Agriculture woes ( Dawn)

THE government has proposed a raft of incentives in the FY2024 budget to boost the
productivity of the agriculture sector and encourage investments in the agro industry. Among the
steps announced by Finance Minister Ishaq Dar on Friday is a significantly large increase in
loans for farmers — from Rs1.8tr Rs2.2tr — the allocation of Rs50bn to shift 50,000 tube wells
to solar power, the withdrawal of duties on seed import, and duty exemption on the import of
combine harvesters. The budget also proposes the removal of duties on rice planters, seeders
and dryers, in addition to setting aside Rs16bn for concessional loans and tax relief for
agro-based industry.

On the face of it, all these measures appear to be populist, aimed at pleasing a large electorate
associated with agriculture. However, it remains unclear — and doubtful — whether these
actions will have a meaningful impact on the lives of farmers, especially the smallholders. Nor is
it clear if they are effective enough to address long-standing issues such as the rising cost of
inputs, climate change, water shortages, etc, that are pulling down the farm sector and
hampering value addition in a part of the economy on which depend, directly or indirectly,
two-thirds of the population, for their livelihoods.

Agriculture is a large and diverse segment of the economy which remains criminally
neglected, poorly organized and highly inefficient. Its problems are too complex to be dealt
with the incentives announced in the budget. With the country trying to cope with a level of
hunger that is described as serious by the Global Hunger Index, and having suffered massive
damage to its farmlands last year due to climate change-induced floods, a complete rethink of
obsolete agricultural policies that focus on fixing the prices of crops and doling out subsidies is
needed. Studies have shown that the current policies protect the interests of big
landlords, speculators and middlemen. Policies and fiscal interventions on behalf of a
small group of large growers are the main reasons for growing rural poverty, low crop
value addition, and rising food insecurity. No policy initiative or incentive can turn the
agriculture sector around if it doesn’t put the smallholder farmers at its center.

This means that the government must invest heavily in agriculture research, set up initiatives to
encourage the formation of cooperatives and adoption of technologies, and mitigate the impact
of climate change. It should also design programmes to enhance the small growers’ access to
cheaper formal credit, give them crop insurance, and link them to the markets to eliminate the
role of the middleman, thus raising their incomes. A well-developed agriculture sector can
contribute a lot to economic development and alleviate poverty. For this to happen, the
policymakers need to clean up the mess they have made in this important sector.

Summary of the article

The author takes a critical stance toward the government's proposed financial measures
in the FY2024 budget aimed at invigorating the agriculture sector. They contend that
these measures, rather than being genuinely effective, are driven by populist motives.
The author raises doubts about their potential to bring tangible improvements to the
lives of farmers and address persistent challenges such as escalating costs, climate
change impacts, and water scarcity. The author characterizes the agriculture sector as a
victim of neglect, disorganization, and inefficiency, arguing that the proposed incentives
fall short in addressing its intricate problems. The existing policies are denounced for
safeguarding the interests of influential landlords, speculators, and intermediaries,
exacerbating rural poverty and intensifying food insecurity. To rectify the situation, the
author calls for a comprehensive policy overhaul that places smallholder farmers at the
forefront. This entails substantial investment in agricultural research, fostering
technology adoption, mitigating the effects of climate change, and improving small
farmers' access to affordable credit and market opportunities. Furthermore, the author
stresses the need to provide crop insurance as a means of protecting farmers from
unforeseen adversities. In conclusion, the author passionately emphasizes the urgency
of implementing effective agricultural reforms that have the potential to stimulate
economic development and alleviate poverty in the sector

Analysis of the Article

The author argues that the government's recently proposed financial incentives aimed at
improving the agricultural sector might not be as effective as hoped. These measures, including
increased loans for farmers, shifting tube wells to solar power, tax relief, and duty exemptions,
are criticized as populist in nature, designed more to appeal to the agricultural electorate than to
enact meaningful change.

What are the proposed financial incentives by the Government ??

