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Importance of agriculture in Pakistans economy and development

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Introduction:

"Agriculture is the of process of cultivation of land or soil for production purpose". Agriculture plays a very vital role for economy of Pakistan and its development.

Agriculture is a vital sector of Pakistan's economy and accounted for 25.9 percent of GDP in 1999-2000, according to government estimates. The sector directly supports three-quarters of the country's population, employs half the labor force , and contributes a large share of foreign exchange earnings. The main agricultural products are cotton, wheat, rice, sugarcane, fruits, and vegetables, in addition to milk, beef, mutton, and eggs. Pakistan depends on one of the world's largest irrigation systems to support production. There are 2 principal seasons. Cotton, rice, and sugarcane are produced during the kharif season, which lasts from May to November. Wheat is the major rabi crop, which extends from November to April. The key to a much-needed improvement of productivity lies in a more efficient use of resources, principally land and water. However, change is dependent on the large landowners who own 40 percent of the arable land and control most of the irrigation system, which makes widespread reform difficult. Assessments by independent agencies, including the World Bank, show these large landholdings to be very unproductive. Pakistan is a net importer of agricultural commodities. Annual imports total about US$2 billion and include wheat, edible oils, pulses, and consumer foods.

48% of labour force is engaged directly with agriculture. So it is the main source of living or income of the major part of economy population. About 70% of population is relates to agriculture directly or indirectly.
Pakistan's economy largely depends on agriculture. Around 60% of Pakistan's population (mostly residing in the rural areas) is directly or indirectly linked with agriculture. The agriculture sector is the second largest sector of Pakistan and it contributes more than 21 percent to the GDP, more importantly it is the largest employing sector as it absorbs around 45 percent of the country's labor force. This sector is significant in nature not only because of the statistics listed above but also because it is a primary supplier of raw materials to various industries, contributing significantly to exports, and it also proves to be a major market for other products like fertilizers, pesticides, tractors, and other agricultural tools.

Agriculture is the major source of food of huge population of Pakistan. Agriculture is also the major source of provision of raw martial to industrial sector of Pakistan. Its contribution towards GDP is about 25% which is higher than contribution of any other sector.
According to the Economic Survey of Pakistan, the livestock sector contributes about half of the value added in the agriculture sector, amounting to nearly 11 per cent of Pakistan's GDP, which is more than the crop sector. The leading daily newspaper Jang reports that the national herd consists of 24.2 million cattle, 26.3 million buffaloes, 24.9 million sheep, 56.7 million goats and 0.8 million camels. In addition to these there is a vibrant poultry sector in the country with more than 530 million birds produced annually. These animals produce 29.472 million tons of milk (making Pakistan the 4th largest producer of milk in the world), 1.115 million tons of beef, 0.740 million tons of mutton, 0.416 million tons of poultry meat, 8.528 billion eggs, 40.2 thousand tons of wool, 21.5 thousand tons of hair and 51.2 million skins and hides.

Following are the main points of importance of agriculture for Pakistan economy.

Source of employment:

Pakistan as developing economy the employment on consistent level has much importance. In this behalf agriculture has much importance because it provides employment directly or indirectly to the public.

Livestock accounts for 40 percent of the agricultural sector and 9 percent of the total GDP. Principal products are milk, beef, mutton, poultry, and wool. During 1999, the livestock population increased to 120 million head. That same year Pakistan generated 970,000 tons of beef, 640,000 tons of mutton, and 190,000 tons of poultry. In an effort to enhance milk and meat production, the government recently launched a comprehensive livestock development project with Asian Development Bank assistance. Poultry production provides an increasingly popular low-cost source of protein. Modern poultry production is constrained by high mortality, high incidence of disease, poor quality chicks, and poor quality feed, combined with an inadequate marketing system. Frozen poultry have only recently been introduced.

Employment directly affects the GSP of economy as well as the per capita income. With the increase in per capita income living standard increases, higher hygiene facilities & better education facilities are also increases.
Pakistan's principal natural resources are arable land and water. About 25% of Pakistan's agriculture accounts for about 21% of GDP and employs about 43% of the labour force. In Pakistan, the most agricultural province is Punjab where wheat and cotton are the most grown. Mango orchards are mostly found in Sindh and Punjab provinces that make Pakistan the world's 4th largest producer of mangoes.

