Importance of Agriculture

Since the birth of Pakistan, agriculture remained as the backbone of Pakistan’s economy;
accounting for almost more than half of gross domestic product and supporting for more than
70% of total population. Presently, agriculture contributes above 20% towards gross domestic
products (GDP). In 1950, over 65% of labor force derived their livelihood from agriculture,
which has declined to around 42%, lately. The agriculture still constitutes a lion’s share towards
GDP. Besides, a majority of the population, especially rural population are dependent upon this
sector (62%); directly or indirectly. Furthermore, it is also the major source of earning income of
foreign exchange through agricultural exports, which leads to sustainability of foreign reserves.
Most importantly, it’s due to agriculture that Pakistan is food self-sufficient country now, which
enables to at least survive in bad times (absence of trade/war). Food sufficiency is a strong
weapon against any country which adds to vitality of agriculture sector. During the intricate
phase of nuclear explosions, it was only self-sustenance of agriculture sector that Pakistan was
able to absorb international sanctions. It was certainly a havoc stage to Pakistan, when Pakistani
people even thought of surviving on grass but not forgoing nuclear blast. Thereafter, Pakistan has
to bear international sanctions which did not affect much but still Pakistan has to pay its cost. At
such a stage, it was only self-sufficiency in food items, which facilitated Pakistan to sustain and
it helped for survival; such an important role of agriculture can’t be underestimated in term of
strategic support. Food deficiency could be used as bomb for such country. Restrictions on food
and medicines could lead to challenge independence of a country; i.e. strategic weakness of a
country. In the early stage of development, agriculture makes several important contributions, as
given below.
i) Product contribution: Agriculture doesn’t only contribute in provision of food but it also
provides raw material to our industrial sector such as cotton, oil seeds and sugarcane etc.

ii) Exports and Foreign Exchange Earning: In the early stage of development, agriculture is
the only sector which helps to offer surplus for exports and therefore grant scarce resources like
foreign exchange and surplus capital for industrial development.

iii) Cheap Food: Agriculture supported industrial sector by providing cheap food for industrial
workers and urban population. During the 1960s the government policies were designed to
extract surplus from agriculture and supported industrial sector by releasing labor from
agriculture i.e. factor contribution, cheap food, capital and foreign exchange earnings from the
export of cotton and rice.

iv) Market Contribution: In the early stages of development the population associated with the
agriculture is the major market for sale of output of industries, which produces agriculture inputs
i.e., consumer goods, chemicals, fertilizers and also capital goods like machinery for agriculture
etc. In 1964, Kuznets revealed that mercerization of production process and provision of market
for augmented agriculture net products are provided by rural economy. In the early to rural areas
and agriculture.

v) Demand for Industrial Output: The demand for industrial products comes from rural area.
In other words, the demand for industrial output is also dependent upon agriculture income.
Thus, a counter balanced linkage is important for both agriculture and industrial development.
The countries failing to keep this balance end up with frustrated growth; neither developing
agriculture nor industrial revolution could take place. Similarly, on the other hand, if we look
into the open market, accelerated growth in agriculture and industry will have a counter effect in
an open economy too.
vi) Capital Contributions: Two major sources of capital transfer from agriculture to industry
are agricultural surplus and extraction due to under paid prices of agricultural produces by the
national corporation, is another contribution in the early stage of development. Moreover, release
of labor from agriculture and provision of labor for industrialization is a significant factor supply
from agriculture to industry. In other words, the two basic and important factors of production
like labor and capital are provided by the agriculture sector. It is done by keeping agricultural
output prices low, as compared to industrial production, as well as, keeping agricultural output
prices controlled by the public sector ( by national corporations like Rice and Cotton export
corporations in the early times of development). It not only helps to transfer in capital but also
contributes to industrial sector by financing government needs. This further leads to low wages
for industrial workers; as a result of cheap food provided by agriculture and agricultural policies
which enable other sectors to grow on the cost of agriculture. Thus, industrial sector can hire
released labor from agriculture, on low wages. It has been applied in Pakistan by all above cited
means. In addition to above, Incremental Capital Output Ratio (ICOR) in LDC’s (less developed
countries) in agriculture tends to be lower than industry.
vii) Investment & Savings: It is also important to note that, it is only agriculture sector which
has significantly contributed as a sole source of saving and investment, in early stage of
development (50s & 60s). It was the time, when Pakistan had scarcity of capital and abundant
labor.