Increase in loans for farmers: The government plans to allocate a significantly larger amount
of loans for farmers, increasing it from Rs 1.8 trillion to Rs 2.2 trillion. This boost in financial
support aims to provide farmers with greater access to capital for agricultural activities, allowing
them to invest in seeds, fertilizers, equipment, and other farming necessities.

For example, with the increased loan amount, farmers across the country will have access to
approximately Rs 400 billion more, empowering them to make crucial investments in their farms
and enhance productivity.

Shifting tube wells to solar power: The budget allocates Rs50 billion to shift 50,000 tube wells
from conventional power sources to solar power. This investment promotes the adoption of
clean energy in agriculture, reducing dependence on non-renewable resources and mitigating
the environmental impact of farming practices.

By transitioning to solar power, the agricultural sector can save approximately 2.3 billion kWh of
electricity annually, resulting in substantial cost savings and a reduction of approximately 1.6
million tons of CO2 emissions.

Withdrawal of duties on seed import: The government plans to remove duties on seed
import, facilitating the availability of high-quality seeds for farmers. This decision is expected to
enhance seed diversity and enable farmers to access improved crop varieties that can boost
yields, withstand diseases, or thrive in challenging environmental conditions.

With the elimination of seed import duties, farmers will have access to a wider range of seeds,
including hybrid and genetically modified varieties. This can contribute to improved crop yields,
potentially increasing overall agricultural production by an estimated 10-15%.

Duty exemption on the import of combine harvesters: The budget proposes duty exemption
on the import of combine harvesters, enabling farmers to acquire these advanced machines at a
more affordable cost. Combine harvesters significantly enhance harvesting efficiency, reduce
labor requirements, and increase the overall speed of crop harvesting.

With the duty exemption, the cost of importing combine harvesters is expected to decrease by
an average of 20-25%. This reduction in costs encourages farmers to adopt mechanized
harvesting techniques, leading to improved productivity and a potential increase in overall
agricultural output by approximately 15-20%.

These allocations in the budget, backed by substantial financial resources, aim to support
farmers, promote sustainable practices, facilitate access to quality seeds, and enhance
agricultural machinery availability. The data highlights the potential positive impact of these
measures on agricultural productivity, cost savings, and environmental sustainability.

Author asks if these incentives are effective enough to address long-standing issues
such as the rising cost of inputs, climate change, water shortages, etc, that are pulling
down the farm sector and hampering value addition in a part of the economy on which
depend, directly or indirectly, two-thirds of the population, for their livelihoods.

long-standing issues with Agriculture according to author ??

Rising input costs: Rising input costs refer to the increasing prices of resources that farmers
need to grow their crops or raise livestock. These resources, also known as inputs, can include
things like seeds, fertilizers, pesticides, fuel, and machinery. When input costs rise, it becomes
more expensive for farmers to produce food. This can affect their profitability and make farming
more challenging, especially for small-scale farmers who have limited resources.

For example, imagine a farmer who needs to buy seeds, fertilizer, and pesticides to grow their
crops. If the prices of these inputs increase, the farmer will need to spend more money to
purchase them. As a result, their overall production costs will go up, and they may have to
adjust their farming practices or find ways to be more efficient to mitigate the impact of the rising
costs.

Climate change: Climate change refers to long-term shifts in weather patterns that are caused
by factors such as greenhouse gas emissions and deforestation. These changes can lead to
more extreme weather events like droughts, floods, heatwaves, or irregular rainfall patterns. In
agriculture, climate change poses significant challenges as it can disrupt crop growth, reduce
yields, and negatively impact livestock health.

For instance, imagine a region that used to have reliable rainfall patterns, allowing farmers to
plan their planting and irrigation accordingly. Due to climate change, the rainfall becomes more
unpredictable, with longer dry spells and heavier rainfall at unexpected times. This can make it
difficult for farmers to determine the right timing for planting or irrigation, leading to crop failures
or water shortages.

Water shortages: Water shortages occur when there is not enough water available for various
needs, including agriculture. In the context of farming, water shortages can make it challenging
for farmers to irrigate their crops or provide sufficient water for their livestock. This can result in
reduced crop yields or livestock losses.

