Agriculture (2016-17): the year of sugarcane

While the Finance Ministry is patting itself on the back for the decade-high GDP growth, the ‘up-to-the-mark’ performance of the agriculture sector should be taken with a grain of salt.

As per the Economic Survey of Pakistan 2016-17, the growth of the agriculture sector has been 3.46 percent – in line with the target of 3.50 percent. The better performance has been due to “better harvesting of major crops through greater availability of agriculture inputs like water, agriculture credit and intensive fertilizer off-take.” This is all well and good, and overall the sector has indeed seen an improvement over last year’s negative growth of 4.97 percent.

However, a look at the crop situation reveals some caveats in the story. Firstly, the growth in cotton (7.6%) and rice (0.7%) production in FY17 is not too impressive given last year’s decline (-29% cotton, -2.8% rice). Wheat production, too, only grew by 0.4 percent over FY16. It seems that sugarcane and maize have been driving the growth, which saw phenomenal increases in production of 12.4 percent and 16.3 percent, respectively.

Secondly, the Economic Survey confirms what this column has been writing about over the past year: there has been a decline in the area under cotton and rice in favour of sugarcane, as well as maize.

Maize and sugarcane production have seen the most rapid growth over all other crops, particularly in the most current year. This has been due to the increase in their area, which has been the highest this year in recent memory (sugarcane 7.60%, maize 12.0%).

Meanwhile, the area under cotton declined by 14.2 percent year-on-year – the lowest it’s been since 1986! The reasons for this are “exceptional losses from previous year’s pest infestation and low domestic prices at the sowing time that pushed growers away from cotton to other competitive crops (sugarcane and maize).”

Same is the case with rice, which saw 0.55 percent decline in area in FY17, on top of the 5.23 percent decline last year. Again, the reasons cited are “decline in domestic prices of rice which reduced the area under the crop and growers shifted to sugarcane and maize crop.”

With sugarcane and maize seeming to be the only major crops driving growth in agriculture at the moment, and in fact replacing other major crops of cotton and rice, one wonder how long would this trend continue, and could it have implications on the country’s exports?