THE agricultural sector has played a pivotal role in Pakistan’s economy in terms of capital formation, employment and external trade. It has helped put the country on a growth trajectory beginning as early as the 1950s.

The sector, however, is no longer the largest segment of the economy at present. Its underperformance in recent decades attracts the wrong kind of attention to its problems. The fact is that the focus in policy debates has shifted away from the agricultural sector, particularly at federal level.

Declining public investment over time, especially in infrastructure, irrigation and agricultural research, combined with changes in demographics, markets and international trade, has contributed to the stagnation in the agricultural sector.

Without sufficient policy attention, new investments in rural infrastructure (roads, irrigation, electricity, markets, communications) and rural public services (nutrition, health, education, and sanitation), the sector has performed much below its potential.

A vibrant agricultural sector is essential for improving the welfare of people, economic growth and development.

Much of the country’s initial economic success was due to the historical Indus river basin accord with India in 1960 which opened the way for the construction of Tarbela Dam and other major irrigation investments. These developments subsequently enabled Pakistan to take advantage of fertiliser-responsive high-yielding varieties of wheat and rice during the ‘Green Revolution’ of the late 1960s and early 1970s.

Pakistan’s agricultural sector has enormous potential, which can be tapped with higher levels of investment and some major policy reforms

Yields and output grew remarkably during this period, increasing both the availability and major food and cash crops. While wheat crop ensured food security, cotton drove substantial expansion in Pakistan’s textile industry, providing the country with a critical source of foreign exchange earnings. Despite all odds, it remains a major source of income for people living in rural areas.

The Washington-based International Food Policy Research Institute has suggested that with a right set of policies it is still possible for Pakistan to boost agricultural growth.

However, growth can no longer rely on the intensive exploitation of the country’s natural resource endowment and market interventions. There is a need to improve and expand the application of modern technology to improve the performance.

Pakistan’s agricultural sector has enormous potential, which can be tapped with higher levels of investment and some major policy reforms. Policies should be designed to address long-standing issues relating to land ownership, irrigation infrastructure, fertiliser markets and the use of new technologies.

The development in Pakistan hinges not only on the volume crop production, but also on investments in human and social capital, institutions, and the quality of governance that empower people to make their own choices and pursue their needs and aspirations. These aspects have been overlooked in the discourse, experts have pointed out.

Long-term climate change and short-term weather shocks loom large in Pakistan, particularly because of the semi-arid climate in much of the country and the reliance of the agricultural sector on irrigation.

The Indus river basin system is in need of major investments in water storage and distribution, including canal rehabilitation and maintenance. Proposed investments, such as the Diamer-Bhasha dam, appear to have high economic returns.

Substantially greater investments in water storage, surface irrigation, drainage, and improvements in the efficiency of water use will be required over the next few decades to maintain the availability of water, minimise the devastation of major flood events, and increase the returns to water use.

Without investments, the agricultural output is likely to become increasingly erratic over time, and may experience an overall deceleration of growth, particularly if average temperatures gradually rise, the snow pack in the Himalayas diminishes, and rainfall variability increases, as is forecast in many climate change models.

Pakistan will also need to build up the resilience of the agricultural sector. The worst-hit areas may be the arid and semi-arid agro-ecologies of Fata, Khyber Pakhtunkhwa, Punjab, Sindh and Balochistan provinces; the flat and poorly drained flood-prone areas of lower Punjab and Sindh; and the coastal areas, where over-exploitation of underground water sources and intrusion of sea-water are creating salinity problems for aquifers along irrigated coastal areas.

With these threats looming, science and technology will need to play an even more significant role. Better regulation of seed markets and stronger incentives to encourage private investment in research and development could also speed dissemination of improved cultivars, hybrids, transgenics, and other products that could increase yields or the value of crops to consumers or could reduce yield variability, losses to biotic and abiotic stress, or costs of production.

Funding for these public initiatives could be secured by reducing expenditures on domestic procurement, storage, and distribution of wheat which accounted for Rs24.84 billion in 2012-13. It would serve better if the government decides to eliminate the subsidy on sales of government wheat to flour mills.

Similar funds could be found by significantly reducing the subsidies received by the fertiliser industry and reallocating those resources into research and extension efforts designed to improve soil fertility management.

Moving forward, the competitiveness of the country’s agricultural products in domestic and international markets will, on the one hand, depend on a strategic combination of technology and infrastructure, and on the other, appropriate price incentives for investment and production.

This was partly demonstrated in the late 1980s with policy changes, exchange rate adjustments, changes in wheat and sugar cane prices, and the gradual withdrawal of the government from direct interventions in cotton and rice markets.

Published in Dawn, The Business and Finance Weekly, August 14th, 2017