Pakistan Institute of Development Economics



Strategic Reforms for Accelerated Agricultural Growth in Pakistan (Distinguished Lecture)

Agricultural growth rates in the 1960s, 1970s, 1980s and 1990s show that strong growth during the 1960s was driven by several factors, including greater certainty in the use of irrigation water (as a result of an agreement with India), the introduction of productivityenhancing fertiliser-seed packages, the introduction of tubewells and the electrification of rural areas, and policy changes that improved the profitability of farming. Growth during the 1970s dropped to 2.3 percent as a result of the uncertainty created by land reforms in 1972 and 1977, severe climatic shocks, a cotton virus that depressed production for most of the decade, and political instability. The recovery in the 1980s and early 1990s can be attributed to the introduction of new cotton varieties and improved management techniques, as well as to a gradual improvement in economic incentives. Closer inspection of the nature and sources of this growth raises concerns about its sustainability and casts doubt on the ability of the sector to grow by more than 3-4 percent a year in the future. Many of the past sources of agricultural growth in Pakistan appear to have been fully exploited. Strategy for the future must effectively address the followings. Allowing the market to Operate, policy reforms that support the ongoing structural adjustment should be given top priority. To address the crisis in irrigation management market-determined incentives must be allowed to determine resource allocation within the irrigation system. Reform in extension should include establishing closer links with research institutions and reducing the number of front-line extension workers and replacing them with fewer, bettertrained workers who are more responsive to the needs of farming systems. Full-fledged land reform is difficult to enact and can be considered only after a comprehensive study of costs and benefits. Some important measures can be implemented immediately, however. Foremost is providing security of tenure to many farmers, especially tenants-at-will, thereby improving responsiveness to incentives and creating better incentives for long-term investments.

Rashid Faruqee