Report on Agriculture Sector

8/9/2019 Report on Agriculture Sector

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Submitted To:

Sadaf Alam

Submitted By:

Narvind kumar

Farhman ali kunbhar

Owias Saboor Malik

Touheed

Date:

07/08/09

Table of Context


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S.No Topics Page No

1 Introduction 12 Land use farming systems and institutions 1

3 Performance of Agriculture Sector 3

4 Agriculture sector important role in Pakistans economy 4

5 Sub-Sector Identification 5

6 SWOT for Livestock/ Meat Sector 7

7 Comparison of current and past trends 88 Agriculture sector in India 9

9 Decline of Agriculture in Pakistan 10

10 Rural Development Program 11

11 Federal Budget on Agriculture in 2009 11

12 Government policies to improve Agriculture sector 12

Table of Context of Graphs


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S.No topics Page .No

1 Contribution in Agriculture Growth 3

2 Livestock value Added in FY08 Share 7

3 Compassion of current with past trends 8


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Table of Context of Charts

S.No Topics Page No

1 GDP -Sectoral and Growth Rates

2

2 Agriculture sectoral performance 4

3 Fisheries in FY07-FY08 5


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Agriculture

Introduction:

With a population of more than 160 million people, agriculture is the singlelargest sector in Pakistan, contributing 21 percent to the gross domestic product (GDP)and employing approximately 44 percent of the workforce. More than two-thirds of thepopulation lives in the rural areas and their livelihood continues to revolve aroundagriculture and allied activities. Agriculture contributes substantially to Pakistan's exportearnings and as supplier of raw materials to industry. Because of its central importancein reviving the economic growth and reducing poverty, the Government of Pakistan(GOP) has identified agriculture as one of the major drivers of economic growth.

Agriculture performed poorly in 2007-2008, growing at 1.5 percent againstthe target of 4.8 percent. This poor performance is attributed to the poor performance of

major crops (cotton, wheat, sugarcane, and rice) and forestry registering a negativegrowth of 3.0 percent and 8.5 percent respectively. Livestock, minor crops (lentils,pulses and oilseeds) and fisheries did reasonably well to offset the negativeperformance of major crop and forestry to arrive at 1.5 percent growth in agriculture in2007-2008. The major oilseed crops include cottonseed, rapeseed, sunflower, soybeanand safflower. The total consumption of edible oil is estimated at approximately 3.5million tonnes. More than 70 percent of this demand is met through import of crude oil(primarily palm oil) or obtained by crushing imported oilseeds. Livestock, the secondlargest sub-sector, accounts for 52.2 percent of overall agriculture value added,contributes 11.0 percent to GDP and affects the lives of 30-35 million people in ruralareas.

Land use farming systems and institutions:

The total geographical area of Pakistan is 79.6 million hectares. About 27

percent of the area is currently under cultivation. Of this area, 80 percent is irrigated. In

this regard, Pakistan has one of the highest proportions of irrigated cropped area in the

world. The cultivable waste lands offering good possibilities of crop production amount

to 8.9 million hectares. Growth in cropped area is very impressive: from 11.6 million

hectares in 1947 to 22.6 million hectares in 1997.

Agriculture is largely dependent on artificial means of irrigation. Of the total

cultivated area, about 82 percent or around 17.58 million hectares is irrigated, while

crop production in the remaining 3.96 million hectares depends mainly upon rainfall. At

present about one-fifth of the cultivated land in Canal Command Area is affected by

water logging and salinity to varying degrees.


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GDP -Sectoral Shares and Growth Rates


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Performance of Agriculture Sector:

A number of adverse development hit agriculture sector to record a dismal 1.5 percent

growth during FY08. This significantly lower than the 4.8 percent target for the year, as

well as, the lowest growth since FY03. A weaker output by major crops overshadowed

the record sugarcane harvest and relatively improved performance of minor crops;livestock and fishing sub-sectors during FY08.

Contribution in Agriculture Growth

A disappointing performance of major crops sub-sector is largely attributed to resource

management issues and absence of a clear pricing policy. For instances reduction in

cultivated area under cotton, wheat and rice was a result of water shortages at sowing

time. A significant 25.3 percent rise in agri-credit during FY08 helped farmers to partly

compensate the impact of high fertilizers prices.