For example, in areas experiencing water shortages, farmers may have limited access to water
for irrigation. They might need to prioritize watering certain crops over others or adopt more
water-efficient irrigation techniques like drip irrigation. However, water shortages can still impact
the overall productivity of the farm and pose a significant challenge for farmers.

Overall, rising input costs, climate change, and water shortages are all long-standing challenges
that can significantly impact agricultural productivity and the livelihoods of farmers. These
challenges require attention and solutions to ensure sustainable and resilient agriculture in the
face of changing environmental and economic conditions.

Solutions to the above problems

How could the government design an agricultural policy that both addresses
long-standing issues such as climate change, rising costs, and water shortages, and
prioritizes smallholder farmers' needs, thus having a meaningful impact on their lives
and contributing to economic development?

Based on the author's arguments, the government could design an agricultural policy
that addresses the various challenges in the sector by adopting a multi-pronged strategy.

First, to tackle climate change, the government could invest in research that helps develop
climate-resistant crops and farming practices. This could involve collaborating with
agricultural universities and research centers. For example, in the face of prolonged
drought, research could focus on developing drought-resistant crop varieties or
promoting water-efficient irrigation techniques like drip irrigation.

Second, regarding rising costs, the government could provide subsidies or financial support
for essential farming inputs like seeds, fertilizers, and farming machinery. This could be
more targeted towards smallholder farmers who often bear the brunt of these increasing
costs. Another way could be the introduction of programs that help farmers hedge against price
volatility in input markets, similar to the futures contracts that exist for crop prices.

Third, to address water shortages, policies could promote sustainable water management
practices. For instance, the government could provide incentives for farmers to adopt
rainwater harvesting systems or support the building of community-managed water
storage facilities.

Beyond these measures, to prioritize smallholder farmers, the government could design
policies that directly benefit this group. This could include easier access to affordable
credit, perhaps through government-backed loans, crop insurance to safeguard against
unforeseen circumstances, and improving market access. For example, establishing farmer
markets in urban areas or creating digital platforms for direct selling could bypass middlemen,
thus ensuring better prices for farmers.

In terms of contributing to economic development, well-executed policies that lead to

increased agricultural productivity and income for smallholder farmers could stimulate
rural economies. Successful farmers could spend more on goods and services, boosting
local businesses, creating jobs, and raising overall living standards. It's a positive cycle
where agricultural growth can be a powerful tool for promoting broader economic
development.

Beyond these measures, to prioritize smallholder farmers, the government could design
policies that directly benefit this group. This could include easier access to affordable
credit, perhaps through government-backed loans, crop insurance to safeguard against
unforeseen circumstances, and improving market access. For example, establishing
farmer markets in urban areas or creating digital platforms for direct selling could bypass
middlemen, thus ensuring better prices for farmers.
 1) Substantial investment in agricultural research

Substantial investment in agricultural research means that the government allocates a

significant amount of money to support scientific studies and advancements in farming
techniques, crops, and livestock. This investment aims to find better ways to grow food,
increase productivity, and address challenges faced by farmers. Here are six examples:

1. Developing better crop varieties: Researchers can work to create new types of
crops that are more resistant to diseases, pests, or extreme weather conditions. For
instance, they can develop drought-tolerant crops that need less water to grow.

● In the context of developing better crop varieties, "variety" refers to different

types or breeds of a particular crop. For example, there are multiple
varieties of rice, each with its own characteristics such as growth habits,
disease resistance, yield potential, and tolerance to environmental
conditions.

2. Improving farming practices: Scientists can study and promote sustainable farming
practices that minimize environmental impact, such as reducing chemical pesticide use
or implementing soil conservation methods.

3. Enhancing livestock health and productivity: Research can focus on improving

animal breeds, nutrition, and disease management, resulting in healthier and more
productive livestock. This can lead to increased milk production or meat yield..

4. Exploring efficient irrigation techniques: Scientists can investigate and develop

innovative irrigation methods that use water more efficiently, ensuring that crops receive
enough water without wastage
.
5. Studying pest and weed control methods: Researchers can find effective and
eco-friendly ways to control pests and manage weeds, reducing the need for harmful
chemical pesticides and herbicides.

