberalized markets and the new WTO regime could offer new opportunities for growth if the Government adopts an effective diversification strategy.
• · Unsustainable water resources management: Irrigation is the single most critical component of water management in the country. However, it shows signs of inefficiency and degradation: i) low conveyance efficiency at 45 percent and deferred maintenance cause both considerable water losses (though much of that goes back into the aquifer) and deterioration of major infrastructure (barrages); ii) illegal pumping from canals and inaccessibility to water by the tail-enders result in unequal water distribution; iii) the lack of transparency of the actual water flow causes inter-provincial water allocation clashes and inefficient water management systems; iv) supply-driven system cannot accommodate farmers’ specific needs; v) cost recovery is low because of bureaucracy and lack of accountability by the service provider (Irrigation Department); vi) water logging, salinity, pollution, and land degradation are becoming significant; and vii) storage management and water scheduling should be improved for water shortages during the winter and oversupply during the summer necessitate
• · Weak rural service delivery: Pakistan has taken major decisions to devolve authority to local governments to improve service delivery This means the roles of different tires of government has been better defined, and downward accountability strengthened. This is a dynamic process, and the country still faces implementation challenges. However, strengthening service delivery and enhanced citizen participation is critical for the development of the non-farm sector, the rural investment climate, and governance.

PRIORITY AREAS OF THE WORLD BANK’S SUPPORT

1. Fostering agricultural growth and competitiveness

• · Policy and Institutional Reforms: Recent reforms on the liberalization of input markets and trade should be consolidated to take advantage of new opportunities offered by the WTO agreement. Agriculture and irrigation policies will need to focus on diversification into high value products, agro-processing, and better integration in supply chains. For the poor to benefit, increases in productivity should be reflected in lower food prices, higher employment and rural wages. At the same time the research and extension system need to be revised towards more demand-driven, participatory approaches based on public-private partnership.
• · Irrigation Sector. Institutional reforms and investments need to proceed in parallel. At the primary level, long term solutions are needed for inter-provincial drainage problems and environmental flows to the Indus delta. At the same time, the safety of infrastructure (especially barrages) will need to be guaranteed. At the secondary level, the introduction of water entitlements and rights, greater participation of stakeholders, transfer of asset management to water users, development of accountable service delivery institutions, and improved water pricing and cost recovery policies are needed. At the tertiary level, a better integration between irrigation and agriculture would help the whole system to become more demand driven.

2. Promoting more equitable access to assets and natural resources management.

• · Land: The high inequality in the existing land tenure structure calls for a comprehensive approach that is socioeconomic and politically feasible. On the one hand, it requires better land markets functions through: (i) improvements in the land administration system, including computerization of land records and reduction of transaction costs; (ii) land taxation policies to reduce incentives for speculative purposes; and (iii) market-based land purchase schemes to facilitate land access across size groups. On the other hand, better allocation of State-owned lands should be further pursued to address landlessness.
• · Finance: Access to formal and informal credit by medium- and small-size farmers and non-farm enterprises should be expanded. For the poor, micro-credit programs that accept other forms of collateral besides land, matching grants for income generating activities, and savings-based schemes may be more appropriate to increase access to micro-finance services. An adequate regulatory framework also needs to be put in place for this.
• · Natural resources. The degradation of land, water, forests and natural ecosystems is pervasive and mostly affects the poor. The situation in Sindh with respect to land use, salinity, degradation of the wetlands, and floods will need special attention, given the large externalities involved. Policies and public programs will need to address the incentive structure for sustainable use and mitigation measures.

3. Institutions for the poor and rural service delivery

• · Participation and accountability: The importance to target the poor to share the benefit of growth and to address their immediate needs is widely recognized. The Government’s devolution initiative strengthened accountability and aimed to improve rural service delivery through capacity building for local governments and communities, and citizen participation.

Livelihood opportunities. Social mobilization and increased capacity for collective action will enhance opportunities for livelihood and income generating activities and greater “voice” in dealing with the private sector and markets. Support for the basic infrastructure and social services delivery would help improving the rural investment climate, a vibrant private sector, employment and livelihood opportunities, and linkages between farm and non-farm sectors.

