Pakistan's Agriculture in the 21st Century

In Pakistan, agriculture, which accounts for more than 20 percent of GDP and provides more than 50 percent of jobs, has a special role to play in growth, poverty reduction, and environmental protection. Agricultural growth in the past thirty years has been impressive, at more than 3 percent a year. Sources of growth, however, have changed over the years—from the seed, fertiliser, and irrigation package of the 1960s, to intensification of water and fertiliser use in the 1970s, to improvements in crop management and incentives in the 1980s. Those sources of growth have all but run their course, and agriculture growth in the next century will depend on increasing productivity. At present there are clear signs of stagnation in productivity growth. In fact, total factor productivity, a good measure of overall productivity, may even have declined since the mid-1970s due to resource degradation, failure to adapt technical change, and poor incentives, among others causes. Future growth through productivity increase, however, will require major changes in systems, policies, and institutions for agriculture. These changes are crucial because agriculture in the next century will continue to be key in achieving growth with poverty alleviation and environmental protection. What policies and programmes should the government adopt to sustain and improve agricultural growth in the 21st Century? Before specific strategies are adopted, the appropriate role of the government should be clearly defined as limited to encouraging the development of a smoothly functioning market through institutional and regulatory reforms that facilitate private sector activities and market efficiency. In cases in which market failure is not an issue and intervention has led to market inefficiency the best strategy is to reduce the government's role through policy reforms and the strengthening of the process of market liberalisation. Thus, intervention failures should not result in situation worse than without intervention.