EDITORIAL: Prime Minister Imran Khan while addressing the National Farmers Convention warned that challenge of food security would become national insecurity if measures were not taken to mend the present course. There can be no question about the fact that farm output has declined in recent years prompting ever larger reliance on imports of even staples like wheat and sugar. This in turn accounts for the newly-appointed Finance Minister Shaukat Tarin repeatedly emphasising the need for reforms in the farm sector.
What is, however, concerning is the prevalence of elite capture in agriculture which has accounted for: (i) replacement of cotton, a major input for our value-added exports, with sugarcane which requires large amounts of water that Pakistan as one of the most water-stressed countries in the world can ill-afford; in addition, sugar accounts for patently flawed economic decisions by our administrations, including the incumbent one, ranging from allowing export subsidy on the premise that there is surplus in the country while domestic price attributed to shortages begins to rise; (ii) the continued predominance of aarthis (middlemen) who have generational ties to poor farmers (including lending at various stages of crop sowing) and who also control food supply to the market in order to make windfall profits. Aarthis operate only in cash and hence also pay no tax; (iii) while there are a few rich tech savvy farmers who have taken advantage of mechanized farming (including Jehangir Tareen appointed by Prime Minister Imran Khan to formulate his government’s farm policy in his earlier avatar) that has resulted in an average yield per hectare well above the national average yet the large number of poor/subsistence farmers have been unable to take advantage of mechanization due to lack of resources that accounts for a low national yield per hectare – much lower than in neighbouring India; and (iv) external factors, including unfavourable weather conditions/pest/locust attacks, continue to impact on farm output and this needs an urgent revisit at a policy level with the overarching objective of making our farm output less dependent on external factors.
The Prime Minister’s address focused on all these deficient areas, which must be appreciated. He referred to subsidies and interest-free loans to poor farmers already announced in the budget 2021-22 - a step aimed at ending the stranglehold of the aarthis on poor farmers and slashing existing farm output profit margins, thereby providing relief to end consumers as well. The Prime Minister rightly acknowledged that achieving this would entail solving the problems of small farmers with regard to storage, transportation, markets (direct access of small farmers to markets) as well as access to research-based information that would help them determine which land is suitable for which crop. The difficulty associated with private sector banks lending to poor farmers, with a high associated risk as well as cost to the bank, would hopefully be dealt with by the finance minister who is a very experienced banker. This delivery would be critical as previous administrations also announced interest-free credit to poor farmers but that incentive or facility was unfortunately hijacked by the rich.
To conclude, if implemented, these measures have the capacity to transform the way the farm sector operates which would benefit not only the poor farmers but also the people of Pakistan by bringing down food inflation.
Copyright Business Recorder, 2021
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