RAWALPINDI, Dec 8: Pakistan’s rural economy from the perspective of agriculture sector is not lacking economic opportunities for growth and the supply potential and demand prospects for growth are in both existing and emerging high value commodities, says a report of Asian Development Bank on Monday.

Pakistan has a strong competitive position in cereals particularly rice, maize and wheat, for which there is strong world demand, In fact, with increasing incomes and growing demand for bio-fuel, the market demand for cereal is going to rise in future, which would put Pakistan in a strong position, says the ADB report on national agricultural sector strategy.

The report says Pakistan can easily become self-sufficient and even an exporting country in wheat as it is already a significant exporter of Basmati rice and can increase its share of world markets through tariff concessions and better branding. Pakistan has a special competitive advantage in maize production as well, the report says. At present, the country is already exporting wheat products to Afghanistan largely through informal trade.

However, the report pointed out that “it is not just the growth rate that matters, but more importantly the nature and quality of growth that ensures from the agriculture farm and rural non-farm sectors are essential and business as usual approach in the rural economy will require a major paradigm shift for the economy to track the sustainable industrialisation path.

ADB says the prospect for sustained growth of the rural economy is in the development of efficient and effective agri-based supply chains that link the agriculture sector with their corresponding upstream and downstream links in the rural non-farm to the national and international markets.

The report examined the situations of existing value chain networks that have a large share in the economy, and whose stunted development in the immediate and medium-term impedes the overall growth of the rural economy. These are in wheat, rice, cotton and sugarcane. Potential areas where diversification has commenced but has not been given the big push in contributing to poverty reduction are horticulture and livestock.

The report pointed out that the critical constraints that impede the full realisation of the rural economy’s potentials are at three levels: macroeconomics, system-level, and the crop-specific constraints.

Macroeconomic stability is important for any economic activity to flourish. It is a major indicator of the government’s performance in overseeing the health of the national economy and provides the signals to private sector on whether or not it will invest in the economy.

A very recent event whose implications will need to be factored when designing a pro-rural growth strategy is the breakdown of the Doha round of talks at the World Trade Organisation. Successful conclusion of the Doha round negotiations would have provided a unique vehicle for rebalancing the multilateral trade system, particularly in addressing the long-systemic distortions with regard to agriculture subsidies of the developed countries, and providing predictable and more effective market access for developing countries to export their products.

Against the backdrop of global price hikes in food and energy, an uncertain WTO future, and rising inflation and huge deficit in Pakistan, ensuring sound macro policy becomes important in setting the overall business environment for the development of agri-based supply chains.

The report states that fiscal policies will be important for rural economic growth. Government expenditures will need to shift away from subsidies and other types of public expenses that serve as disincentives to agri-based suppliers to become competitive.