Archive for June 12th, 2010

Energising agriculture

Post Source: DAWN economic & Business Review

By Ahmad Fraz Khan

WITH the abolition of concurrent list, agriculture has become a purely provincial subject. For the first time, the provinces would be on their own this year to prepare their agricultural budgets – allocating their funds and rearranging their priorities. In this context, Punjab is likely to present its budget on Friday. Farmers, however, still do not know what it would mean for them. Has the provincial government, the fiscal, infrastructural and cerebral capacity to fill the gap left by the receding role of the federation? No one feels sure, at least so far.

The last two provincial budgets do not leave any space for optimism. Last year (2009-10), out of Rs175 billion annual development budget (ADB), it allocated Rs3.2 billion – a meagre 1.8 per cent – to the sector. Such a paltry amount reflected its priorities.

The previous year (2008-09) was even worst. Out of total budget of Rs3 billion, it spent only Rs1.6 billion. If that amount if deducted, the last year’s (2009-10) budget was only Rs1.8 billion.

The performance of these two years show that farmers’ fears about policy agenda are not totally misplaced, especially when the provincial government is to assume the federal role as well.

The farmers insist that the coming budget should set policy agenda, which the provincial government now plans to follow. Instead of making perfunctory allocations, it should reflect the provincial vision for the sector. The provinces have so far been concentrating on short-term measures, which supplements federal policies. This year, they have to create their own vision and set the future agenda. It represents challenge as well as opportunity for provinces. The challenge for Punjab is much bigger than other federating units as it has to feed rest of the country as well. It might not have a capacity to leapfrog production and marketing, but it certainly has the opportunity to set its priorities and allocating funds for them.

The provincial vision should include developing agriculture marketing and the government should allocate substantial funds for it. It should re-energise specialised bodies – the Punjab Agriculture Marketing Company (PAMCO) and Agriculture Marketing Department – that it created for the purpose. Instead, the provincial government is preparing an exit strategy. It plans to partially privatise wheat procurement from next season, and gradually get out of it. It then wants to apply the same strategy to other produces as well. Out of four major crops, wheat is the only commodity where the government plays some role but it is preparing to pull out.

The farmers insist that the government must not reduce, rather increase, its role in marketing until these markets become efficient enough to absorb agriculture produces and regulated enough to stop exploiting growers. Otherwise, the provincial government would be risking a social chaos.

Agriculture research is another area where farmers want the provincial government to play more effective role, and make generous allocations. Productivity enhancement is a key to future food security. Though Punjab is a surplus producer in many areas, all these areas are vulnerable to changing climate – temperature and rising water stress. The province needs new seeds that can absorb water, temperature and salt stress.

Thus it needs to reinvigorate its research sector. The previous government created Punjab Agriculture Research Board (PARB), which now seems to have dropped out of favour of current government for political reasons. Though the government is still allocating funds for its basic operation, it has lost steam. The research sector must be made responsive to farmers’ needs and result-oriented. On its part, the PARB should stop granting new projects to government organisations, and promote private sector to bring efficiency to the sector and its operations.

The new vision must facilitate a paradigm shift in the sector. People are migrating to cities in droves, and all of them would need food supplies. Punjab must make allocations for bringing that paradigm shift. In the next two decades, national population will hit 250 million mark and a massive number of them would be residing in the cities where food needs would be different from those of rural areas.

Punjab being the country’s food basket, needs to readjust its food priorities. The Punjab government must provide fiscal space for prioritised farming. No one expects the provincial government to multiply allocation this year but it should come up with a vision for the next one or two decades and pledge cascading allocations to realise the vision which it evolves.