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Optimum cropping
pattern under WTO
By Asif
Maqbool & Dr Ishtiaq Hassan
AGRICULTURE directly or indirectly sustains 67.5 per cent of
the population and engages 42 per cent of the labour force.
If value addition is taken into account, its share in total
foreign exchange earnings is 70 per cent or more, indicating
that most of the industries in Pakistan are based on
agriculture.
 If
one takes into account provision of food, fibre, industrial
raw material, foreign exchange earnings, labour employment,
and sale of industrial goods in rural areas, etc., the
importance of agriculture turns out to be outstanding.
Growth and development of economy can not be thought of
without the prosperity of this sector.
Punjab accounts for about 73.4 per cent of Pakistan’s
agriculture both in terms of cropped acreage and income
originating from it respectively. Over 95 per cent income
comes from the irrigated areas of Pakistan, of which 73 per
cent is contributed by the irrigated areas of Punjab.
The concept of trade liberalisation in context of
agriculture was first included in the international
discussions on the eve of command changing from GATT to the
WTO.
Pressure from major agricultural exporting countries in the
Cairns group and concerns of the US and the EU put
agriculture into the Uruguay Round. Both, the US and the EU
over-produced and needed markets to dispose off their
surplus.
Disagreements between them nearly stalled negotiations in
GATT until they reached an agreement. These two major
trading blocks largely thrashed out the AOA and selected
base year and detailed targets so as to benefit them most.
Many, if not most, developing countries, including Pakistan,
signed the Uruguay Round without understanding the
implications of agreements for their farmers and food
security.
The WTO is encouraging farmers to adjust their cropping
structure and in doing so producers increase overall output
even as aggregate prices fall. In response to overall price
falls, consumers decrease consumption. However, with the
increased incomes that accompany the shift of farmers to
more profitable crops, most of the sector is likely to be
better off (although we do not measure indirect rise in
consumption due to income effects of higher agricultural
profits).
Rich farmers in coastal areas benefit more than poor inland
farmers. The main reason for the advantage of coastal
farmers is the land which produces higher yields. Moreover,
producers who live in coastal regions tend to plant crops in
which China has a comparative advantage, while poor farmers
in western areas do not.
It is expected that trade liberalisation under the WTO
regime will increase food security. Reduction of tariffs and
opening of market will make it possible to supply food items
at comparatively lower cost because commodities are traded
on the principle of comparative advantage i.e., commodities
will move from lower cost point to higher cost point
abandoning their production in higher cost areas.
In existing scenario, the agriculture of developing
countries, like Pakistan, is characterised with high cost of
production as compared to developed countries. Agriculture
is the main stay of the economy but it is under developed.
There will be more export from the developed countries into
the market of developing countries including, Pakistan. The
WTO therefore will negatively affect Pakistan agriculture
export. Sugar from the West Indies, Brazil and Hawaii will
be in our market at half the price of Pakistani sugar.
In the wake of the WTO agreement, many devices deployed in
the past for productivity enhancement would be no longer
tenable. Pricing of inputs and outputs and their
subsidisation, tariffs, duties etc., in particular would
fall outside the purview of the Pakistan government to steer
agriculture to the desired goals, as has been the case in
the past.
What can be done under the new situation, when most of the
Pakistan agricultural products would face cut-throat
competition from abroad? The most decisive option would
comprise selection of optimum cropping patterns as a
pre-requisite to efficient utilization of available
resources of land, water and capital. Farmer’s profit cannot
be maximised without optimum cropping patterns, which ensure
efficient utilization of available resources in the WTO.
Second, international price options foreseeable in the times
ahead should be used to see their effects on acreage
allocation to crops, land use intensities, water and capital
utilisation in various crop zones. It would be seen how a
given crop behaves to new price situations. This exercise
would yield information by which a particular commodity
would be made to stay in the field under the WTO conditions
where the fittest would survive. See the tables.
Under free trade regime cotton will be the only crop which
will gain acreage at the expense of all other major crops.
Wheat will lose acreage by 7.42 per cent, basmati rice by
12.57 per cent, IRRI rice by 5.12 per cent and sugarcane by
12.302 per cent as compared to existing situation. However,
under the WTO regime overall cropped acreage will be
increased by 0.62 per cent as compared to the existing
condition.
The WTO will effect positively on the incomes of farmers of
former Bahawalpur Division. Income of farmers will be
increased from Rs27.920 billion to Rs38.163 billion. The
farmers of the Bahawalpur Division will get Rs10.243 billion
additional under the free trade regime. Thus, under the WTO
situation income of the farmers will increase by 36.68 per
cent as compared to existing situation.
The DAWN
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Pakissan.com;
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