Archive for June 7th, 2010

Paltry investment in agriculture

Post Source: Dawn economic & business review (07 Jun to 14, 2010)

THE Economic Survey 2009-10 has pointed out the ills of the agriculture sector and suggested remedial measures. It said that the major crops, which account for 32.8 per cent of value-added agriculture, registered a negative growth of 0.2 per cent against 7.3 per cent last year. Minor crops, contributing 11 per cent to the overall agriculture sector, have posted negative growth of 1.2 per cent.

Recognising that growth volatility is a malaise, the survey said that though the sector has grown at an average rate of 3.7 per cent per annum during the last six years, the growth fluctuated from one per cent to 6.5 per cent.

The survey claimed that substantial growth (4.1 per cent) in the livestock sector – a sub-sector of agriculture – saved the day both for the government and agriculture. It made around two per cent growth possible for agriculture sector against targeted 3.8 per cent.

The situation, said the survey, demands investments in new seeds, farming technology and techniques and the water infrastructure to stabilise growth. Without new investment in these areas, it is unclear how the policy makers would tackle the emerging challenges, such as declining water availability and the climate change.

One could have expected that the survey had set the context of budget preparation and presented the government’s vision for the sector. But, the Saturday budget turned those expectations topsy-turvy as there was no linkage between what the government had suggested in the survey and what it presented in the budget. The allocations were meagre and misdirected if the Economic Survey was the guideline.

Out of Rs663 billion public sector development programme (PSDP), agriculture sector got a paltry allocation of Rs10.87 billion – a meagre 1.5 per cent. The amount turns microscopic –only 0.36 per cent–of the consolidated budgetary outlay of Rs3.2 trillion..

It becomes pathetic when taken in the backdrop of the contribution that the sector makes to the gross domestic product (GDP): it contributes 22 per cent of the GDP, provides 44 per cent of employment and directly serves over 62 per cent of the rural population.

According to the budgetary document, Rs10 billion would be spent on 44 ongoing projects and Rs795 million on 15 new projects.

A majority of the ongoing schemes was started by the last government and the present regime is just carrying them forward. Take the example of National Programme for Improvement of Water Courses, which was started by Jehangir Khan Tareen, when he was a minister for special initiatives in the last regime. It has been allocated Rs5.137 billion – almost half of total allocation.

The Crop Maximisation Plan, which found mention in the budget speech, is still to be established on ground. Financed by the International Fund for Agriculture Development, its credit line is still not clear. But the government intends to take the plan to 32,000 villages from current over 1,200 villages. How it would to increase the number by 3000 times in next year, it has not bothered to explain.

One could have expected that at least new projects would include the areas, which the government had indicated in the survey for investment. But that was not the case. Under the new schemes, government allocated Rs500 million for enhancing capacity of grain storage and another Rs35 million for construction of steel silos of 0.65 million ton capacity across the country.

The figures of livestock growth, which it announced to be over four per cent also smack of gross fudging in the face of ground realities. There are no market indicators that the animal population grew at Malthusian rate, as indicated in the Economic Survey to justify four per cent growth rate in livestock.

During the last one year, beef, meat and chicken rates have almost doubled. Had the population of animals increased as substantially as claimed by the government, the rates should have been on the slide, not on the rise. There seems to be something wrong with the figures.

Out of 15 to 20 major and minor crops, the Economic Survey does not go beyond five to six crops. How has it been able to count millions of animals? At least, it needs to establish its figures’ credibly and link its claims to ground and market realities. Otherwise, its credibility would continually chip away.—A.F.K.