Pakistan’s Agricultural Sector: Challenges and Response (Part 4)

B. Vertical Expansion

As opposed to horizontal expansion, in vertical expansion, efforts are made to increase the yields of crops, animals, and trees by using the resource base and inputs more efficiently. This can be accomplished through the following ways;

1. Improving Agricultural R&D, Training and Extension services
2. Farm Mechanization
3. Input Availability and Input-use Efficiency

A brief description of the above will be in order

1. Agricultural Education, R&D, Training and Extension

There is an urgent need to revamp our agricultural R&D, linking it with the industry and ensuring the reach of these products to farmers. Research and Development as well as Extension are the responsibility of the government, and the system lacks capacity both in terms of manpower and finances. The funding level is among the lowest in the world, and the system is supply-driven and does not have the capacity to cater to the present-day requirements of the sector. It also lacks autonomy, particularly in the provinces. This needs to be improved by

1. Need-based Education and Research: Introducing need-based agriculture education, creating effective inter- and intra-institutional linkages, and collaborating with reputable foreign universities. Agricultural research is currently not delivering the type of knowledge needed by end users, especially the private sector and farmers in rural communities, generally because traditional and indigenous knowledge has not been taken on board. Therefore, new systems of knowledge creation and diffusion that take into consideration the needs and experiences of the client are required.
2. Strengthening Research Institutions: Strengthening the public sector Research and Development system, improving inter- and intra-institutional coordination among educational/research institutions, and extension. Agricultural education and training have been isolated from the marketplace and from the rest of the education system. This isolation has been leading to curriculum irrelevance, falling teaching and learning standards, unemployment of graduates, and, thus, decreasing investment support. Responses to such crises were mostly fragmented and inward-looking, lacking a vision and a systemic approach.
3. Private Sector Research: Encouraging private sector investment in the field of R&D with a focus on modern technology and facilitating their outreach. Private sector involvement in research can be made possible by the enactment of Intellectual Property Rights. Another possibility could be to provide financial support for R&D to non-profit organizations with links to international research organizations.
4. Capacity Building: Capacity Building of Extension Personnel of the Provincial Agricultural Departments The extension system is also deficient in resources and does not serve the sector well. It requires structural administrative changes backed by the use of technology such as radio, television, cell phones, and printed material. However, limited success has resulted in providing technical know-how, skills, and new techniques to the farming community in general and small farmers in particular. This gap in technical know-how is too wide to ignore
5. Market-driven Research: Whether it is the public sector or the non-profit private sector carrying out research, they should prioritize the products for carrying out research. For example, wheat, rice, maize, and sugar cane are essential food items and should be given priority in the food crops segment, and cotton is a valued crop. In horticulture, citrus, mango, potato, and onion may be given priority over other crops. If such a priority is set, it would make R&D much more efficient, both in terms of food security and export enhancement.
6. Coordination among Universities and Others: Effective coordination among agricultural universities, research, and extension departments needs to be enhanced to cope with the growing food and fibre demands of the country. The holistic nature of research, education, and extension dictates closer ties among these activities and among the various institutions that participate in pluralistic national technology systems.

2. Farm Mechanization

Accelerated farm mechanization is an important ingredient of the strategy to accelerate the growth rate in the agriculture sector. It has become more important with fears looming large about sustainable food security. One big aspect of mechanization is that it not only helps boost per-acre yield but also reduces post-harvest losses. The main constraints to increasing agricultural productivity are the non-availability of farm machinery to farmers at the right time and at affordable prices due to the following reasons:

1. Low Farm-power availability: Agriculture mechanization in Pakistan is limited to tractorization with cultivators. Even that farm power is inadequate. The number of tractors in operation is around 400,000, resulting in a per hectare horsepower (hp) availability of 0.90 against the required power of 1.4 hp per hectare as per FAO recommendations. The number of additional tractors required to achieve this ratio is 185,000.
2. Implements Availability: A tractor itself is not of much use if the requisite implements are not available at the right time, thereby delaying farm operations (particularly sowing and harvesting of crops).
3. Additional Issues: Add the following issues: a. inefficient selection and use of agricultural implements, usually mismatched to the field application, b. lack of proper operation and maintenance of agricultural machines by the farmer or operator/driver, c. low purchasing power of farmers as farm machines are expensive and their use is seasonal with the exception of a few implements for land development and seedbed preparation, d. poor quality of repairs of tractors and farm implements at local workshops, which are not adequately equipped and the mechanics are not well trained to provide quality services.
4. Manufacturers’ Capacity: The quality of locally produced farm machines is generally poor because of poor layout of workshops, a lack of managerial, engineering, and technical manpower, poor designs, improper manufacturing techniques, a lack of availability of quality raw materials and components such as gears, sprockets, etc., a lack of finance and marketing skills, and the lack of awareness of manufacturers about standards, the non-availability of standards in Urdu, and their enforcement.