viii) Human Resource Development: Besides above, farmers also benefit in investing in non-
agriculture goods & services such as children’s education, maternal health facilities &
entertainment such as traditional festivals, which promises comparatively higher return and
utility for small farmers.

ix) Factors’ Contribution: The early stage of industrialization lies utterly on the processing of
agriculture goods like cotton, rice, fruits (jams and Jelly) and sugarcane (sugar) etc., which is
largely dependent upon agricultural raw materials. Thus, the sustenance of agriculture was based
on the continuous supply of raw material at competitive prices to industrial zones. In developing
countries, agricultural value added in manufacturing ranges to over 90% for Nigeria and
Madagascar to over 40% for Pakistan. The same is true for developed countries i.e. 8% for Japan
and around 13% for United Kingdom (UK). This course provides backward and forward
linkages9. It is a sheer dismal that, over time, the share of agricultural sector towards GDP has
dwindled. Nevertheless, it does not reflect that it becomes a petty sector. It may be noted that
even subsequent to development of any agricultural country, the remaining people still remains
attached to the agriculture sector because it is a way of their life10. A prominent example is of
United States, which has largest manufacturer of high value added goods such as fighter planes,
machineries and sophisticated computers, and arms/weapons. The most important role of
agriculture, which can never be neglected, since it provides basic necessity of life; like food for
all citizens.
Agricultural Development Planning and its Implementations
The agriculture sector of Pakistan has gone through various phases of mayhems and in turmoil.
The first and second Five Year Development Plans (1955-65) assigned significant substance to
this sector. Thereafter, much of the public policies budgeted towards industrialization. Pakistan’s
industry made outstanding progress during 1960s. Conversely, this growth was not sustainable.
The nationalization of industrial sector and reforms in the agriculture did not contribute much
towards maintaining the momentum of accelerated growth. The growth of Green Revolution
components died down soon. Besides, the 1971 war (worst years of Pakistan history: 1970s)
momentously affected all the sectors of the economy. As a result, the decade of 1970’s could
have performed better, if these events didn’t exaggerate the agriculture sector. The early seeds
sowed through green revolution started to die down in late 1970s.

It is generally understood that the Pakistan economy performs well when agricultural
performance is satisfactory. The agriculture sector is considered backbone of Pakistan economy.
Naqvi S. N. H. (1993) stated that negative growth in agriculture also leads to negative per capita
income of 0.7%. As indicated in the table 1, below, in spite of decreasing share of agriculture
output towards GDP, it still provides a strong foundation for the economy. It has been observed
that agriculture growth rate had been fluctuating over the years (from -5% to 5 %, table 1) and,
therefore, the instability of the agricultural growth also affected other sectors. Thus, other
sectors, directly or indirectly, are dependent upon agricultural performance; fluctuation in
agricultural output growth also destabilizes other sectors performance. In the era of 1949/50-60,
the agricultural growth was around 1.6% p.a. and the GDP growth was almost 3.2% per annum
(p.a.).