All these signs are the factors of economic development. So we can say that agriculture has a great contribution toward economic development by providing the employment.

Food requirement:

Population growth rate of Pakistan is increasing rapidly. According to UNDP human development report population growth rate of Pakistan is 2% per year.

Some reformers have blamed imbalance in land ownership in Pakistan for playing a part in "maintaining poverty and food insecurity". According to the Pakistan-based NGO, Society For Conservation and Protection of The Environment (SCOPE), about one-half (50.8%) of rural households in Pakistan are landless, while 5% of the country’s population owns almost two-thirds (64 percent) of its farmland. (The World Bank found that according to 2000 agricultural census 63.3% of rural households were landless. Of the remaining 37% of rural households, 61% of these owned fewer than 5 acres, totaling 15% of total land. Two percent of households owned 50 acres or more, accounting for 30 percent of total land area.) Concentration of ownership is also thought to be less productive than owner farmed land. According to the World Bank, "most empirical evidence indicates that land productivity on large farms in Pakistan is lower than that of small farms, holding other factors constant." Small farmers have "higher net returns per hectare" than large farms, according to farm household income data. Sharecropper productivity is also lower (about 20%) than landowner productivity, holding other factors constant, because there is less incentive for sharecroppers’ own-labour inputs.

So with the rapidly increasing population the food requirement is also increasing rapidly. In this behalf agriculture is the only the major sector which is the meeting the increasing requirement of food.
The Federal Bureau of Statistics provisionally valued major crop yields at Rs.504,868 million in 2005 thus registering over 55% growth since 2000 while minor crop yields were valued at Rs.184,707 million in 2005 thus registering over 41% growth since 2000. The exports related to the agriculture sector in 2009-10 are Rs 288.18 billion including food grains, vegetables, fruits, tobacco, fisheries products, spices and livestock.

It also reduces the import of food from other economies. So we can say that agriculture sector is playing very vital role in development of Pakistan by providing the food for massive population as well as supporting the economic growth.
The economic importance of agriculture has declined since independence, when its share of GDP was around 53%. Following the poor harvest of 1993, the government introduced agriculture assistance policies, including increased support prices for many agricultural commodities and expanded availability of agricultural credit. From 1993 to 1997, real growth in the agricultural sector averaged 5.7% but has since declined to about 4%. Agricultural reforms, including increased wheat and oilseed production, play a central role in the government's economic reform package.

Contribution in exports:

Major exports or cash crops of Pakistan are wheat, rice and cotton. 9.8 billion Bales of cotton are produced per year. Rice crop is produced 4.3 million ton per year. These agricultural commodities are exported to various countries against foreign exchange.

Minor crops account for only 5 percent of total cultivated area; these include oilseeds (sunflower, soybean), chilies, potatoes, and onions. Domestic oilseed production accounts only for about 25 percent of Pakistan total edible oil needs. As a result, Pakistan spends more than US$1 billion annually in scarce foreign exchange to import edible oils, while its oilseed processing industry operates at less than 25 percent of capacity due to an inadequate supply of oilseeds. For 2000-01 total oilseed production was forecast to decrease 10 percent to 3.6 million tons. The government has highlighted development of the oilseed sector as a priority.

This foreign exchange is utilized for the import of industrial or technological equipments such as machinery or automobiles. Further this foreign exchange is utilized to improve the infrastructure of economy or for improving the other sector of economy like education, health and investments.
Pakistan is a major rice exporter and annually exports about 2 million tons, or about 10 percent of world trade. About 25 percent of exports is Pakistan's famous fragrant Basmati rice. Rice is Pakistan's second leading source of export earnings. Private traders handle all exports. Pakistan's main competitors in rice trade are Thailand, Vietnam, and India.

Raw material for industries:

Industries have great importance for the development of any country specially for developing economies like Pakistan. Industries need raw material to produce finish goods. In Pakistan agriculture provides raw material to industries.

Tobacco is grown mainly in the North-West Frontier Province and Punjab and is an important cash crop . Yields in Pakistan are about twice those for neighboring countries largely due to the extension services provided by the industry. Quality, however, is improving only slowly due to problems related to climate and soil. Farmers have started inter-cropping tobacco with vegetables and sugarcane to increase returns. About half of the total production is used for cigarette manufacturing and the remainder used in traditional ways of smoking (in hand-rolled cigarettes called birris, in water pipes, and as snuff). The share of imported tobacco is increasing gradually in response to an increased demand for high-quality cigarettes.