Challenge of rural poverty

Post Source: Dawn Newspaper

By Meer M. Parihar

SUCCESSIVE governments in Pakistan have taken numerous policy initiatives to alleviate poverty, yet the latter has continued to increase. The International Fund for Agricultural Development’s Rural Poverty Report 2011 says that poverty is widespread in Pakistan and is predominant in the rural areas, holding that “nearly 80 per cent of the country’s poor people live in rural parts of the country”.

Agriculture is the heart of the rural economy. The sector is not just a source of food but also foreign exchange earnings and has done well in the past few years. Nevertheless, small landholders and landless peasants, whose work makes the country produce a surplus of grain, live in abject poverty, the basic reason being the unequal land distribution, particularly in Sindh.

Instead of the size of landholdings decreasing, in this province many feudal and neo-feudal families have been multiplying their acreages. In that race, they have not spared the riverine belts and common grazing grounds in arid areas. Whether in power or out of it, it is this class that benefits from governmental subsidy policies, extension of services and most importantly, has access to water. The powerful bring their entire holding under cultivation by usurping the water rights of small farmers and tail-enders.

Improving the lot of the rural poor would involve focusing on increasing yields per acre, generating self-employment activities and encouraging industrialisation. Additionally, there is a need to provide quality education and better health facilities, making potable water available and delivery services efficient. Yet in the interior of Sindh, Balochistan and Khyber Pakhtunkhwa, challenges include the declining fertility of arable lands, high input costs, shortage of water and vulnerability to natural disasters. Thus bringing about improvements in the agricultural farming sector alone will not bring about real change.

There is a need to search for alternate sources of income, preferably indigenous ones with which rural people are familiar. Of these, the most common is livestock farming. Animal rearing is traditional in rural societies.

Sindh alone has over 35 million milch and meat animals, including a number of breeds at par with international standards. It is rich in milk production and yet cannot meet even half the milk demands of big cities in the province. Balochistan has more that 50 per cent of Pakistan’s estimated total of 26.488 million sheep. During Eid, there is a surge in demand for camels both in the Gulf and local markets. Sindh and Balochistan possess more than two-thirds of the estimated one million camels in
Pakistan. Given their location, they could attract greater attention from milk and meat importers in Muslim countries, particularly the Gulf where fresh deliveries can be ensured at low carriage cost.

Despite all these positive indicators, the livestock sector has been neglected. Small farmers, who contribute about 80 per cent of the milk production, have never been a priority with successive governments. Assistance and the extension of services have remained restricted to big farmers. Small-scale farmers do not have unfettered access to grazing fields and fodder, let alone feed that is rich in protein.

Federally funded projects such as the Pakistan Dairy Development Company and the Livestock and Dairy Development Board have failed to reach small farmers. The same state of affairs applies to provincial livestock departments. The Sindh Dairy and Meat Development Company Ltd, a first of its kind, multi-million project for small farmers that was launched using savings made by abandoning duplicate schemes in 2008, is still in limbo. Similarly, USAID and Japan International Cooperation Agency projects related to the livestock sector have yet to take off. Neither can much be expected from the recently launched Rs3.539bn Poverty Reduction through Smallholder Livestock Development project since the stakeholders were not involved
at the decision-making and implementation stages.

Still, the livestock sector is performing relatively well, particularly in Punjab. While other development sectors experienced saturation and decline, there was a 17.8 per cent increase in livestock. The Economic Survey of Pakistan 2009-2010 reports that the “livestock sector contributed approximately 53.2 per cent of the agriculture value-added and 11.4 per cent to the national GDP”.

Clearly, there is massive potential to enhance milk and meat production by focusing on small livestock farmers. These people need better services, support in obtaining soft loans for purchasing animals and leases of land on which to grow fodder. Much could be achieved by making available breed bulls and scientific methods of cross-breeding. Conveniently located milk sale centres and awareness-raising programmes could help bring small livestock farmers into the cooperative farming net.

Meanwhile, there is the need to prioritise vulnerable populations at the tail end of the canal networks and in arid or flood-ravaged areas where poverty is on the increase.

The key to the success of any project depends on the judicious selection of those running it. Meanwhile, organisational austerity must be observed by avoiding extravagances such as purchasing large vehicles or furnishing offices. Projects must be effectively monitored and audited.

It is important to keep in mind the advice issued by the UK’s National Audit Office to its Department for International Development in terms of rural poverty reduction initiatives: “It should concentrate its efforts on what it knows works well and avoid what does not work well in practice.”