During 1959-60 -1970, the agricultural growth improved to 5% per annum. The GDP growth
also improved to as high as 6.8% per annum. It indicates linkages between these sectors. During
the 1960s and 1970s, the introduction and spread of the Green Revolution brought a new wave of
stimulus to agricultural growth. The introduction of new modern inputs like HYVs, chemicals
like new fertilizers and pesticides sprays significantly improved and saved agricultural output.
Besides, investment was also significant during this period11. The development plans were also
focusing on improving agriculture. Thereafter, investment in agriculture decreased12 and the
engine of agricultural growth – Green Revolution – also went out of steam. The rapid growth of
agriculture was discontinued. As a result, agriculture could not maintain the momentum of
accelerated growth.
A statistical estimation, on long term data, of growth rates’ reveals that agriculture and GDP
growth are interlinked and these are positively correlation. The decade of 1960s laid down the
foundations of accelerated economic growth in Pakistan. However, this momentum could not be
maintained due to two major reasons i) The Green Revolution failed to continue, and ii) The
inflow of foreign aid also dried up13; after the Third Five Year Plan.
The agriculture growth fell to 2.4% in the 1970’s so did the GDP growth which also decreased to
5.5%. During the next decade i.e. 1980’s, agriculture performance improved and its growth
increased to 5.5%. Similarly, the GDP growth also improved to 5.6%. The 1992-93 was a year of
bad luck. Due to floods and unfortunate weather conditions, agriculture growth not only
decreased but also turned out to be negative. These natural calamities adversely affected GDP
growth and hence only 2.3% of growth in it was observed in the 1990’s. Zadi (2015) called it a
decade lost, in terms of achieving significant economic growth. However, the agriculture sector
improved thereafter and so did the performance of GDP. During 2000s, the agricultural growth
was 3.2% per annum (p.a.), while the GDP grew by 4.7%, per annum. During 2013-2014,
agriculture and GDP growth rate remained around 2.5% and 4.0%, respectively. The agriculture
improved to 3.8% growth in 2017-1, while the economy improved to 5.5% in 2017-18. However,
it fell again to 3.3% in 2018-19 and so did the agriculture, for which the growth rate was less
than one percent in 2018-19. Thus, the growth of GDP is dependent on agricultural performance.
Withstanding the above, even today more than 30% exports (70 percent in 1949-50) and 17%
(26% percent in 1949-50) imports pertained to agriculture products alone. Rural population is
still largely dependent on agriculture sector, which constitutes a major proportion in the total
population of Pakistan. About 42% of total labor force is directly employed in this sector.
Presently, its’ share in GDP is around 19.8%. Being in such a dominant position, agriculture is
still far behind from its potential contribution towards GDP, which needs to be improved14.
Economic Growth and Agriculture Performance

Year Rural Agri. Share in Agri. Growth GDP Growth

Population GDP,% ( p.a.) (%) p.a. (%) p.a.
(%)
1949-0/60 78 46 1.6 3.2
1959-60/70 74 39 5.0 6.8
1949-60/82 70 - 3.0 6.5
1970s - 39 2.4 5.5
1980s 31 5.5 5.6
1990s 26 4.5 4.5
1992-93 24 -5.3 2.3
1996-97 65 - 0.12 1.9
1997-98 - - 3.8 4.3
1998-99 63 - 2.0 3.2
1999-00 63 - 5.6 4.5
2000s - - 3.2 4.7
2013-14 - 21 2.7 4.0
2014-15 - - 2.9 4.1
2016-17 62 19.9 2.1 5.4
2017-18 - 19.8 3.9 5.5
2018-19 61 19.5 0.85 3.3

All above indicates poor performance of agriculture. From the discussion above, we may
conclude that agriculture growth has a significant and positive impact on GDP. Policies that led
to agriculture growth, also led to improvement in overall growth rate of national income. It is,
thus vital that priority must be assigned agriculture sector, if there is any concern about
improving the living standards of people; related to agriculture sector and other segments of the
society.
4. Land Utilization: Agriculture Output and Cropping Pattern

