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Last week we looked at the snapshots of the typical profile of different
size farmers in the country. It was not a picture of prosperity with
hopes of growth. There is another dimension to rural sector that we
tend to forget. By latest surveys, around 38 percent of people living
in the rural areas are non-agricultural by vocation. Their plight
is tied to agriculture too since there is little rural industry in
the country. Looking at the rural sector as a whole will give a better
picture than agriculture alone.
Today we shall look at the broader, micro level to get an overview
of what went wrong and why Pakistan, once the breadbasket of Indian
subcontinent, is mired in over-populated, under productive and stagnant
agriculture that is sinking the rural areas into replicas of extended
slums of the cities.
The feudal legacy is a popular scapegoat for assigning the blame for
many evils. It is ironic how those who blame feudalism are themselves
not free from the fundamental flaw of feudal mindset. Feudal essence
lies in a predominant obsession with power at a cost of productivity.
After the partition, obsession with power dominated Pakistani politics
(and government) and this has not abated till this day. Conflicts
- with India, Bengali majority, religious right wings and amongst
civil versus military - emerged and their solutions were sought through
power. Land ownership endowed political power and hence the perspective
towards agriculture was skewed from the early start. Land and Water
were perceived as resources of power first; productivity as a secondary
by-product.
The three land reforms within a period of twenty years sought political
ends - to erode the political power of the land owning elites. About
10 percent of privately owned land was appropriated (mostly barren
or uncultivable) and given to 0.1 percent of rural landless poor.
The nexus between land and political power was not broken; it exists
till today and productivity didn't rise in the hands of the recipients
of those redistributed lands. The ill-conceived and poorly conducted
land reforms severed the linkage between land and productivity by
sending a strong psychological signal that land ownership is a matter
of equity rather than productivity, selectively applied of agricultural
land, not to any other productive assets used in industry, trade or
services.
The gurus (from Harvard School of development economics) put Pakistan
on a wrong track in 60's by assigning top priority to large scale
industry based on import substitution policies. Massive resource transfers
were built in policy framework to drain agriculture revenues for industrial
development. A part of that resource transfer should have been ploughed
back into rural infrastructure but that wasn't done either. To compensate
for the implied taxation (of resource transfers) subsidies were provided
to the agricultural sector as an oxygen pipe. Rural economies were
forced into artificial recession while urban economies raced away
in high inflation rates. The disparities grew starkly with time. Thus
began the flight of capital from rural areas to the urban areas as
farmers moved their asset baskets to the cities and the city barons
jumped on to the band wagon of industries that benefited from resource
transfers.
The
nationalisation of industries, agricultural markets and financial
institutions of the 70's put the last nail in the coffin of agriculture
productivity. Farmers were reduced to second class citizens as captive
producers and captive consumers, weaned on political largesse of the
government. They lost all market orientation and became totally dependent
upon dole outs from the government in the form of assured support
prices and subsidies on inputs. They haven't outgrown that mindset
till today when we are moving in to post WTO scenario of global competition.
Our farmers are not able to face the heat of international competition
without the crutches of support prices and subsidies.
Land Revenue Act and Canal and Drainage Irrigation Act of the 1880's,
which were drafted for subsistence farming, have not been amended
to meet new paradigms of agricultural productivity. Land and Water
markets have not developed. Primary resources of agricultural productivity
- land and water - are straight jacketed into hereditary and equity
constraints. In spite of the fragmentation by Muslim Family laws of
inheritance that has caused more distribution of land than the Land
Reforms, it is impossible for land and water to move naturally into
the hands of those who can use it more productively under market forces.
Farming is a profession dictated by accident of birth, not an entrepreneurial
activity.
Farm mechanisation came because of land reforms, primarily. MLR 115
made tenants legally hazardous. Farmers adopted 'tractorisation' to
replace tenants. The 'Mohenjo Daro' crop technology of 'hal and sohaga'
has remained in vogue; a tractor just replaces twelve pairs of bullocks.
Small size farms can not afford to invest in advanced technologies
of tillage, planting, plant protection, harvesting and irrigation
efficiency. Inefficiencies in crop technology raise costs and depress
yields. Farmers are squeezed and holler for more support from the
government.
The emphasis on import substitution made us oblivious of the critical
factor of productivity - competitive advantage. Resources, support
and incentives were deployed into crops where Pakistan's natural advantage
is low. e.g grain crops and sugarcane. Horticulture and livestock,
where there is our real comparative edge because of low water use
and high labour requirements, were ignored. Import substitution, because
of divorcing local markets from international trade, also ignored
development of quality and health standards for agricultural commodities.
So when there are surpluses, exports suffer from sub-standard quality
in grading, packaging and phytosanitary standards. The combination
of all these factors is a tall barrier between Pakistan's comparative
advantages and competitive edge in international markets.
Population growth is higher in rural areas, producing surplus labour
that can not be absorbed in the rural areas. The migration to the
cities is producing slums and shanty towns in all urban areas - 20
percent by recent count, and likely to rise to over 50 percent within
the next twenty years. Providing civic amenities in villages is far
cheaper than in the cities. Rural industrialisation through development
of SMEs (Small and Medium Enterprises) has remained beyond the realm
of our policy planners, who keep focussing on mega-industries with
high capital costs and low labour absorption. Unemployment and under-employment
is on the rise in rural areas, and therefore the poverty levels.
With millions of dollars available for poverty alleviation, no one
seems to have an idea on how to attack the menace. Rural economies
are an entanglement of the diverse agricultural productivity factors
that I have describe in this column. It is a complex mosaic of land
and water distribution, rural infrastructure, technology for optimisation
of resources, quality standards, and international market linkages
and development of rural industrialisation through SMEs.
Currently, the government is looking at the problem in two macro dimensions.
Making more water available (not at efficient use of it) and throwing
more credit at the farmers. It is trying to do more of what was done
in the past to maintain a respectable growth rate in agriculture.
There is even talk of more land reforms.
We need to revisit the fundamentals in agriculture sector from an
economic and organisational perspective and keep politics out of the
equation. Our politics has destroyed our agriculture and our agriculture
has destroyed our politics! As we are awakening to the need of keeping
religion out of politics we should also begin to realise that we need
to separate agriculture from politics; and not through land reforms.
Iqbal Mustafa
1260 words
06 November 2004
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