Agricultural Policy Issues Research Articles

Agricultural Policy Issues in Pakistan

Agriculture, in many ways, remains the most dominant activity in Pakistan. It provides a way of life to almost three-quarters of the country's population: over 55 percent of the labour force works directly in agriculture and about 30 percent of the Gross Domestic Product and over 35 percent of the export earnings were contributed by agriculture in 1984. That three-quarters of the population engaged in agriculture cannot produce adequate supply of food and fibre at reasonable prices for the one quarter working in other sectors indicates a low level of productivity in crop and livestock production. Agricultural growth in the past 35 years or so has been uneven in terms of both rates and commodity balances. Also, the benefits from growth have varied significantly across regions and between farm groups. Markets and public policy have not always provided the right economic incentives and environment for sustained and equitable growth.

Commodity Programs: Discussion

Some years ago, R. G. D. Allen was invited to the United States as a discussant of several papers on the subject of index numbers. Somewhat to the chagrin of his sponsors who had underwritten his transatlantic airline fare, his sole comment was to the effect that he had read the papers, was favorably impressed, and that the authors should continue their good work. I might best serve the purpose of this session by similar brevity! The two prepared papers deal with two important facets of contemporary agricultural policy issues: (a) instability and its sources, (b) the distribution of benefits flowing from commodity programs. Each confirms some generally held impressions; e.g., export variability was the dominant source of instability in total utilization of grains and oilseeds in recent years; the distribution of benefits of agricultural subsidies are unevenly distributed and tend to favor the relatively larger producer. Each contains some surprises, at least to my intuition; e.g., only recently has the need to undo certain consequences of abundance been used as an argument for intervention in commodity markets. Although the variability in aggregate net farm income has been sharply higher in the 1970s than in the 1960s, variability has not been appreciably higher in the latter half of the 1970s than in the two decades after World War II.

Finance and Effective Wartime Use of Agricultural Resources

For a decade or more prior to the beginning of World War II much of the thinking on agricultural finance and related agricultural policies was conditioned by what some have labeled the psychology of a surplus economy. It is not surprising, therefore, that considerable time elapsed, after the outbreak of the present war, before the influence of a possible wartime scarcity economy was fully reflected in the thinking of students of agricultural policy. One of the early reactions was to stress the increased incomes which might accrue to the farmers. At the outset, emphasis was placed on the prospects that those farmers who were still in a weak financial position would soon be able to obtain enough income to set their financial houses in order, and on the dangers that buyers of farms would involve themselves in excessive new debts as many did during and following the last world war. This attitude changed radically with the rapid shift from widespread under-employment of agricultural manpower and other rural resources to drastic shortages of these resources. The emphasis has shifted from control of agricultural production to the adoption of measures designed to maximize agricultural production. To accomplish this latter objective subsidies and related forms of public assistance are now advocated as methods of overcoming extra costs which may be incurred in the production and distribution of products. Earlier these inducements were discussed mainly in terms of raising the level of income and improving the lot of low-income groups. The present complex and difficult situation has led naturally to differences of opinion on questions of wartime agricultural policy. Time lags and leads in the recognition of wartime agricultural problems alone could be expected to give rise to divergent views. Likewise the relative weights given to several partially conflicting public objectives-holding down the cost of living for the urban population, promoting effective wartime uses of agricultural resources, safeguarding farmers against possible post-war financial losses, and distributing the costs of the war equitably among different economic groups--doubtless have influenced the views held on specific agricultural policy issues.2 These differences of opinion in turn have been reflected in divergent views on issues of wartime agricultural finance policy. Students of financial policies, as they relate to agriculture, have found it necessary to reorient their thinking not only on many of the technical aspects of farm finance, but also on the questions that fall outside the general field of finance.