Pakistan has both extensive and intensive potential for growth. The issue here is that all of the
land available in Pakistan is not suitable for agriculture, particularly due to areas of mountains,
forests and salinity etc. Some to this land can be brought under cultivation, with a little
investment in modern agricultural inputs. However, the case of primitive technology is a
constraint to exploit its potential. This land could be made fertile if there are appropriate policies
& application of new technologies, which can improve its salinity level etc. Besides, the
cultivatable land which is available for agriculture is also not exploited due to lack of instrument
for water and bringing virgin land under cultivation. It is no less than a wonder that one farmer
may earn over one hundred thousand rupees from one acre of land; if he uses his land optimally
and efficient inputs are applied. By producing high demand goods and selling those at higher
prices can earn abnormal returns. Besides, the same land available can be used to produce
manifolds greater output if it is optimally utilized, keeping into the consideration new researches
and market information.
The changes in the area sown and cropping pattern are given in table 2. Out of the reported area
of 46.5 million hectares in 1950-51, only 11.6 million hectares were sown. Out of this sown area,
only 3.54 million hectares were current fallow land and only 1.3 million hectares were sown
more than once. Total area cropped was 12.9 million hectares, out of the total area cultivated
(15.15 million hectares). In other words, about 28% of the reported area i.e. the net area sown
was only 25% of the total reported area. There was 44% of the total available area for
cultivation, out of which 20.7% was not available for cultivation. This reflected a very
unfortunate performance. The significant proportion of the area which could have been
cultivated remained untapped. The net area sown increased only by 3.8% in 50 years, which
indicated that extensive growth of agriculture was not evident. An average annual increase in the
net area sown was observed (hardly 0.1%) over these years. It is on the face of it, that there is
still over 9 million hectares, which remained as cultivable waste. Alone in Baluchistan, over two
million hectares are lying virgin, still waiting for exploitation.
Another feature of these unexploited resources of agriculture sector is the trivial growth in the
multiple cropping. The area sowed more than once, increased from 1.3 million hectares to 6.34
million hectares over the period of about half a century, which means that the multiple cropping
was not significant in these years. In 1950-51, net area sown was 11.6 million hectares. The
fallow land was 3.54 million hectares. Thus, total area sown was 15.15 million hectares. The area
sown more than once was hardly 1.3 million hectares. Overall, cropped area was 12.91 million
hectares which increased to 22.96 million hectares. It constitutes an increase of 77.8% in fifty
years. Thus, an average continuous increase was less than 1.5%. Thereafter, the area decreased to
22.73 million hectares. Thus, rather than increase, there was decrease in it.
Table 2: Land Utilization and Agriculture Output (Million Hectares)

Check from book

During 1990-91, the net area sown was estimated as 16 million hectares (M.H.), which further
increased to 16.6 M.H. in 1999-2000, depicting a negligible change. The cultivable waste land
increased from 8.9 million hectares in 1990-91, which increased to 9.3 million hectares in 2000.
Thus, it shows deterioration in the cultivatable land. This cultivatable waste land could have been
brought under cultivation and agriculture output could have been further enhanced. This clearly
shows the neglecting of agriculture land by the policy makers. Since 1980-91, there is an
increase of less than 1% p.a. in the total cropped area, which reflects a poor performance. The
above analysis indicates that there is a need to bring the virgin land under cultivation. Special
attention may also be paid to multiple cropping. The forest area is very low, as compared to the
requirements. Thus, there is a need for new program for its uplifting too. Forests have been cut
down and there is a need for tree plantation; only KPK government planted trees in its province
in 2015-17.

During 2005-10, the forest area remained the same. However, there was minor decrease in the
cultivatable waste and current fallow land. During the same period, the net area sown, total area
sown and aggregate cropped area improved somewhat. It reflects that some new area was
brought under cultivation. However, it was also not much momentous.
During the period of 2010-18, there was no noteworthy change in the net area available for
cultivation, cultivatable wastelands and forest area. The current fallow land also slightly
increased, deploying poor performance of the agriculture sector. Rather, it should have been
decreased if as per the green revolution; multiple cropping was being done. By 2014-15, the
aggregate area sown was decreased, rather than showing any improvement in it. The total area
cropped was also almost stagnant which depicts again an overlooking of the agriculture sector.
5. Land Structure and Farm Size
Farm size plays an imperative role in several aspects to boost agricultural productivity. It
generates a definite rural culture comprising of different income group classes, which have an
influence in political structure of the country, particularly, a country like Pakistan, where
landlords have been overriding in politics. The large holdings of farm land may also escort
inefficiencies in production. It is a sheer dismal that in most of the years, the agricultural land is
not fully utilized for cultivation. It lies sterile to be exploited or it was reserved for the
sumptuousness of the elite i.e. big landlords who use it for hunting etc. On the other hand,
common people remained deprived of food and basic amenities.
Farm size is also imperative in terms of agricultural efficiency. There are conflicting views about
the efficiency of different farm sizes. Evidences indicated that large farms are efficient since the
big landlords can afford to use modern machinery and inputs and as result they can generate
higher production. It is also argued that medium farms are efficient since it has an optimal size
and, therefore, it is utilized optimally and waste is reduced. It has also been argued that the small
farms are efficient since these are family farms and due to the application of surplus labor as
input, these farmers can derive better output.