Livestock farming projects that focus on small farmers are sure to work well in rural Pakistan if undertaken with commitment and transparency.

The writer is a former secretary of Livestock & Fisheries, Sindh.

meer.parihar@gmail.com

Weather-stressed wheat crop

Post Source: Dawn economic & business review

WITH the first half of April remaining unusually cold, and another spell of rains threatening not only to prolong the cold wave into the second half of the month but also making it humid, the wheat crop in Punjab is under stress. Understandably, it has left the planners guessing as to how much damage this freak weather could wreak on an otherwise record size crop. Crop cycle in Punjab is complete. In southern part of the province, it is over due. But the weather is not allowing its harvesting; hot and dry weather is needed for harvesting whereas the current pattern is cold and humid. Already mature, and soon to be over-mature, crop is in the field, with farmers praying for the weather to turn hot and dry. However, there has been no damage to the crop on this account so far. But if the current weather pattern extends beyond third week of April, the crop would be exposed to possibility of shedding and lodging. That could translate into yield loss.

The ripe crop is naturally top heavy, hanging on a weak stem. It could easily fall with the slightest high velocity wind. Rains make the soil wet and its grip on stem-roots even weaker, causing lodging even without high velocity winds. This is the risk the crop faces in the province now. How much of it happens, no one knows for sure.

The second biggest source of uncertainty is the anatomy of wheat crop. Once fallen on the ground, it does not have a dormancy period like other crops. The dormancy period is the time lag between shedding of any crop and its seeds becoming seedlings (re-germination). Almost all other crops do have a reasonable time lag before its fallen seeds start germinating. But it is not so with the wheat seed. Once it falls on the ground and the grain comes out of the spikelet, it germinates within no time. There is, thus, no time to save the crop once it starts falling.

Harvesting wheat in cold and humid weather has its own cost: it hits the quality of grain, increases chances of grain breakage and enhances post-harvest losses. All these three factors can weigh heavily on the final yield quality of the crop. It is because such weather makes and keeps the grain wet even after harvesting and taxes its quality.

The moisture content in grain has to drop from around 20-10 per cent if it is not going directly for grinding. Until the drop of moisture, the grain is also exposed to many crises – fungus attack being one of them and bad smell the other.

It also becomes very difficult to harvest the crop by harvester because it sifts grain from the chaff by blowing strong air. Wet chaff sticks to wet grain, and their separation becomes impossible. The thrashing thus has to be carried out manually. To make the matter worse, storage of wet grains becomes harmful. It runs high risk of fungus attack, and affects the rest of the crop as well. If ten out 1,000 bags in a stack come under fungus attack, it becomes very difficult to locate them and separate them. Keeping them in there will spoil the entire stack.

In the beginning of the month, when temperatures started dropping and snow started falling in northern parts of the country, the metrological office was hoping things to get back to normal after mid month. At the middle of the month, a system producing rain has entered the country, and rain is expected in the next 48 to 72 hours. One only hopes that the weather gets clear after the rains, and temperatures rise to allow not only wheat harvesting but also some snow melting easing water shortages, which hit 50 per cent at one point of time during last weak, hitting cotton sowing in Sindh.

But if that does not happen and the farmers had to go for harvesting, they need to take a few precautionary measures, like harvesting manually, keep bundling the harvest in short intervals instead of doing so at the end of day (traditionally, farmer harvest the crop whole day and make the bundles in the evening), keep the bundles in standing position so that rain water does not stay in the stem and thrash wheat as soon as weather improves at any point of time in 24 hours. They will also have to spry storage pots and places (at some additional cost) before moving the crop there.

But if the weather improves during this week, harvesting and thrashing would gain momentum. In that case, there would be a distinct possibility of price crash as it would create an instant glut in the market, and test provincial food departments beyond their limits. It would be especially true if cold weather does not hit the grain, and the size of the crop remains as substantial as farmers are currently hoping for. They are hoping a record crop of around 25 million tons. In that case, a tradable surplus of well over eight million tons would hit the market. With weather delaying harvesting, time for trade is being squeezed correspondingly. That is why the catch would lie for everyone in the trade, especially the official sector.

The government is targeting procurement of 6.5 million tons, leaving around two million tons for private sector. Situation would worsen if the private sector goes slow and government agencies are unable to buy quickly. All the government agencies have a procedure for procurement, which is slow and hardly matches normal arrival of wheat in the market. This time, it would be even short span. A substantially bigger crop size and its quick arrival would be a cause of concern for everyone this year.