Cotton is very important agricultural production which is also major export of Pakistan. It is used as raw material in textile industries. The production of these textile industries is exported to various countries against foreign exchange.
Pakistan's fishing industry is relatively modest, but has shown strong growth in recent years. The domestic market is quite small, with per capita annual consumption of approximately 2 kilograms. About 80 percent of production comes from marine fisheries from 2 main areas, the Sindh coast east from Karachi to the Indian border, and the Makran coast of Baluchistan. Ninety percent of the total marine catch is fish; the shrimp which constitute the remainder are prized because of their greater relative value and demand in foreign markets. During 1999-00, total fish production was 620,000 tons, of which 440,000 tons consisted of sea fish and the remainder were fresh-water species. About one-third of the catch is consumed fresh, 9 percent is frozen, 8 percent canned, and about 43 percent used as fish meal for animal food.

Live stock is also an agricultural sector. It also plays very important role to export goods by providing the raw material to various industries like sports goods industries and leather industries. So in this way agriculture helps to Pakistan economy and its growth toward development.
Much of the Pakistan's agriculture output is utilized by the country's growing processed-food industry. The value of processed retail food sales has grown 12 percent annually during the Nineties and was estimated at over $1 billion in 2000, although supermarkets accounted for just over 10% of the outlets.

Infrastructural development:

Infrastructure plays very important role to development of any economy. It is fuel to the economy development. Well organised infrastructure is a key to development because of quick means of transportation of agricultural goods or commodities (raw material or finish goods) and communication.

Irrigation was developed in the Indus Valley Civilization by around 4500 BCE. The size and prosperity of the Indus civilization grew as a result of this innovation, which eventually led to more planned settlements making use of drainage and sewers. Sophisticated irrigation and water storage systems were developed by the Indus Valley Civilization, including artificial reservoirs at Girnar dated to 3000 BCE, and an early canal irrigation system from circa 2600 BCE.

On distribution purpose of agricultural products good and quick means of transportation are required this intends to improve the infrastructure rapidly. So agriculture play important role to the development of transportation for the purpose of distribution of goods.
The major issues that farmers face include firstly the soil. Pakistani soil lacks nitrogenous content, therefore in order to increase cultivated crops and yield it needs proper fertilizers and great investments. Soil erosion is a common phenomenon in the country which adds to destroying the soil energy, and there are not many mechanisms or efforts being taken to reduce soil erosion or restore nutrient to the soil. Another issue faced by farmers which hinders growth in this sector involves water wastage by using flood irrigation methods which waste around 50 to 60 percent of the water, hence new irrigation facilities need to be adopted to better use limited water resources. There are many other issues as well like small land holdings, limited credit facilities available, lack of adaptation of new farming technology, recent rain fed floods which have led to the loss of livestock and crops, water logging and salinity and lastly lack of development and infrastructure in rural areas. The agriculture sector is of great importance to the nation and such problems call for a reform of the agricultural policy, in which these issues are tackled and more importantly the abolishment of feudalism so land is allotted to poor farmers, this would increase the crop yield per acre.

Increase in GDP level:

Agriculture has huge contribution toward GDP of Pakistan economy. it contributes about 25% of total GDP, which is larger than other sectors of Pakistan. Increase in GDP shows the developing progress of the economy.

The 2000-01 wheat crop was forecast at a record 19.3 million tons, compared to 17.8 million tons produced during the previous year. This increase is due largely to favorable weather and a 25-percent increase in the procurement price to about US$135 per ton. About 85 percent of the crop is irrigated. Despite the record production, Pakistan will continue to be a major wheat importer. The government has imported an average of US$2.4 million annually over the past 5 years. The United States and Australia are the major suppliers. Demand for wheat is increasing from Pakistan's rapidly growing population as well as from cross-border trade with Afghanistan.

It has played very important role since independence toward GDP of Pakistan. Now agriculture is the 3rd largest sector of contributing to GDP. Live stock and fisheries are the huge sector of agriculture in order to providing the employment.
Outdated irrigation practices have led to inefficient water usage in Pakistan. 25 percent of the water withdrawn for use in the agricultural sector is lost through leakages and line losses in the canals. Only a limited amount of the remaining water is actually absorbed and used by the crops due to poor soil texture and unlevelled fields.

