Our Backbone is Cracking
“Agriculture is the backbone of
The early
planners took a wrong fork somewhere very early after partition. This part of
the subcontinent (the western part) had two historical strengths, agriculture
and trade –
The
euphemistic lip service paid to agriculture all along by all governments is
bordering on obscenity now. I was one of
the first of educated youths to take up agriculture professionally out of
choice, not for accident of birth. I lived on the farm, worked with my hands
carving a modern farming enterprise out of a desert and after twenty 24 years
of purgatory I was the first to escape. Much of the sense of adventure, the
intoxication of living with the elements of nature remains with me but so do
the horrors. It’s a long story that I may document one day; the point here is
that in this series of columns of agriculture economy, I speak with a
combination of statistical and technical expertise as well as the human
dimension – both are equally significant in any analysis.
I abandoned
farming because my balance sheet had started screaming at me that my net-worth
was eroding very fast. It is universally accepted that farming (specially crop
farming) does not have returns on equity greater than 3 to 5 percent, if the
value of land is taken into account. The book value of land may be zilch for
most farmers who inherit land but the opportunity cost of current market value
must be taken into account for economic sanity. I farmed from late sixties to
early nineties. In the earlier years, influx of foreign remittances and massive
devaluation of the seventies provided a healthy growth of land equity (12 – 15
percent per annum) for no credit to my efforts, except perhaps good farming
practices in soil conservation and investment on land infrastructure. With 5
percent profits added to equity appreciation I was sitting pretty on an annual
growth of around 20 percent, which is the benchmark for any business venture
globally. Inflation hovered around 13 to 16 percent and I had my nose well
above the water.
Somewhere
in mid to late eighties, land prices began to peak out and later dip slowly. I
began to perspire late at nights as I fumbled through profitability printouts.
Inflation racing away in two digit numbers and land prices stagnant, even
falling, my net-worth growth was well below inflation levels. That was exactly
the point where, under agreement with World Bank’s structural adjustment
facilities subsidies on agricultural inputs were being withdrawn progressively.
As input costs increased, I hit a glass ceiling for a couple of years when I
just managed to break even.
In 1987, I
used to look out of my study window onto the glorious wheat fields stretching
into infinity – the best wheat crop I had grown ever – and my spirits would
soar for an instant when the bleak reality used to descend like a steel clamp
that I was going to lose money despite 55 maunds per
acre average yield because of abysmal support prices (40 percent lower than
import parity price). I began to have
nightmares of becoming destitute as my net-worth stagnated under racing away
inflationary trends. I decided to call it day and bale out, despite the fact
that I had become an icon of agricultural progress in the country. With some
creative planning, gambling bravado and a large dose of luck (luck always favours
the brave, by the way), I managed to change the course
of my destiny, away from agriculture. Most of my fellow farmers who chided me
for a bad decision (and being a turncoat), in
hindsight wisdom look at my decision with envy today, openly admitting that my
decision was wise, on a personal level at least.
It has been
ten years since I bid farewell to my passion for the soil and with time the
sagacity of my decision gains strength. Farming community is in bad shape
today. Most of the upper class farmers have eaten away more than half of their
assets; many of them tottering at bankruptcy as ADBP
is hounding them for servicing their accumulated liabilities. Middle level
farmers (15 to 50 acres) are eking out a meagre subsistence from over-mined
soils always asking me how to survive and where to go. Small farmers have
always had the perverted security that things can’t get worst for them. They
subsist on livestock which, ironically, is the most ignored sector from
government support point of view. Free of government intervention, this is the
only sub-sector of agriculture that has shown a steady growth of over 5 percent
since past four decades. Perhaps there is a lesson to be learned in there:
In
livestock, especially dairy, multinationals have moved in to exploit the small
farmers, although they position themselves to be their saviours by purchasing
their milk. The margins on sale of packaging material by the leading (and
monopolistic) multinational are far larger than farmer margins on production of
milk. For the subsistence farmer they are a godsend since it is better to sell
milk than spill it since they can only drink so much.
For the
horticulture sector, conditions are more hairy than playing roulette on a
tampered wheel in
These are
all the symptoms of a disease that no one can ignore – let the government
conduct a survey across the agriculture sector and if my assertions are incorrect
I promise to write the next ten columns in praise of Planning Commission and
the Ministry of Finance – MINFAL is neither here or
there in the scheme of things, really.
However, I am not going to follow the beaten track of bashing the
government; the weaknesses lie throughout the whole system. In the following
columns I will try to present a prognosis and then a road map for pulling the
agriculture sector out of the pits it is in today.
To be
continued….
P.S
See Headlines, December 13, “ADBP to auction land of
109 defaulters for recovery of Rs. 950 Million in
Iqbal
Mustafa
1350 words