Curb on wheat movement to hurt small growers

Post Source: Dawn Economic & Economic Review

By Mohammad Hussain Khan

THE ban imposed on inter- district movement of wheat by the Sindh Food Department will benefit the middlemen or traders and hurt the small growers. Farmers fear that with the ban continuing and harvesting of a bumper crop getting into full swing, price of the grain would drop as hoarders and middlemen would be free to caiptalise on the situation. They will connive with the food and police officials to take the crop to Karachi from other districts and mint money. All Pakistan Flour Mills Association, Sindh chapter, president Mehmood Hassan is worried that price of 100kg bag of wheat has jumped to Rs2,450 from Rs2,350. He believes the one kg price of flour would also increase which was otherwise showing stability at Rs28.50 per kg.

Until the ban imposed on April 10 for one month, wheat price stood at Rs880 per 40kg against the support price of Rs950. At the early harvesting stage in lower Sindh, growers even sold 40kg of wheat at Rs925. There has been a demand from growers to increase the support price which is static for the last three years.

Small growers of wheat are usually exploited by food officials. But the ban on movement of the crop hurts them more. They approach the nearest official procurement centre of the food department to sell their produce along with form-VII of their land showing its ownership to get gunny bags.

The officials demand commission for the gunny bags which they are unable to pay as they don`t have large quantity of wheat. The call deposit for gunny bags is refundable and growers bear the cost of unloading of crops at centres. To avoid the hassles, they sell their crop to middlemen at lower rates. Those providing crop to food department also have to pay commission for collecting call deposits for gunny bags.

“It is unfortunate that the government underscores the need for increasing wheat production and when the growers do it, they are slapped with ban on crop movement,” says Anwar Bachani, general secretary of Sindh Chamber of Agriculture.

“The ban is to support middlemen only as food officials don`t provide bags to small growers, who ultimately sell their crop to middlemen,” he says. He talked about a nexus between the middlemen and the food officials. The latter buy crop from the former at official price after getting commission but do not offer actual price to small growers. Presently, average wheat price offered to growers ranges between Rs800 and 850, he says.

This year the government has fixed procurement target at 1.3 million tons against 1.5 million tons of last year. Growers` representatives have termed it unjustified in view of the size of the crop. Ever since last year`s floods, bumper crop was predicted.

According to Sindh agriculture crop reporting service, wheat was cultivated on around 10,92,000 against the target of 10,31,000 hectares. After floods the katcha area on both sides of the Indus – around 2.2 million acres – was brought under wheat cultivation.

Climatic conditions remained favourable with ample supply of water. Even in February and March when water is needed the most for healthy grain no complaints of water shortage were received. Since then growers have stressed the need for better management and timely procurement of the crop.

Now the growers have reacted against the ban on movement of wheat on the ground that it is illogical that when there is a bumper crop, free market mechanism is being curbed.

Sindh Abadgar Board (SAB) general secretary Mehmood Nawaz Shah believes that the fear of the food department that it will not be able to meet the procurement target of 1.3 million tons despite bumper crop is ridiculous and hence the ban on the movement of the crop is unjustified. “We demand that gunny bags should be provided to growers to obtain the required results,” he remarks.

He foresees a sharp increase in flour prices which consequently would affect the consumers. “Losses to growers will increase as price of wheat will drop following ban,” he says. “Let traders export wheat freely and open market dealers offer fair prices to growers,” he advocates.

Mir Zafarullah Talpur, vice-chairman of the Sindh Chamber of Agriculture (SCA), Mirpurkhas region, alleges that the ban will lead to leakages. He says food department will issue permit selectively to transport wheat and everyone knows how permits are issued. “So growers are not going to get fair price,” he observes. He points out that free market sale always benefits growers as they have choice to sell their crop in market or to the food department.

The signals from government circles are confusing. Apparently, the department is finding it hard to achieve the target. Food Director Talib Magsi says that ban can be extended further for a fortnight after its expires after one month to achieve procurement target of 1.3 million tons. But Sindh Chief Minister told journalists the other day that Sindh government was approaching the federal government to get target for Sindh increased to 1.5 millions tons in view of the bumper crop.