Employment contribute to GDP, it is as with the increase in employment the per capita income will increase which results to increase in GDP rate of the economy.

Decreasing in rural poverty:

Agriculture sector has played very important role in order to reduction of rural poverty. Since 1975 to 2000 the GDP growth rate of agriculture was about 4.1% per year. Green revolution technology in irrigation, improved seeds and fertilizers played very vital role to increase the agricultural production which results in increase in GDP.

The first attempts at land reform in Pakistan occurred under Ayub Khan's government, the West Pakistan Land Reforms Regulation 1959 (Regulation 64 of 1959). The law put a ceiling on individual holdings: no one individual could own more than 500 acres of irrigated and 1,000 acres of unirrigated land or a maximum of 36,000 Produce Index Units (PIU), whichever was greater. On result of this attempt at redistribution was that land was divided up among members of the landowning family to keep the land owned by individuals below the "ceiling".

Through this technology farmers with land gain the opportunity to increase their production. So in this way arable lands became cultivated lands and farmers got the market of agricultural products against some return.
Pakistan is one of the world's largest producers of raw cotton. The size of the annual cotton crop—the bulk of it grown in Punjab province—is a crucial barometer of the health of the overall economy, as it determines the availability and cost of the main raw material for the yarn-spinning industry, much of which is concentrated around the southern port city of Karachi. Official estimates put the 1999-2000 harvest at some 11.2 million 170-kilogram bales, compared with the 1998-99 outturn of 8.8 million bales and the record 12.8 million bales achieved in 1991-92. The government recently actively intervened in the market to boost prices and to encourage production. A major problem is that the cotton crop is highly susceptible to adverse weather and pest damage, which is reflected in crop figures. After peaking at 2.18 million tons in 1991-92, the lint harvest has since fluctuated considerably, ranging from a low of 1.37 million tons in 1993-94 to a high of 1.9 million tons in 1999-2000.

Development of banking sector:

Agriculture has also contributed a great role toward the development of banking sector. As the government realized the importance of agriculture, it takes steps to improve the productivity of crops by providing the credit facilities to the farmers at low interest rates.

Fishery and fishing industry plays an important role in the national economy of Pakistan. With a coastline of about 1046 km, Pakistan has enough fishery resources that remain to be fully developed. It is also a major source of export earning. Aquaculture is also a rapidly developing industry in Pakistan. Especially the Punjab Province has demonstrated rapid growth in fish farming. GIFT Tilapia culture has also been introduced quite recently in Pakistan especially Punjab province.

With utilizing these credits farmers can produce more and more crops. For this purpose government established the ZTBL and other financial institutes for the provision of credit facilities. So in this way development of banking sector takes place.
Another provision of MLR 115, Section 25, gave first right of re-emption (right of first refusal to buy) to the existing tenants. In 1977, another bill the Land Reform Act, 1977, reduced the ceiling to 100 acres, although this act provided for compensation to landlords.

Farm mechanization:

Introduction of farm mechanization in agricultural sector had played very effective role in the development of economy. With the use of modern machinery in agricultural lands causes more and high quality production of crops.

The Food and Agriculture Organization reported in June 2006 that in Pakistan, government initiatives are being undertaken to modernize milk collection and to improve milk and milk product storage capacity.

So the provision of raw material to the industries increases. Due to increase in productivity level the export rate of major export crops is increased which causes foreign exchange and economic development.
With regard to farming in Pakistan there are two main seasons for growing crops and specified crops are grown only in that season. 'Kharif' season is the summer season in which the summer crop are grown and 'Rabi' is the winter season in which winter crops are grown. In Kharif crops, sowing is done in April - June and harvesting happens in October - November. In Rabi crops, sowing is done in October - November and harvesting is done in April - May. Kharif crops include rice, sugarcane, cotton, maize and others, while Rabi crops include wheat, tobacco, rapeseed, barley and mustard.

Use of Nanotechnology:

In agricultural sector use of modern technology like nanotechnology has played very vital role in the development of economy. This technology is used for producing the high yielding variety with high quality products. High quality products results into high rate of return to the farmers and the per capita income of farmer increases. Increase in per capita income shows the growth of economy toward development.

This sector has enormous potential for growth and in terms of contribution to the development of the country, yet it requires large investments and attention for its proper enlargement.