Despite setback in major crops in FY08, prevailing high prices of agriculture

commodities suggest that Pakistan, being an agrarian economy, to enhance earning

potential of the farmers should focus on modernizing agriculture sector with greater

emphasis on crop diversification and its value chain. Crop diversification experiments inmajor agriculture producing countries, for instance, crops for bio-fuel, suggest that

Pakistan could also benefit from favorable global prices. This need to improve price

transmission mechanism to ensure that the benefits reach the farmers.

In federal budget FY09,some measures were announces including in subsidy on DAP

fertilizer to promote balance mix of fertilizers, exemption of excise duty on fertilizers and


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pesticides, increased allocation for maintained of reservoirs and improve irrigation

network to boost the agriculture sector productivity. The impact of these policies is likely

to be complemented by introduction of crop insurance scheme initiated by SBP, to help

farmers invest in their crops without fear of heavy losses.

Agriculture Sector PerformanceFY07 FY08 Growth rate

FY07Growth rateFY08

Value addition

Agriculture VA of which 1,132.0 1,148.9 3.7 1.5Major crops 400.8 388.9 8.3 -3.0Minor crops 124.9 599.2 -1.3 4.9Livestock 577.4 599.2 2.8 3.8

Cops productionCotton 12.9 11.7 -0.8 -9.3Wheat 23.3 21.8 9.4 -6.4Rice 5.4 5.6 -1.8 3.7Sugarcane 54.7 63.9 22.4 16.8Non-cops

Meat production 2,618.0 2,704.0 4.1 3.3Milk production 32,996.0 34,0064.0 3.2 3.2Fish production 578.0 640 -3.5 10.7Forest production 366.0 280.0 -9.4 -23.5Inputs

Improved seed substitution 284.8 266.3 12.2 -6.5Fertilizer off-take 3.7 3.6 -2.6 -2.7Sale of tractor 54,052.0 53,203.0 10.8 -1.6Credit Availability

Credit disbursement 168.8 211.6 22.8 25.3

Agriculture sector plays an important role in Pakistans

economy:

y Contributing 24 percent towards GDPy Provide food to about 130 million people

y Earning about 60 percent of the countrys total export earning

y Providing employment to 47 percent of the total wok force

y Providing the main source of live hood for the rural population of Pakistan

y Providing raw material for many industries and a market for many locally

produced industrial products.


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Pakistan is one of the world's largest producers and suppliers of the following accordingto the 2005 Food and Agriculture Organization of The United Nations and FAOSTATgiven here with ranking:

Chickpea (2nd)

Cotton (4th)

Sugarcane (4th)

Milk (5th)

Onion (5th)

Date Palm (6th)

Mango (3rd)

Tangerines, mandarin orange, Clementine (8th)

Rice (8th)

Wheat (9th)

Sub-Sector Identification:

a) Fisheries:

Improved performance of fisheries sector in FY08, owed to both marine

an inland fish catch, due to higher prices in domestic as well as international markets.

This growth is remarkable as better feed and management for inland fishing offset the

negative impact of water levels in reservoirs and rivers during the year. Fish production

from marine also recovered well in FY08 and posted a respectable growth 0f 10.5

percent as against 7.1 percent decline in FY07. Pakistan needs to improve hygiene andenvironmental conditions in handling fish and its products, to increase its share in EU

and Japanese markets. Surveys suggest that suggest that huge fishing potential is

available in Pakistan territorial limits. Utilization of this, however, requires investments,

research and introduction of suitable technology. Further, there is an urgent need to

have a comprehensive long-term National Fisheries Policy for sustainable growth

management of fishery resources.

FY07 FY08

Fish Catch

Maine 353 390Inland 225 250Total 578 640

Value

Marine 3,470 3,836Inland 13,136 14,595Total value addition 16,606 18,431


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b) Forestry:

Value addition by forestry sub-sector declined for the fifth year in a row.

This continued disappointing performance is mainly due to massive deforestation

unabated cutting of trees and forests as well as poor law and order situation in Northern

areas. As a result, timber and fire wood production from forests fell to 280 thousandcubic meters- lowest level ever. It is interesting with the rise in area under forests until

FY03. Since than the area increased by 4 percent, but production feel by massive 66

percent. The major reason of this delink is probably poor law and order situation

coupled with strong local demand FYO6 onwards due to massive reconstruction after

October 2005 earthquakes in affected areas. On the positive side, a gradual increase in

the area under forest during law few years is likely to start paying dividends in the years

to come. Therefore a strong recovery is possible in forestry in coming years.

c) Crop:

