Mixed prospects of agriculture

Published January 4, 2021
In 2019-20, agricultural growth of 2.7 per cent helped contain the decline in GDP to 0.4pc in the wake of the first wave of Covid-19.
In 2019-20, agricultural growth of 2.7 per cent helped contain the decline in GDP to 0.4pc in the wake of the first wave of Covid-19.

In 2019-20, agricultural growth of 2.7 per cent helped contain the decline in GDP to 0.4pc in the wake of the first wave of Covid-19.

For 2020-21, the government has set a 2.8pc growth target for agriculture and 2.1pc for the overall economy. Achieving overall economic growth may not be difficult due to the low-base effect. But meeting the agricultural growth target can be as it is supposed to come on top of an equal growth last year.

Prospects for major crops appear good with the only exception of cotton. The production of cotton that remained less than 10 million bales in 2020 cannot be enhanced to more than 11.5m bales. And achieving even that level of output depends on how easily growers switch over once more to cotton cultivation from sugar cane, how effectively the provinces control pest attacks and to what extent weather conditions support the cotton yield.

The outlook for major crops appears good with the only exception of cotton. Its production, which was less than 10m bales in 2020, cannot be increased to more than 11.5m bales

A rising trend in domestic and export prices of rice in the recent past, penetration of previously introduced high-yield paddy varieties and some improvement in paddy cultivation and rice milling techniques seen lately are expected to help rice production exceed the 2020 level of 7.4m tonnes.

The government has lately been working to promote a gradual shift from water-intensive sugar cane to cotton cultivation. That’s why a larger-than-before area was dedicated for cotton cultivation in 2020 though that could not help boost the cotton output. This policy is going to continue in 2021. But this time around, the federal government wants to ensure that it leads to at least 10-15pc increase in cotton while maintaining the sugar cane output at its 2020 level of 67m tonnes. In case the government’s drive against sugar mills that indulged in hoarding backfires politically, the sugar cane output may slip below this level but can still hover around 65m tonnes.

The wheat output in 2020 remained close to 25m tonnes but due to a lack of coordination between the federal and provincial governments and cartelisation by flour millers, people had to brave a wheat and wheat flour crisis. Wheat sowing on the targeted 9m hectares has almost been over and the Federal Committee on Agriculture is confident that the wheat output this year will rise close to 27m tonnes.

The total maize output is achieved mostly through summer maize. But it is also achieved through winter maize, which has been growing consistently for some years. It exceeded 7.2m tonnes. In 2021, too, maize production is expected to remain in the range of 7-7.5m tonnes. A slow yet steady rise in its yield and sustained increase in demand both as fodder and food crop have made maize a favourite of farmers, particularly among those who want to stay away from the politically sensitive wheat crop.

Despite a modest increase in the area under cultivation of oilseed crops in the past few years, the output of oilseeds has hovered around 3m tonnes per year and there isn’t any indication that these crops will surpass this level by a wide margin in 2021. The reason is contrary to all claims of oilseed supportive measures, oilseed farmers still struggle in getting a fair price from contractors of oil extracting companies and city-based exporters of oilseeds.

Just like major crops, the livestock sub-sector of agriculture also holds promise for 2021. In 2020, livestock growth had tumbled to 2.6pc from 3.8pc a year earlier. This reduced base and the fact that the food sector manufacturing is one of the few industries showing post Covid-19 growth resilience, livestock should either grow in 2021 at the targeted rate of 3.5pc or slightly below that. In July-October 2020, the production of food and beverages sector of large-scale manufacturing increased 12.2pc year-on-year. Provincial governments must, however, listen to the advice of the State Bank of Pakistan and conduct a physical census of animals. Lack of appropriate and updated data on cattle heads and their productivity makes it difficult for milk and meat sector companies to make realistic projections. And exploiting the full potential of livestock becomes more challenging.

Published in Dawn, The Business and Finance Weekly, January 4th, 2021

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