Govt fails to carry out $350m project in the agricultural sector

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By Amin Ahmed


ISLAMABAD: The government has failed to carry out structural reform programme in the agricultural sector for which it was provided a loan of $350 million, says an Asian Development Bank (ADB) report on Thursday. Reforms in the agriculture sector were regarded as fundamental to overall economic reform, and to providing sustainable livelihoods for half the labour force, says the project completion report made available to ‘Dawn’.

The programme was aimed to improve the efficiency of commodity markets by removing market restrictions, improving public management of strategic reserves of wheat, phasing out commodity price supports and subsidies, and accelerating divestiture and restructuring of the state-owned enterprises.

The shift away from sugarcane as a result of the increase in prices for wheat and paddy has not materialised. These price increases have motivated a shift away from sugarcane but not to the extent envisaged under the programme.

Despite some progress in liberalising agricultural markets and prices, direct intervention by the government remained excessive, constraining productivity and discouraging private sector participation.

Problems facing the sector, included low producer prices, expensive and misdirected subsidies, and inadequate research and extension, the report said.

The evaluation report notes the removal of price supports, achievement in bringing prices paid to farmers close to import or export parity, and removal of restrictions on commodity movements.

However, it points out that the liberalisation does not apply to wheat and concludes that there was consensus among senior officials that the removal of wheat market restrictions would not occur for some time.

The report states that the commodity support price system remains in force for wheat, although prices are now more in line with market-based prices. The government also continues to heavily subsidise agricultural inputs, it notes.

While discussing the restructuring of state-owned enterprises, the report notes that the provincial food directorates have not been restructured as envisaged by the project. The Pakistan Agricultural Storage and Supply Corporation (Passco) continues to operate.

There was partial success in closing or restructuring public sector suppliers in Sindh and Khyber Pakhtunkhwa and at the federal level closing the fertilizer import department and the directorate of food.

The ADB report also points out that no progress has been made on restructuring or right-sizing the Parc or the Narc, and no progress is foreseen in the short term.

The report was of the view that the performance of the ministry of food and agriculture (Minfal), being the executing agency of the structural adjustment programme, was considered to be ‘unsatisfactory’.


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