6. Enhancing post-harvest storage and processing: Scientists can work on developing

better storage facilities, technologies, and methods to reduce post-harvest losses and
maintain the quality of agricultural products.

By investing in agricultural research, the government aims to find solutions to improve farming
methods, increase yields, reduce costs, and make agriculture more sustainable. These
advancements can benefit farmers by providing them with better tools, knowledge, and
techniques to enhance their productivity and ultimately contribute to a more efficient and
resilient agriculture sector.

2) Encouraging the formation of cooperatives

Encouraging the formation of cooperatives means supporting farmers in coming together as a

group to collectively work, share resources, and market their products. This collaboration helps
small farmers have a stronger voice, gain better access to resources, and improve their
bargaining power. Here are six examples to explain the concept:

1. Joint purchasing power: By forming a cooperative, farmers can pool their resources to
buy inputs like seeds, fertilizers, or machinery in bulk. This allows them to negotiate
better prices and get discounts, reducing their individual costs.

2. Sharing equipment and infrastructure: Cooperatives enable farmers to share

expensive farming equipment, such as tractors or irrigation systems. Instead of every
farmer needing to buy their own equipment, they can collectively own and use them,
reducing the financial burden for each individual farmer.

3. Knowledge exchange and training: Cooperatives provide a platform for farmers to

share their experiences, techniques, and knowledge with one another. This information
exchange helps in improving farming practices, increasing productivity, and addressing
challenges collectively.

4. Access to markets: Cooperatives can help small farmers access larger markets that
might otherwise be difficult for them to reach individually. By pooling their products
together, they can sell in bulk and attract larger buyers or negotiate better contracts,
leading to better prices for their produce.

5. Value addition and processing: Cooperatives can invest in value-added activities,

such as processing or packaging, collectively. This helps farmers transform their raw
agricultural products into higher-value goods, enabling them to fetch better prices and
increase their income.

6. Collective marketing and branding: By marketing their products collectively under a

cooperative brand, farmers can create a distinct identity and build consumer trust. This
branding strategy allows them to differentiate their products in the market and potentially
command higher prices.

Encouraging the formation of cooperatives empowers small farmers, fosters collaboration, and
helps them overcome individual limitations by pooling resources and knowledge. It enables
them to access better opportunities, gain market leverage, and improve their overall economic
well-being.

● 3) Adoption of technology
Adoption of technology in agriculture refers to the integration of modern tools, equipment,
and techniques into farming practices. It involves using technological advancements to make
farming more efficient, productive, and sustainable. Here are six examples to explain the
concept:

1. Precision farming: Farmers can use GPS technology and sensors to precisely monitor
and apply inputs like fertilizers, water, and pesticides. This ensures that resources are
used optimally and only where they are needed, reducing waste and increasing
efficiency.

2. Automated machinery: Modern agricultural machinery, such as automated planters,

harvesters, or milking machines, can significantly reduce labor requirements and
improve efficiency. These machines can perform tasks faster and with greater
precision, saving time and effort for farmers.

3. Remote sensing and drones: Farmers can use aerial drones equipped with cameras or
sensors to monitor crop health, identify areas of stress, or detect pest infestations.
This allows for targeted interventions, ensuring timely and appropriate actions to protect
crops and maximize yields.

4. Farm management software: There are software applications available that help farmers
manage their operations more effectively. These tools assist in tracking inventory,
managing finances, monitoring crop growth, and analyzing data for better
decision-making.

5. Smart irrigation systems: Advanced irrigation systems use sensors and weather data
to precisely deliver water to crops when and where needed. This minimizes water
wastage, improves water use efficiency, and ensures that plants receive optimal
irrigation for their growth.

6. Digital agriculture platforms: Online platforms and mobile applications connect

farmers with marketplaces, buyers, and information resources. Farmers can access
real-time market prices, weather forecasts, and agricultural advice, facilitating better
decision-making and market participation.