Realising land potential

Post Source: Dawn Economic & Business Review

 

If the government cherishes the desire to move forward towards sustained self-sufficiency in food sector, it will have to move away from the syndrome of promises outpacing performance. It will have to develop a workable stratagem, plugging crannies and crevices in the agriculture sector. - File Photo.

 

 

By Ibrahim Lakhiar

 

Pakistan is a divinely blessed country with vast swathes of fertile land and perennially flowing waterways, that traverse and criss-cross its heartlands, flanking silt-laden and gold-growing soil on either side.

A bird`s-eye view of the sector would reveal that a lot of land has been brought under the plough. The credit for this task squarely goes to growers. The input of the government has been minimal. Growers` single-handed endeavours have born fruit in converting barren lands into blooming fields.

Despite ceaseless efforts of growers, most of the land, especially in Sindh, is not properly developed. A cursory glance at the expanse of lands would be met with repelling looks. Looks look abhorrent, when the land is viewed during the period falling between harvesting of one crop and growing of another.

These repelling looks emerge from the uneven surface of lands, massive amassing of unwanted heaps of earth in its bosoms and the thick and clumsy embankments of minors and tributaries.

If the bonded land under the occupation of unwanted earth is retrieved for cultivation, it may amount to a slew of `ghuntas` in almost every `survey number` of the land. The released area at national level could add up to multiple thousands of acres, which could yield many more maunds of crop yield, touching fancy figure in every cropping season.

Unlevelled land, when flooded, develops depressions and forms puddles. The stagnant water in pools affects crops` growth. Similarly earth in heaps and embankments deprive the grower of additional space of fertile land for cultivation.

Attractive ambience offers added incentive to stay put in the place. Well developed land would not be an exception to this rule. Farmers loitering in the land leisurely would not tolerate weird growth of weeds. They would uproot the same to enable the neighboring plants to sprout luxuriantly. Acceptability of the clean marketable surplus would then be enhanced at first glance.

Handicapped by resource constraints, the growers cannot be expected to hire privately-owned and highly-rented heavy machinery to level the land and remove the dunes. The condition of the government-owned rickety bulldozers leaves a lot to be desired. Their condition is too bad to complete the assignment, confronting countless breakdowns and leaving the growers in the lurch. As for big wigs, they have myriad of resources to beef up their bulging bank balances, caring little to develop the land that could at least benefit the back-bared toilers on their lands.

Retrieving land from the jaws of earth dunes and leveling do not beg billions of rupees from the government to purchase necessary equipment. Infra-structure to assimilate the equipment already exits at district level. What is required is shopping the bulldozers and laser equipment from some friendly foreign country.

In the on-going episode of engagements with the US, a window of opportunity has opened in the flagship aid programme on non-military side under the Kerry-Lugar-Bremman Act. One of the components of the aid package relates to agriculture. If the embedded wisdom of the American is to be trusted, the US government can pick up the tab without involving the GoP functionaries undertaking detailed extra homework to convince them about the advantages of the requisition. A caveat can, however, be appended to ask the Americans to provide brand new machinery and not over-hauled junks.

If the government cherishes the desire to move forward towards sustained self-sufficiency in food sector, it will have to move away from the syndrome of promises outpacing performance. It will have to develop a workable stratagem, plugging crannies and crevices in the agriculture sector.

For optimal utilisation of land potential, creation of conditions on the surface of the soil is significant. The deficiencies high-lighted may look perfunctory, over-hyped or not appealing, but viewed contextually, these would prove to be a driving force to further maximise production, following enhanced interest of the farmers due to creation of pleasing condition of ambience on the place of work.

Food security concerns

Post Source: Dawn economic and business review

By Dr Mirza Ikhtiar Baig

THE food prices index around the world has surged to a new height compelling a few countries of North Africa and the Middle East to store wheat and rice in bulk. And governments of Mexico, South Korea and developing countries of Asia are paying huge subsidy to buy and store crops. It is also feared that rising oil price may result in increase in demand of food items. The Food and Agricultural Organisation (FAO) has advised developing countries to avoid the option of producing bio-fuel from corn. According to a report, a number of developing countries have used 120 million tons of cereal food as alternate source of energy by converting it to bio-fuel paying huge subsidy of $13 billion. Naturally, this will lead to rise shortages and increase in prices which may create serious food shortage as suffered in 2007-08.

