Agri collapse in ’12

With 2011 rightly dubbed a black year for agriculture, the outlook is not much rosier in the new year for the economy’s largest employer. A number of crucial factors combine to put unbearable downward pressure on agriculture growth and productivity. And failing urgent and immediate action, the spill-over will not only affect the sector’s growth, but also the national GDP, employment and export earning.
One, due to obvious time lags between policy implementation and on ground results, much of the policies introduced in ’11 will take intrinsic shape in ’12, with the prospect of a more dismal outlook for the latter. Two, area of wheat cultivation has been reduced by 10-15 pre cent, which will compound losses in agri-GDP because of flash flood losses in Sindh. Three, cultivation mechanics have been altered, as indicated by tractor off-take in H2-2011 dropping by an alarming 33 per cent. Comparing with 33 thousand in the first half of the year just ended, the number for the last six months came at only 12 thousand. The trend implies that the ongoing year will record a tractors offtake shortfall of approximately 40-50 thousand, which in turn means that a similar number of farmers will not posture towards mechanisation. So, not only will no new land come under cultivation, but rather even the present amount will decrease.
These developments have made wheat cultivation non-feasible for a bulk of the farmers. The wheat support price, set at Rs1050 per maund, is just not feasible in light of rising input costs alone. This sets a very dangerous precedent. Wheat is the country’s staple crop for rich and poor alike. And considering price distortions and cost-benefit feasibility, farmers with bare-minimum initiative will shift out of wheat production.
The cotton situation, too, is alarming. Unlike the sugar industry, which enjoys popular political patronage, the cotton sector has not been blessed with government intervention this year. The industry is already suffering with international cotton prices at their lowest level in two years. And since the crash followed an abnormal hike last season, the export industry has been caught off guard as well, with compound losses for national growth. The worst sufferer, of course, is the helpless cotton farmer, whose livelihood erodes with little chance of help from concerned quarters.
Overall, I see the agriculture sector taking a 10-15 per cent battering in ’12. Support price distortions and lack of official patronage are not all. This season has so far been without the usual rainfall, a situation aggravated by the decision to close dams. Plus, with diesel price flirting with the Rs100 level, coupled with savage energy shortage, farmers are unable to continue using tubewells as their alternate water source. The prohibitive cost means water will remain scarce. Hence low growth, low productivity and poor sectoral results in the current year.
Therefore, ’12 is likely to be a very dismal year for the agriculture sector, particular the farmer. The government no longer sits comfortably on its strategic reserves either. Reports indicate that a good 30 per cent of the stock has been lost to poor storage arrangements. The turbulence is concerning and can quickly cause numerous spill-over shocks. Deteriorating agriculture will push yet more people from the periphery, burdening the already unsustainable city-urban structure. At a time of low growth, increasing unemployment will further tear the fragile social structure at the seams. And loss in agriculture output will seriously compromise export earning, something the country can ill afford when the other arm of revenue generation – tax machinery – is not much to write home about. Unless timely action is taken, farmers too will join the tidal wave of public discontent, a worrying sign for all parties concerned, especially a government in election year.

The writer is President,
Farmers Association of Pakistan