However, it is also stated that these farmers do not have resources to use modern input.
Moreover, these farms are also not suitable for use of machinery; therefore, these farms produces
lower product.16 Similarly, it is also stated that medium farms are inefficient since these farms
lack in abundant use of labor and modern inputs. The farm structure has gone under changes
overtime due to reforms and inheritance laws. Overall, in Pakistan, farm size has decreased for
all categories of farms. All farm size was about 10 acres (1960), which decreased to 9.38 acres
(1990). However, the same size slightly increased in Punjab and Sindh. There was a subsequent
increase between 1960 and 1970. However, it again started to decrease in years after 1970s.
Interestingly, agriculture reforms were also introduced during this period which helped to change
the farm size structure.
In Pakistan, average size of the farms less than five acres, was of the size of 1.9 acres in
Pakistan; 1.86 acres in Punjab and 3 acres in Sindh in 1960. It increased in Punjab and Sindh in
1970, but further decreased in 1980 and for a second time increased in 1990 to 2.98 in Pakistan,
2.96 in Punjab and 2.88 in Sindh. In 1990, the size of these farms slightly increased overall and
also in the Punjab, but it decreased in Sindh.
The average farm size was between 5 and 12.5 acres was 8.14 in Pakistan, overall. The same in
Punjab and Sindh was 8.23 in 1960. It decreased in Pakistan, overall, in Punjab and also in
Sindh, by 1990. The average size of farms between 12.5 and 25 acres (medium size farms) was
17.2 acres, overall in Pakistan, 17 acres in the Punjab and 17.5 in the Sindh, in 1960. The
average size of these farms substantially decreased to 16.4 acres (by 1990) in Pakistan; i.e.
overall, 16 acres in the Punjab and 17.15 in the Sindh, in 1990s.
In the years of 1960s, it was reported that the average farm size between 25 and 50 acres was 33
acres in Pakistan (overall), about 33 acres for Punjab and 33.5 acres for Sindh. This size of farms
further decreased in the 1990s to ballpark of 31.5 acres in Pakistan, overall, 30.94 acres in the
Punjab and 32.48 in the Sindh. The overall average size of the farms between 50 and 150 acres
was 74.3 acres in Pakistan. The same size for Punjab was 101 acres and for Sindh it was 171.5,
in 1960. It may be noted that as the farms size becomes larger, the average farm size also
becomes large in Sindh, as compared to other areas. The average size of these farms decreased
over time.
In 1960, the farm size over 150 acres was reported as 349.7 acres in Pakistan; for Punjab and
Sindh it was 285.2 and 398.5, respectively. The size of these farms decreased to 322.5 acres in
Pakistan, in 1990. In 1990, the average size of these farms was 70.3 acres in Pakistan, and the
same for Punjab and Sindh were 70.1 acres and 72.2 acres, respectively. The above mentioned
figures show that there is a sizeable transformation in this size of the farms over the last 30 years.
The same size for the Punjab decreased to 275 acres in the Punjab and to 302.74 acres in the
Sindh. It is eminent that still in 1990, the farm size remained very large. Furthermore, the large
farms and waste of land are also more in Sindh, as compare to other provinces, except
Baluchistan. These farms have to be converted to commercial farms if at all, agricultural
productivity and production has to be enhanced.