The most important crops are wheat, sugarcane, cotton, and rice, whichtogether account for more than 75% of the value of total crop output. Pakistan's largestfood crop is wheat. In 2005, Pakistan produced 21,591,400 metric tons of wheat, morethan all of Africa (20,304,585 metric tons) and nearly as much as all of South America(24,557,784 metric tons), according to the FAO. Pakistan is a net food exporter, exceptin occasional years when its harvest is adversely affected by droughts. Pakistan exportsrice, cotton, fish, fruits (especially Oranges and Mangoes), and vegetables and importsvegetable oil, wheat, cotton, pulses and consumer foods.

d) LivestockPakistan claims to be the fifth largest producer of milk, yet there is still a

deficiency. The per annum milk production is around 2,200 liters. The known pure breedis presently available at the farms in Friesian (mainly at the Army Dairy Farms) and thecross breeds are Cholistan Jersey and Sahiwal Friesian. The low milk yield can beattributed to a poor genetic pool and inappropriate feeding and farm management.Engro Foods and local dairy farmers have imported dairy cows from Australia. Satisfiedwith the quality of semen and embryos imported from Canada, the Remount Veterinaryand Farm Corps (RVFC) of the Pakistan Army may repeat the order for the sameproducts with Semex Alliance. Similarly the provincial livestock departments also have

similar demands for animal genetics.

The Canadian High Commission is also working with the GOP on finalizingthe health certificate for the export of Meat Bone Meal (MBM) and day old chicks fromCanada to Pakistan. Pakistan is also encouraging investors to establish modern exportquality slaughter houses and meat processing facilities.


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Livestock value Added FY08 Share:

SWOT for Livestock/ Meat Sector:

Strengths:

y A low input production system prevails, with less veterinary products used.y The large size of national herd.

y The population is growing fast and meat supply cannot keep pace.

Weaknesses:

y Nutritional and feed shortages are prevalent.y There is lack of processing facilities.y Health hygiene, awareness poor.y Weal SPS regulatory framework.

Opportunities:

y New markets for Halal mear Malaysia and Indonesia.y Donor support to manage SPS issues.

y Domestic and foreign private sector investment interest.

Threats:

y Imports, particularly from India.y Loss of existing markets through competition and their introduction of better

quality and safer meat products.y The introduction of exotic disease.


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Comparison of current trends to past trends

An important contributor to the slowdown in GDP growth was investment demand in thecountry reflecting investors cautious response to political uncertainty, law and ordersituation and inflation expectations. The FY08 contribution of investment demand inoverall GDP remained the lowest in last four years at 0.7 percent. In contrast to arelatively balanced FY07 growth, the major impetus to FY08 growth came from a sharprise in private consumption demand. This appears to have further strengthened

inflationary pressures in the economy.


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Agriculture sector in India

The developmental factors that contributed to the overall economic growth of India. The

period after 1990, witnessed progressive increase in the annual average Gross

Domestic Product (GDP) of the Indian economy hovering around 4.5% to 5%. The

astronomical rise of Indian Information Technology, Indian BPO and the Indian

telecommunication industry, propelled the growth of GDP of India to around 6%, during

the period from 1988 to 2003. After a long lull period, the agriculture sector of India

registered a strong growth of 4%.

The snapshots of the economy of India in 2006-2007 are as follows -

y The Gross domestic capital formation in 2005-06 grew by 23.7%y FDI amounted to US$12.5 billion and outpaced portfolio investment of US$6.8

billiony Central Public Sector Enterprises to invest Rs.165, 053 crore in 2007-08y New 162 production sharing contracts awarded to Petroleum and Natural Gas

sectory SMEs witnessed steady increase in outstanding credity Foreign trade and merchandise exports expected to cross US$125 billion by the

end of the fiscaly Provision for tourist infrastructure increased to Rs.423 crorey Bank's differential rate of interest scheme provided finance at the rate of 4% to

weaker sectionsy Seven ultra mega power projects were under processy Provision for national highway development programmed to be increased to

Rs.9, 945 crorey Farm credit target of Rs.225, 000 crore was allotted for the financial year 2007-

08 with an addition of 50 lakh new farmers to the banking systemy Defense expenditure allocation to increased to Rs.96, 000 crorey IT allocation for e-governance to increased from Rs.395 crore to Rs.719 crore.