In order to rectify the situation, we should do the following:

1. Indigenization: There is an urgent need to produce agricultural implements as per international standards. Pakistan spends about $100 million annually on the import of agricultural machinery and implements. Net imports can be reduced with a little effort to boost local production. Three things are needed to obtain this objective: (a) We need an umbrella body to coordinate all efforts on this front; (b) a policy framework; and (c) manufacturing SMEs must be taken on board.
2. Standardization: There are around 500 small and medium-scale agricultural machinery units manufacturing farm implements/machines. Locally manufactured farm machinery and equipment lack standardization and quality. Standardization is required for the use of the right type of material and ensuring inter-changeability of components, which facilitates easy repair/maintenance of the products.
3. Enhancing production quality: Through mandatory certification by relevant government certifying agencies. Similarly, giving incentives for developing high-tech machinery
4. Intensification and diversification of farm mechanization: To ensure easy access for farmers to essential farm machinery, and its efficient and optimal use, the government should incentivize the private sector to open farm machinery leasing/hiring outlets in villages.
5. Expansion and modernization of local farm machinery manufacturing: by providing them training, incentives and technical/financial support to produce agricultural implements as per international standards
6. Solar Technology: The use of solar technology is catching up among growers across the country, and solar-powered tube wells and electricity-generating panels have been a great relief in recent years for several progressive farmers. develop solar-powered machines for drying crops, distilling essential oils, roasting nuts, etc

3. Inputs

There are four types of inputs used in agriculture: seeds, chemicals, water, and credit. The existing supply chain infrastructure is full of issues that impede the development of the sector. Starting from the seeds, which form the basis for the production quality, up to the markets, the entire chain is defective.

1. There are no checks on seed companies with regard to seed quality
2. there are issues with pesticide quality and usage
3. fertilizers have become out of reach due to high prices
4. land degradation is on the increase, with over 22 million hectares of land under threat without any tangible remedy
5. irrigation facilities are decrepit and inefficient
6. Insufficient quality control testing facilities for soil, inputs and produce
7. storage, logistics and markets are inefficient and insufficient
8. the power supply is unreliable and expensive
9. growers’ outreach to markets, market information systems and marketing networks is limited
10. formal credit availability is restricted
11. crop insurance is nearly non-existent

A brief description of the interventions needed in these four areas is as follows:

Inputs-1: Seeds

Following interventions could go a long way in improving the use and efficiency of seeds

1. Variety development and local production of good quality seeds by the private sector by providing them with appropriate legal cover and technical/financial support.
2. Providing a legal framework for establishing partnerships between biotech research institutes and private seed companies.
3. Encouraging good practices among the farmers to increase the efficacy of their saved seeds.
4. Incentivize the farmers to use a drill system of sowing to save on fertilizer and for better seed germination

Inputs-2: Chemicals

1. Timely availability of fertilizers, unadulterated pesticides, and herbicides at reasonable prices to the nearest possible doorsteps of the farmers through rationalization of prices, in-time import, and provision of subsidies when needed.
2. There is a need to create awareness among farmers about the judicious use of weedicides to reduce production losses. There are eco-friendly measures to reduce this loss for those who are excessively conscious of the use of chemical inputs

Inputs-3: Water

Pakistan is facing increasing water scarcity and has entered a water-scarce region by global standards. and depending on assumptions of various future demand scenarios, annual water requirements at the canal head could be in the 135–170 MAF range after the next few years. The National Water Strategy envisages raising irrigation efficiency to 50% from the current level of 40%. Even if these targets are met, a shortfall of 22% to 33% in irrigation water supplies would remain. Existing irrigation practices are a constraint to yield increases and do not support the sustainable production of quality products. It is therefore suggested that

1. Provinces should rationalize their respective water-related legislation, including local water usage rules and the implementation of integrated water resource management.
2. Encourage public-private partnerships on water-saving techniques in the cultivation of different water terrains, and other innovative designs of groundwater recharge dams and rainwater harvesting.
3. Prioritizing planned investment in large storage infrastructure and groundwater use in light of macroeconomic instability due to public budget deficit and conflicting demand uses.
4. Saving water by reducing water losses through proper water conveyance and efficient irrigation techniques.
5. Economical management of groundwater pumping through incentives, legislation and awareness

Inputs-4: (Credit)

According to estimates, total credit disbursement by the country’s banking sector to agriculture during the current year was PKR 231 billion, as against the estimated requirement of PKR 700 billion. The gap is obviously filled by the middleman, who undertakes the timely provision of inputs to the poor farmer and consequently exploits him by taking away the output on his own terms.

The cost of utilizing a middleman’s services is estimated to go beyond 60% per year. The reason why farmers are inclined more towards middlemen is because they have convenient and hassle-free access to resources as compared to banks. The formal banking sector is reluctant to finance the farming community due to the high risks attached to agriculture lending due to perishability, non-existent infrastructure, and a lack of knowledge. There are three ways to get rid of middlemen.

1. Establishing licensed non-banking financial institutions to work on the pattern of middlemen with the availability of credit at a lower rate of interest.
2. Introducing a partial credit guarantee scheme for banks to raise their comfort level in agricultural lending.
3. Introducing and promoting the community-based Venture Capital Fund concept to make financing available to farmers on a collective/cluster basis.
4. Streamlining the traditional sources of farmer credit by integrating them with the formal banking system
5. Making financial products tailor-made to the needs of smallholders and of micro, small and medium non-farm rural enterprises to become efficiently linked to the agri-based supply chains
6. Increasing the volume and outreach of formal banking networks for timely and easy access to credit by the farming community

In my next article, I will be discussing the structural transformation of the agricultural sector