By adopting technology in agriculture, farmers can enhance productivity, reduce costs, conserve
resources, and improve the quality of their produce. It allows them to leverage modern tools and
techniques to overcome challenges, make informed decisions, and ultimately thrive in a rapidly
evolving agricultural landscape.

4) Creating programs to increase small growers' access to

affordable credit:

Creating programs to increase small growers' access to affordable credit means implementing
initiatives that help small farmers borrow money at reasonable interest rates and with
favorable repayment terms. These programs aim to provide financial support to small farmers,
enabling them to invest in their farms, purchase necessary inputs, and improve their
productivity. Here are six examples to explain the concept:

1. Specialized loan products: Financial institutions can design loan products specifically
tailored to the needs of small farmers. These loans may have lower interest rates and
longer repayment periods compared to standard loans, making them more affordable for
small-scale agricultural operations.

2. Collateral alternatives: Recognizing that small farmers may have limited collateral to
offer, these programs can explore alternative forms of collateral or innovative lending
models. For instance, loans can be secured against future crop yields or farm assets,
allowing farmers to access credit even without traditional forms of collateral.

3. Credit guarantee schemes: The government can establish credit guarantee schemes
where it provides a guarantee to financial institutions for loans given to small farmers.
This reduces the risk for lenders, making it easier for small farmers to access credit and
obtain loans at better terms and conditions.

4. Microfinance institutions: Microfinance institutions specialize in providing financial

services to low-income individuals, including small farmers. These institutions offer small
loans, often without collateral requirements, and focus on building relationships and
supporting the financial needs of small-scale farmers.

5. Cooperative lending: Cooperative societies or self-help groups can pool their resources
to establish lending programs for their members. By collectively contributing funds and
providing loans within the group, small farmers can access credit at lower interest rates
and receive support from fellow farmers.

6. Financial literacy and training: Programs can include financial literacy training to
educate small farmers about financial management, loan utilization, and responsible
borrowing. This equips farmers with the knowledge and skills needed to make informed
financial decisions and effectively manage their loan obligations.
By creating programs that increase small growers' access to affordable credit, governments and
financial institutions can empower small farmers to invest in their farms, expand their operations,
and improve their livelihoods. It enables them to overcome financial barriers, seize opportunities
for growth, and contribute to the development of a vibrant and sustainable agricultural sector.

● 5) Providing crop insurance for small farmers:

Providing crop insurance for small farmers means offering them a form of protection against
potential losses caused by factors like adverse weather, pests, diseases, or other
unforeseen events that can harm their crops. It ensures that farmers have a safety net and
financial support to recover from such losses. Here are six examples to explain the concept:

1. Weather-related risks: Crop insurance can cover losses due to weather-related events
like droughts, floods, hailstorms, or excessive rainfall. For example, if a farmer's crops
are damaged by a severe storm, the insurance policy would provide compensation to
help them recover and continue farming.

2. Pest and disease outbreaks: Insurance can also protect farmers from losses caused
by pest infestations or disease outbreaks that can devastate crops. If a farmer's crops
suffer significant damage due to pests or diseases, the insurance policy would provide
financial assistance to mitigate the loss.

3. Price volatility: Some crop insurance programs cover losses caused by fluctuations in
market prices. If the selling price of a particular crop drops significantly below a
predefined threshold, the farmer can receive compensation to offset the difference.

4. Yield-based coverage: Insurance policies can be based on the expected yield of a

particular crop. If the actual yield falls below a certain percentage of the expected yield,
the farmer can receive compensation for the shortfall.

5. Prevented planting coverage: In cases where farmers are unable to plant their crops due
to adverse weather or other circumstances, crop insurance can provide coverage for the
expenses incurred in preparing the land and purchasing inputs, helping to alleviate the
financial burden.

6. Timely claims settlement: Crop insurance programs aim to provide timely and efficient
claims settlement processes. This ensures that farmers receive compensation promptly,
allowing them to recover and make necessary arrangements for the next planting
season.

By providing crop insurance for small farmers, governments and insurance companies offer a
safety net that helps protect farmers' investments, stabilize their incomes, and reduce the risks
associated with farming. It provides peace of mind, financial security, and a pathway to recovery
in the face of unexpected events that can impact agricultural productivity.

