Pakistan Institute of Development Economics


Dependence on agriculture

Publication Year : 2015
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The agricultural sector is the only sector in Pakistan which employs the majority of the country’s labour force.According to the World Development Indicators, in 2011, the agricultural sector absorbed 45.1 percent of the country’s total labour force, which was higher than the top agricultural exporting countries of the world, such as the Netherlands (2.5 percent), Indonesia (39 percent), China (35 percent) and Brazil (15 percent).On the other hand, this sector also contributed about 25 percent to Pakistan’s GDP in 2013, which is a larger share when compared to the Netherlands (1.9 percent), Indonesia (13.7 percent), China (9.4 percent) and Brazil (5.6 percent).The above statistics prove our heavy reliance on the agricultural sector. However, it must be noted that this sector is highly dependent on natural factors, and is therefore, subject to uncertainty and unpredictability.If environmental conditions are favourable, there would be high agriculture productivity. But if the conditions are unfavourable and farms are afflicted by droughts, floods and other climatic shocks, agricultural productivity is adversely affected.According to the National Disaster Management Authority in Pakistan, the recent flood of 2014 affected 19,638 square km in Mithi, Chachro, Dahli, Diplo, Islamkot and Nagar Parkar.Overall, 367 people lost their lives, more than 2.5 million people were affected by the floods and rains, and 129,880 houses were partially damaged or destroyed. Over one million acres of cropland and 250,000 farmers were affected.Most the farmers in rural areas consume their own produce as well because they have low purchasing power and a large household to support. Such factors restrict farmers from intensive agriculture. In any case, a majority of the farmers do not even own the land on which they farm, and even if they do, it is usually small land holdings.Regardless of the condition of farmers in Pakistan, the agriculturalsector has still managed to absorb the majority of the labour force on a global level. It is an effective instrument to reduce poverty as 75 percent of poverty-stricken people reside in rural areas in the world where most farms are located.The markets for agricultural and non-agricultural commodities exist mainly in urban areas, which was also the key point in the New Growth Strategy of the Ministry of Planning and Development. But in Pakistan’s case, the majority of the population lives in rural areas (62 percent) where they are dependent mainly on the agricultural sector.The percentage of the population living in the urban areas of Pakistan (38 percent) is less than it is in other agricultural exporting countries such as the Netherlands (89.9 percent), Indonesia (53 percent), Brazil (85 percent) and the United States of America (81 percent) as recorded in the year 2014. Improving urban centres and strengthening the urban markets are necessary for speedy economic growth in the country.Unfortunately, the growth rate in the agricultural sector is quite low (2.9 percent in the year 2014-15) as compared to other agricultural exporting countries.In rural areas, the majority of the people are poor and have low purchasing power. A large proportion of these people cannot even afford the purchase of agricultural inputs. Moreover, they do not receive fair prices for their product in both national and international markets. These facts, combined with other factors, have made this sector run on a subsistence level.There is a need to shift employment from the agricultural sector to one unrelated to agriculture. Furthermore, this sector must be commercialised rather than leaving it on a subsistence level.To this end, the provision of improved inputs, access to markets and credit and the provision of training and education are vital. The resilience of the farmers against economic and environmental shocks must be facilitated as this will ensure a higher rate of productivity in the future.