To confront such eventuality, Pakistan will have to activate research and development cells of its agricultural sector and encourage the use of high yield seeds to improve productivity so that it not only meets its domestic needs but also boosts exports.

Though the present government, with a view to increasing the income of farmers and curb smuggling of wheat across the border, has increased support price of wheat to double from Rs425 to Rs950 per maund, the move has resulted in increase in wheat and bread prices.

The Director of World Food Programme in Islamabad has recently described the wheat support price as the root cause of price hike. According to a rough assessment, 10 per cent increase in support price results in three per cent rise in prices of food items. The 120 per cent increase in the support price of wheat has resulted in an increase of 32 per cent in the prices of its items.

On the other hand, the recent flood adversely affected production of crops taking prices of food items to a new height and creating sugar crisis which rose to Rs90 per kg, but with cut in sales tax by 50 per cent, the price was brought down.

Since the government will not be able to continue this subsidy for a long period, sugar price may go up again by Rs10 per kg.

Experts are of the view that the issue of food security will keep on nagging the world. Thank God, Pakistan is now a wheat and rice exporting country. But then for tea and cooking oil it has to rely heavily on imports.

Recently because of increase in fuel and power rates, food items recorded an increase of 17 per cent. Government sources said import of our food items recorded a rise of 74 per cent between July 2010 and January 2011, taking our import bill to $3.15 billion. This trend is visible globally and the uprising in Tunisia, Egypt and Libya are its consequences.

Last year I visited the UAE, representing a delegation of businessmen and met UAE Minister for Commerce Sheikha Lubna Khalid Al Qasmi to discuss bilateral trade and investment. She informed me that during the last GCC meeting the question of food security in the Gulf countries was high on their agenda and it was decided to purchase agricultural land in other countries to produce and import food items for the Gulf states. The UAE wanted similar arrangements with Pakistan.

I informed her that the UAE was already cultivating Alfalfa in some parts of Sindh for export to UAE. In addition to Pakistan, UAE is also cultivating fodder in Sudan, Spain, Canada and some other countries.

Sheikha Lubna said the UAE was even ready to build small dams for cultivation on the lands they would acquire in Pakistan, provided the government ensured that there would be no ban on export of these items.

In short, food security is common concern for both rich and poor. Both developed and developing countries are therefore, making long-term plans to meet their food requirements.

Pakistan is fortunate to have a vast fertile land and an effective irrigation system. We are blessed with four seasons and our farmers are hard working. All we need is good network of transportation of farm products from field to storage. We should also add value to our items and improve packaging for exports.

Owing to huge increase in prices of agricultural products, the farmers/agriculturists are supposed to have earned additional Rs250 billion through cotton trade and Rs230 billion from wheat and rice. Unfortunately much of this additional amount went to the pockets of the middlemen and the big landlords.

The Director World Food Programme in Islamabad, Wolfgang Herbinger in a report said that due to increase in food prices about 70 per cent of flood victims in Pakistan had to borrow money to meet their day-to-day needs. Pakistan is producing food items in abundance but due to high prices and poverty, the purchasing power of the common man is gradually decreasing.

It is therefore imperative to review the agriculture policy to attain autarky in food crops and provide essential food items to the common man at affordable rates.

( The writer is advisor to PM on textiles )

Gram crop to achieve output target

Post Source: DAWN economic and business review

By Ahmad Fraz Khan

 

GRAM the second largest Rabi crop acreage wise — is expected to achieve its production target of 623,000 tons, making it a good season for agriculture. Farmers are also hoping to hit a dreamy wheat target of 25 million tons. Both these crops would definitely boost country`s agriculture output. Gram, commonly known as poor man`s protein for its healthy dietary value, is to be harvested by the end of April. Though the crop`s achieving the production target can only be welcomed, it is also time to assess the potential of the crop and see how it could be improved further. Especially, as international grain prices are increasing and may take pulses price upwards with them putting additional pressure on the poor.

As far as acreage is concerned, gram falls fifth on the national list after wheat (22 million acres), cotton (eight million acres), rice (six million acres) and maize (three million acres). It is sown on 2.7 million acres, which is more than the much politicised cane crop which covers only 2.2 million acres. Of the one million tons requirement, the local crop meets 85-90 per cent. By that calculation, the crop would still be less than the need, and may be imported to meet the requirements.