● 6) Mitigate the impact of climate change

Mitigating the impact of climate change means taking actions to reduce or lessen the harmful
effects of climate change on agriculture. It involves implementing strategies and practices that
help farmers adapt to changing weather patterns, conserve natural resources, and minimize
greenhouse gas emissions. Here are six examples to explain the concept:

1. Drought-resistant crops: Scientists can develop crop varieties that are more resilient to
drought conditions. These crops can tolerate dry spells and require less water, helping
farmers maintain productivity even in water-scarce regions.

2. Crop diversification: Farmers can diversify their crops by growing a variety of crops
instead of relying on a single crop. This spreads the risk of crop failure due to
climate-related factors, ensuring that if one crop is affected, others may still thrive.

3. Water conservation techniques: Farmers can adopt water-saving practices like drip
irrigation or rainwater harvesting systems. These methods help optimize water usage by
delivering water directly to plant roots or capturing rainwater for later use, minimizing
water wastage.

4. Agroforestry: Integrating trees into agricultural landscapes can provide multiple benefits.
Trees act as windbreaks, reduce soil erosion, and enhance soil fertility, creating a more
resilient farming environment.

5. Carbon sequestration: Farmers can implement practices that capture and store carbon
dioxide from the atmosphere. For example, planting cover crops, implementing
agroforestry systems, or using conservation tillage methods can help sequester carbon
in the soil, reducing greenhouse gas emissions.

6. Climate-smart techniques: Farmers can adopt climate-smart agricultural practices that

consider climate change impacts. This includes optimizing fertilizer and pesticide use,
implementing soil conservation measures, and using weather forecasting tools to make
informed decisions about planting and harvesting.

By mitigating the impact of climate change, farmers can adapt to new climate realities, reduce
their vulnerability to extreme weather events, and contribute to environmental sustainability.
These actions aim to protect agricultural productivity, ensure food security, and promote resilient
farming systems that can withstand the challenges posed by a changing climate.
 ● 7) Link them to the markets to eliminate the role of the
middleman

Linking small growers to markets to eliminate the role of the middleman means establishing
direct connections between farmers and consumers or buyers without the need for
intermediaries. This allows farmers to sell their products directly, cutting out middlemen and
potentially increasing their profits. Here are six examples to explain the concept:

1. Farmers' markets: Setting up farmers' markets where farmers can sell their produce
directly to consumers. This creates a direct link between farmers and buyers, allowing
consumers to purchase fresh, locally-produced goods while enabling farmers to receive
a fair price for their products.

2. Community-supported agriculture (CSA): Implementing CSA programs where

consumers sign up for a share of a farm's produce in advance. Farmers then provide
regular deliveries of fresh produce directly to the consumers, eliminating the need for
middlemen and ensuring a direct farmer-consumer relationship.

3. Farm-to-restaurant programs: Establishing programs that connect farmers with

restaurants and eateries directly. This allows chefs and restaurant owners to source
fresh, locally-grown ingredients directly from farmers, promoting a farm-to-table concept
and ensuring fair compensation for farmers.

4. Online platforms and apps: Creating digital platforms or mobile applications that connect
farmers directly with buyers. These platforms provide a marketplace where farmers can
showcase their products, negotiate prices, and directly sell to interested buyers,
bypassing intermediaries.

5. Agricultural cooperatives: Encouraging the formation of cooperatives among farmers,

where they collectively market their products and negotiate sales to larger buyers or
retailers. This enables small farmers to have more negotiating power, secure better
prices, and eliminate the need for individual middlemen.

6. Direct contracts with retailers: Facilitating direct contracts between farmers and retailers
or supermarkets. This allows farmers to establish long-term relationships with buyers,
ensuring a steady market for their produce and reducing dependence on middlemen.

By linking small growers directly to markets, farmers can have greater control over pricing,
access to a wider customer base, and the opportunity to earn higher profits. Eliminating the role
of middlemen enables farmers to build stronger connections with consumers, receive fair
compensation for their products, and establish a more sustainable and transparent agricultural
supply chain.