Role of dairy farming:

Dairy farming from agricultural sector has also played a great role in economic development. Livestock or dairy farming has huge contribution toward economic growth. The annual protein per capita is 18 kg of meat and 155 litters of milk.

Forests cover an area of 4.2 million hectares or about 5 percent of the total area of Pakistan. The principal forest products are timber, principally for house construction, furniture, and firewood. Many of the country's wooded areas are severely depleted as a result of over-exploitation. The government has restricted cutting to protect remaining resources—though corruption often jeopardizes environmental efforts—and has lowered duties to encourage imports. Forestry production has since declined from 1.07 million cubic meters in 1990-91 to 475,000 cubic meters in 1998-99.

This is the highest rate in South Asia. Milk and meat and their by products have a good market. Farmers can receive a good return by producing and providing these products to the market. This process results into increase in per capita income as well as increase in national income of the economy.

Role of textile industries:

In economic development textile industries plays very important role. These industries totally depend on agriculture production in raw form. Cotton is the major crop which is used as raw material for these industries for production purpose.

About only 4% of land in Pakistan is covered with forest. The forest of Pakistan are a main source of food, lumber, paper, fuelwood, latex, medicine as well as used for purposes of wildlife conservation and ecotourism.

Further these products are exported to many economies against foreign exchange. So cotton as raw material from agriculture side contributes toward increase in NI (National Income). Textile industries also provide employment level which increases the per capita income of the person.
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So we can say that contribution of textile industries in the development of economy has much importance.

Role of sugar industries:

Sugar industry is also one of the major sectors of economy which has great importance according to development of economy. This is totally agricultural based industry. Sugar cane is produced on very large scale in many areas of Pakistan.

Pakistan is a net food exporter, except in occasional years when its harvest is adversely affected by droughts. Pakistan exports rice, cotton, fish, fruits (especially Oranges and Mangoes), and vegetables and imports vegetable oil, wheat, pulses and consumer foods. The country is Asia's largest camel market, second-largest apricot and ghee market and third-largest cotton, onion and milk market.

This further supplies to sugar industries for the production of sugar and other by products which has great market. As large scale industries these also helps to provide employment level to the public. This results into increase in per capita income as well as improves living standards.

Rice Export Corporation:

Many areas of Pakistan have much importance according to the production of rice crop. In some areas the world most famous rice crop is produced. A huge quantity is exported to many economies against foreign exchange. This foreign exchange is further utilized in import of some other products like modern technology or machinery or this is utilized for the improvement of infrastructure of the economy.

Role of fishery:

Fishing industry plays very important role in the development of national economy. With a coastline of 814 km Pakistan has enough resources for that remains to fully development.

Pakistan has also cut the use of dangerous pesticides dramatically.

This is also the major export of Pakistan.

Forestry:

About 4% of land is covered with forests in Pakistan. This is the major source of paper, lumber, fuel wood, and latex medicine. It is also used for the purpose of wildlife conservation and ecotourism.

Measure to improve the efficiency of agricultural sector for development of economy:

Yield collection problems:

The collection of yield from small farmers is very expensive & difficult process. So it is a great problem of marketing. There should be some easy way for collection of yield from the farmers.

Rough grading Products:

Commodities or products which are graded have higher price in the market. In Pakistan mixing of poor & good qualities are common. So grading problems must reduce.

Storage problems:

The storage facilities in markets are not enough, seller can not store & wait for a higher price of the product due to lack of warehouses. Because of this some perishable produce suffers loss.

Pakistan would be to cope with rising problems such as falling water availability and intense climatic changes.

Middleman's role:

The middleman takes a big share of farmer crop without doing anything. The farmers borrow the money from them & sell their products at low prices. So this is a big loss to the farmers.

Transportation problems:

Our sources of transportation are insufficient, so regular supply of product is not possible to the market. The village are not properly linked to the markets. For proper provision of products to the market their must be sufficient as well as fast means of transportation.

Revenue system:

Our farmers have to pay land revenue after the harvesting of each crop, so it forces the farmers to sell their produce at low price.

Market Advisory Committee (MAC):

MAC (Market Advisory Committee) at district and tehsil level should be set up to provide technical advice and information to co-operative marketing societies. The officers of co-operative & agriculture department should be the members of the committee.

Market reforms:

The government should improve the markets system. Strict rules and laws should be introduced. The prices of agricultural products should be checked by the inspectors in the market.

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