This is pathetic to say especially when the country had produced over 200,000 tons more than the current target. In 2006-07, gram production stood at 823,000 tons. This was the result of policy measures, which included “intervention price” and later induction of Pakistan Agriculture Services and Storage Corporation (Passco) into procuring gram to stabilise price. Both the measures increased gram production by 75 per cent within a span of one year. Unfortunately, due to official neglect slide in production started from the very next year.

The slide was officially accepted, rather engineered. No one can explain the logic behind fixing 25 per cent less target for the next two years than what has already been achieved. Last year, the production target was reduced to 553,000 tons – 33 per cent less than 2006-07 production. This year, the official target was 623,000 tons – some 25 per cent less than the same. Why the targets were revised downwards, no one knows. Especially when the national requirement is more than that, and the country faces shortages and high price once production drops.

The second factor that increased production during 2006-07 was improved seed. As per official record, around 1,510 tons improved, not certified, seed was used during that year and production skyrocketed. In subsequent years, the usage dropped exceptionally, and so did production. In 2007-08, only 206 tons improved seed was used.

Next year, it dropped to 180 tons and to 172 tons last year. If total requirement of seed is considered, it comes to around 81,000 tons – at a rate of 30kg per acre for 2.7 million acres. Out of these 81,000 tons, if farmers use only 172 tons improved seed, one cannot, and should not, expect any miracle out of the crop, despite all other good practices and favourable climate.

It only goes to prove that seed is crucial to grams production. But there has not been much varietals improvement in gram seed. One wonders if genetic improvement can be bought to cotton, rice and maize seeds, what deters the government from encouraging seed agencies for doing the same to gram. No multinational or a local private company deals in gram seed, leaving over 70 per cent of farmers with traditional varieties, which have become highly susceptible to all kinds of diseases – fungi, bacteria, nematodes and viruses.

The government must ask the official agencies dealing in seed business to come up with some better varieties of gram (both desi and kabuli ). That is exactly where the planners need to concentrate.

Apart from seed, the crop also suffers few other problems that must be dealt with. They include pests, poor agronomical practices and water availability. As far as diseases are concerned, experts believe one way of dealing with them is to stop sowing gram in the area for three to four years. It could break the pest cycle and help gram grow better.

But, to stop gram sowing, farmers need alternative crop. Cotton can be one option. India has successfully taken major portion of cotton crop to rain-fed area and some companies in the country have also experimented with the same, with encouraging results.

In addition to a shift in crop cycle, the government should also help farmers improve agronomical practices. Since soil in the rain-fed areas is largely un-even, fields` preparation becomes even crucial. Deep sowing with drills is the most desirable practice in gram areas as traditional sowing (throwing the seed) drastically reduces yield.

Since the entire crop is restricted to rain-fed areas, reliable water supply is crucial to the crop. Other gram producing countries, like China, have developed mobile water units or have taken the crop to sprinkle and drip irrigation. Such models are still to be explored here.

The entire concentration of the crop in Punjab, over 85 per cent is only in rain-fed areas, which happens to be the most backward as far as agriculture, development and administration is concerned.

The crop thus falls much below the official priority list. Given its nutritional value, especially for the poor, gram must be taken out of neglect, and be saved from these small problems. The government needs to take these small steps to achieve big result.

EAC advises imposition of agriculture income tax

Post Source: Staff Report Pakistan ToDay

 

ISLAMABAD – The government has been advised by the Economic Advisory Council to take measures to tax the agriculture income and proposed setting up of a holding company to revive the eight loss making and upgrading the five profitable public sector enterprises. The meeting was held under the Chairmanship of Minister for Finance Dr Abdul Hafeez Shaikh, and attended by Dr Hafiz A Pasha, Shaukat Tarin, Dr Ijaz Nabi, Jahangir Khan Tarin, Salim Raza, Farooq Rahmatullah, Ali Habib, Nasim Beg, Shahnaz Wazir Ali, Farid Rehman, Hassan Ali Chaniho, Arshad Zuberi, deputy chairman planning commission, governor State Bank of Pakistan and other senior officials.
An official source said the council also expressed serious concerns that the Federal Board of Revenue (FBR) may not be able to even achieve the revised revenue collection target of Rs 1604 billion for the current fiscal year. He said EAC was of the view that revenue collection would remain around Rs 1530 to Rs 1535 billion.
They suggested that the government should take administrative measures to increase the revenue collection by bringing agriculture income into the tax net, adding that provinces were already empowered to collect tax from agricultural sector and should be asked to issue notices to rich landlords. On the issue of taxation of agriculture sector, the source said it was proposed that FBR should explore the actual potential of taxation of the agricultural sector and should obtain a list of possible taxpayers from the provinces.