The bullish run of the GDP India 2006-2007 was led by the following sectors -

y Information Technologyy Telecommunicationsy Electronics and hardwarey Oil and natural gasy Pharmaceuticals and biotechnologyy Retaily Textilesy Infrastructurey Construction


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y Airlinesy Health carey Hospitalityy Power and utilitiesy Transport and logistics

The stupendous rise of the Indian GDP during the financial year

2006 - 2007 can be credited to the simplified economic policy of the Government of

India. These economic policies simplified the process of business registration, cross-

border trade, and payment of taxes, eased access to credit and strengthened investor's

interest. These liberal economic policies of Government of India accelerated the growth

of Indian industries, especially manufacturing, construction, and service industry.

The Decline of Agriculture sector ofPakistan

y Climate; Irrigation and Land utilization

y Problems of water Logging and salinity

y Weights in Agriculture sector

y Institutional arrangements

Climate:

y Total Geographical area of Pakistan is 79.6 million hectares

y 27% is under cultivation

y 80% irrigated

y Cultivable waste lands amount to 8.9 million hectares

Irrigation

o Total geographical area receives only 250 mm of rain

o Two types of crops are being irrigated

o

Kharifo Rabi

o Canal system


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Rural Development Programs:

To encourage the villagers to respond to modernizing norms

To achieve the self sufficiency in every aspect

To develop small projects such as approach or feeder roads, repair or construction of small schools or dispensary buildings

Agriculture-package Federal Budget FY09 ofPakistan:

y Agriculture package aims at reducing cost of production, increasing output,enhancing water availability and raising income of faming sector.

y The budgetary proposal has been positive for farming sector in the form highersubsidy of 32 billion rupees compared with 25billion rupees last year.

y Subsidy on DAP has been raised by Rs 530 to Rs 1000/50kg bag, would reducethe price of DAP and encouraged use of fertilizers, in turn in enhancing cropyields.

y Exemption of general sale tax on fertilizers and pesticides, wood also boostdemand for urea, DAP and pesticides.

y Elimination of 5 percent excise duty on crop insurance to encourage cropinsurance scheme.

y Withdraw 10percent custom duty on import of rice seed-enhance plantation ofbetter seeds-increase rice yield.

y Allow duty free import of bulldozers/laser land leveling technology help improvewater efficiency at farm gate.

y Under white revolution program Rs.1.5 billion would be spend on dairy milkdevelopment.

y Farm level income world increase on the back of higher marker prices/demand.y Formal sector agri-credit disbursement increased, because of higher input

demand/prices.y Allocated Rs.75billion for building new dams and improve the existing irrigation

network-increase irrigation water availability.

If fully implemented the package would encouraged, mix use of fertilizers, increase useof pesticides to cope with fast spreading disease, enhance grower confidence toearn/save more, improve water availability at farm gate and increase agriculture

production. All this will help increase production, export, boost economy and reducepoverty in rural economy.


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Government Policies to improve Agriculture in Pakistan:

Government sets price level of commodities little higher than equilibrium price,

called support policy it is FOR Giving incentives to the farmer Upward revision of

minimum support prices for selected crops like Wheat, Rice etc. The Governmenthas allocated Rs 200 billion for agriculture credit disbursements for the year 2007-08

which is 25 percent higher than the allocation of the preceding year i.e. Rs 160

billion. Out of the total credit target of Rs 200 billion, Rs 96.5 billion were allocated to

commercial banks, Rs 60 billion to ZTBL, Rs 8 billion to Punjab Provincial

Cooperative Bank Ltd., and Rs 35.5 billion to Domestic Private Commercial Banks.

The agricultural loans extended to the farming community during July- March, 2007-

08.

y Agricultural loans amounting to Rs. 138.6 billion were disbursed during (July-

March, 2007-08) as against Rs.111.2 billion during the corresponding periodlast year

y Registering an increase of 24.6 percent.

y The share of ZTBL in supply of total agricultural credit by institutions

decreased and was 28.6 percent during (JulyMarch, 2007-08)

y 47 percent of the total agricultural credit disbursed during July/March 07&08.

y Domestic private bank has increased by 21.6 percent of the total agricultural

credit

y Ministry of Food, Agriculture & livestock (MINFAL) launched an integrated

development programme entitled Crop Maximization Project (CMP) in 15

districts of the country.

y The project aimed at providing inputs for crops through Revolving Fund for

the financial assistance of the farmers in the project area.

y Establishment of Zarai Tarqiati Bank Limited (Z.T.B.L.)

y Role of Commercial Bank

y Role of State Bank of Pakistan

y Easy Procedure

y Timely Disbursement

y Recovery Rate

y Package of All Inputs


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Report on Agriculture Sector

Documents

Transcript of Report on Agriculture Sector