AGRICULTURE

Agriculture is the mainstay of Pakistan's economy, employing almost 50% of the population. Wheat, rice, cotton, sugarcane, and tobacco are the chief crops, and cattle and sheep are raised. Most of Pakistan's agricultural output comes from the Indus basin. The country is now self-sufficient in food, as vast irrigation schemes have extended farming into arid areas, and fertilizers and new varieties of crops have increased yields.

Pakistan's industrial base is able to supply many of the country's needs in consumer goods, although production has slowed in recent years. The country's natural resources provide materials for such industries as textile production (the biggest earner of foreign exchange), oil refining, metal processing, and cement and fertilizer production. Remittances from Pakistanis working abroad constitute the second largest source of foreign exchange. Since the mid-1950s electric power output has greatly increased, mainly because of the development of hydroelectric power potential and the use of thermal power plants. Pakistan's chief imports are petroleum, machinery, transport equipment, chemicals, and edible fats and oils. The chief trading partners are the European Union nations, the United States, Japan, and China. In the late 1990s, following years of lax fiscal policies, Pakistan appeared on the verge of bankruptcy, with a foreign debt of over $30 billion.

The slippage in agriculture was mainly attributable to the weak performance of both the major and minor crops. Major crops, accounting for 34 percent of agricultural value added, grew by 2.8 percent against an impressive recovery of 6.9 percent last year. The performance of two major crops, cotton and wheat, was lackluster as the cotton crop suffered from pest problems in Southern Punjab while wheat production was adversely affected by the lack of rain in March when the formation of wheat grain takes place. The size of the cotton crop is estimated at 10.0 million bales - 1.6 percent lower than last year while that of wheat is estimated at 19.767 million tons against a target of 20.0 million tons, a shortfall of 1.2 percent. The performance of rice and sugarcane - the other two major crops - has been modest at best with the rice crop estimated at 4.848 million tons - 8.3 percent higher than last year and sugarcane at 53.419 million tons - 2.6 percent higher than last year. These two crops are highly water intensive and the improved availability of water helped increase their production. Minor crops, accounting for 12 percent in agricultural value added showed a 'weak' performance, growing by only 1.7 percent. Widespread rains during the monsoon season of 2003 (July-September) and increased snow fall in the catchment areas contributed to an improvement in the water situation during the year. The canal head withdrawals in the Kharif 2003 and Rabi 2003-04 seasons were higher by 5.0 percent and 26.2 percent, respectively over the previous year. However, during winter (January-March 2004) the actual rainfall was 40 percent lower than normal and this had a severe impact on the wheat crop.

Pakistan's economy has undergone considerable diversification over the years, yet the agricultural sector is still the largest sector. With its present contribution to GDP at 23.3 percent it accounts for 42.1 percent of the total employed labour force and is the largest source of foreign exchange earnings by serving as the base sector for the country's major industries like textile and sugar. It also contributes to growth by providing raw materials as well as being a market for industrial products. What happens, therefore, to agriculture is bound to have a substantial impact on the growth of overall GDP. Over the last one decade i.e. 1990s(Table 2.1) agriculture grew at an annual average rate of 4.5 percent per annum but was quite volatile, rising as high as 11.7 percent and declining by as much as 5.3 percent. The overall performance of agriculture during (2000-01 and 2001-02) was depressed as it was adversely affected by the unprecedented drought situation. Agricultural growth showed a negative trend for these two years (See Table 2.1). However during 2002-03, the extent of water shortage was relatively less and Agriculture grew by 4.1 percent (See Table 2.1). During 2003-04, the wide spread rains and increased snowfall in the catchment areas contributed to an improvement in the water situation as agriculture grew by 2.6 percent. Slower growth in agricultural during 2003-04 is mainly attributed to a decline in production of cotton followed by the slower growth in livestock, the largest contributor to agricultural growth. Furthermore, the shifting of slaughtering from livestock to manufacturing also slowed livestock growth and hence agricultural growth. Likewise, a 2 percent growth of fisheries against the 3.4 percent growth and last year was due to the oil spill of the Tasman Spirit at the Karachi Port which killed millions of fish and contributed to the slower growth of agriculture.

As stated earlier, the shortage of water is receding. The canal head withdrawal in the Kharif 2003 and Rabi 2003-04 seasons increased by 4.96 percent and 26.16 percent, respectively over the Kharif 2002 and Rabi 2002-03. Moreover, the heavy snowfall on the mountains during Winter 2003 will help fill the country's water reservoirs and alleviate water shortages to a greater extent for the Kharif Crops 2004. On the whole, the water situation in the current fiscal year appears better than last year but still lesser than normal supplies.

The agricultural growth is estimated at 2.6 percent during 2003-04. Major crops, accounting for 34.2 percent of agriculture value added, grew by 2.8 percent against 6.9 percent last year. Minor crops, contributing 12.4 percent to agricultural value added, registered a weaker growth of 1.7 percent against 0.4 percent last year. Livestock, the largest contributor to overall agriculture value added (contributing 49.1 percent), grew by 2.6 percent in 2003-04 as against 2.8 percent in 2002-03. Fisheries accounting for 1.4 percent of agriculture value added has shown a growth of 2 percent against a growth of 3.4 percent last year. On the other hand, forestry contributing 2.9 percent to agricultural value added, grew by 2.9 percent as against growth of 11.1 percent last year.

Amongst the major crops, Wheat production is estimated at 19.767 million tonnes in 2003-04, as against 19.183 million tonnes last year, showing an increase of 3 percent. Rice production is estimated at 4.848 million tonnes in 2003-04, against 4.478 million tonnes last year, an increase of 8.3 percent. Sugarcane production has increased by 2.6 percent in 2003-04, from 52.056 million tonnes last year to 53.419 million tonnes in 2003-04. Cotton production has however, decreased from 10.211 million bales in 2002-03 to 10.048 million bales in 2003-04, showing a decrease of 1.6 percent. As regards the minor crops, the production of two major pulses, namely, masoor and mung have increased this year. Production of masoor has increased by 2.7 percent, followed by Mung (1.7 percent) during 2003-04. The production of mash declined by 13.7 percent. The production of onion is estimated to increase by 16.1 percent. The production of chillies and potato decreased by 29.5 percent and 4.7 percent respectively in 2003-04 over the last year. Agriculture credit disbursement of Rs.47.925 billion during July-March 2003-04, is higher by 27.3 percent, as compared to Rs.37.632 billion over the corresponding period last year. The fertilizer off-take stood at 2508 thousand nutrient tonnes in July-March 2003-04 or higher by 9.5 percent, as compared to 2291 thousand nutrient tonnes for the corresponding period last year.