Depleting agro-biodiversity a risk to food security

By Fahim Nawaz – Dawn economic & business review

THE replacement of indigenous varieties of crops, fruits, vegetables and livestock species by high-yield crop varieties and improved breeds of animals, in the past few decades, has depleted agro-biodiversity.

Indigenous varieties and livestock species have lost their significance due to intensification of farming and separation of local communities from indigenous biological resources.

Agro-biodiversity has a major role in providing food and promoting food security for the future. Agro-biodiversity for food and agriculture comprises various biological diversity components like crops, fish, livestock, pests, inter-acting species of pollinators, predators and competitors among others. About 20,000 species of plants, fungi and animals have been identified for their medicinal importance; and pharmaceutical industry is based on these biological resources and related local knowledge. Plants are the potential food resource for both humans and animals. It is interesting to know that about 30,000 plants species have edible parts but only 7,000 plants have been collected or grown as food throughout the history, of which only 20 species provide 90 per cent of the world’s food. Wheat, rice and maize supply 60 per cent of the world food requirements.

The food security is threatened by rapid decline of biodiversity through introduction of exotic species, loss of gene pool, neglected/underutilised species, monocultures and bio-fuels. The introduction of uniform, high-yielding varieties has resulted in the loss of 75 per cent of plant genetic diversity as farmers have worldwide replaced their multiple local varieties and landraces with these varieties. These varieties led to the deterioration of the environment as they required more water, high input of chemical fertilisers and pesticides which increased salinity, waterlogging and also resulted in depletion of nutrients.

The well adapted old cultivars have been replaced by few genetically modified varieties and breeds. New species are ranked second to habitat destruction in threatening the biodiversity as they exclude native species by competing with native flora/fauna for resources. Some plants like Mesquite have made cultivated lands vulnerable to cultivation while others like eucalyptus and parthenium retard seed germination and plant growth of native plants by releasing allelopathic chemicals. It has also resulted in the introduction of new pests like mealy bug.

Livestock is so severely affected that about 30 per cent of its breeds are at risk of extinction and six breed, worldwide, are lost each month. Domestic animals are decreasing at the rate of five per cent and tropical forests at the rate of one per cent. About 70 per cent of marine species are fully exploited and nearly 60 per cent of the earth’s coral reefs are threatened by humans. According to estimates 34,000 species of plants or 12.5 per cent of the world’s flora are facing extinction. The diminishing biological resources will diminish food sources of the communities and this will lead to food insecurity.

The introduction of bio-fuels in the last few decades has helped solve the problem of energy insecurity and climate change but the increased conversion of agricultural commodities to biofuels resulted in an increase of international food prices.

According to the World Bank, about 70-75 per cent of the increase in food commodity prices from 2002 to 2008 was mainly due to biofuels. The use of biofuels has decisively contributed to a rising demand for sugar, maize, wheat, oilseeds, and palm oil and this food/fuel competition could be observed as global wheat and maize stocks are declining considerably.

Agriculture intensification has reduced crop diversity to few varieties in Gilgit-Baltistan region of Pakistan. Buck wheat was grown on wide scale earlier but now it is rarely seen in the fields of the region because farmers are keen to grow potatoes and high-yielding wheat varieties which have made their fields susceptible to pests and diseases. The infestation of the pests like codling moth and wooly aphids in apples, Botrytis leaf virus in onions, crown gall disease in cherries and nematodes in potatoes are the effects of agriculture intensification. The market oriented agriculture practices, during the last few decades in the region, have replaced traditional self-sustaining agriculture systems.

Support to farmers is required as they play a key role in the protection of precious resources. It should be provided as a means of meeting the survival needs of ever increasing population. They should be given subsidy to encourage them to grow old, neglected and underutilised crop species like pearl millet, finger millet and sorghum etc. Biopiracy and patents on living organisms should be prohibited as well as the prohibition of the development of sterile varieties through genetic engineering processes. The government should redesign policies and take serious efforts for the conservation of biodiversity in the country. The establishment of gene bank at regional levels and promotion of research related to evaluation of national germplasm would help in this regard.