Pakistan's agriculture sector : is 3 to 4 percent annual growth sustainable?

A key source of the impressive growth in Pakistan's Gross Domestic Product (GDP) has been the agriculture sector, which grew about 3.6 percent a year for 25 years. The author analyzes whether such a growth rate is sustainable. In different periods, growth has come from different sources: from a seed, fertilizer, and irrigation packages in the 1960's, from intensification of water and fertilizer use in the 1970's, and from improvement of crop management and incentives in the 1980s. In the past 10 years, cotton has been a main source of growth. The momentum for growth may be ending. Total cultivable land and irrigation cannot increase significantly. At best, water resources can expand by 10 percent, and only at great cost. Also, there have been problems with cotton in recent years. Future growth must come mainly from increases in productivity, achieved by allocating resources to crops for which the country has a comparative advantage, improving the technical efficiency of inputs for each major crop, and increasing cropping intensity. But increasing productivity means changing major agricultural systems, policies, and institution, including: (a) Poor incentives policies, which have led to inappropriate use of land and hence to problems of soil erosion and land degradation; (b) Poor distribution of land resources and inadequate systems of land tenure. At one extreme are very large estates of absentee landlords, and at the other, very small, ill-equipped peasant farms. Insecurity of tenure creates disincentives for investing in land; (c) Persistent problems with irrigation, essential on more than three-fourths of agricultural land in Pakistan; (d) Weak human resources and infrastructure; and (e) Direct government intervention in agricultural markets, which, although recently diminished, still distorts markets. Subsidized imports of wheat and price controls on cotton exports reflect a persisting bias against cotton and wheat, while sugarcane is heavily protected. The protection of domestic industry distorts sectoral prices. Government policy also distorts the market for such vital inputs as seeds and fertilizer. Serious problems in the credit market exacerbate other problems arising from policy distortions.