Fundamental change needed in agricultural policy

Pakistan's agricultural economy has fast emerged at the centre of the country's future prospects as the countdown begins for stemming a depletion of liquid foreign currency reserves.

As Pakistan's economic outlook worsens by the day, so does the prospect of a new loan from the International Monetary Fund (IMF) become increasingly likely.

Such a programme is more than likely to come tied with conditions for Islamabad to follow including the likelihood of a new IMF programme. Such conditions are likely to include the introduction of a fresh tax on the country's larger farm owners, who remain immune from income tax.

The farm tax issue has remained unresolved for years. There is of course every reason to argue in favour of equity across the board for all income earners including those in the business of farming. But agriculture has been so badly neglected in the past decade or so that slapping tough new taxes for the sector could be counter-productive at a time when farm incomes need to grow rapidly and create a boom in agriculture.

Pakistan's economic future lies in the success of its agriculture, for more than one reason. Almost a quarter of Pakistan's gross domestic product (GDP) comes from agriculture, while almost two-thirds of its population relies directly or indirectly on farm incomes.

Experience in the past year has shown that the world's agriculture producers still have a valuable place in the economic cycle. This is largely true on the basis of countries where farm incomes are a key player in the overall economy. Hence, farm producers seeing a strong recovery from added income coming through export of commodities, underlines the importance of agriculture.

For Pakistan, the way forward can see relative stability if farm incomes grow with time. This will require a new partnership between the government and stakeholders in agriculture, paving the way for long-term growth.

Missing the bus

On the other hand, if prospects for agricultural growth are stifled by harsh new taxes on farm owners, Pakistan may once again miss the bus. Going forward, it is vital that farm incomes are not only kept protected, but must at least in part get channelled in to a bold and sustainable recovery process.

At the same time, Pakistan must also work to modernise the sector. For too long, successive governments have ignored agriculture while focussing on trade and industry. The time has now come to break away from this pattern by diversifying the kinds of crops prevalent in the country.

For too long, farm owners in Pakistan have relied heavily on the few cash crops which make up the bulk of its produce. The time has now come to diversify into a range of cropping patterns, including non-traditional crops. Such diversity is central in improving the returns for the sector as a whole - a first step towards improving income.

While an effort gets under way to increase farm yields, it is also essential to improve links between the farm sector and industry, all with the intention of establishing the basis for higher incomes. Ultimately, policy choices by the government must work to increase yields as well as the incomes of individual farmers.

Once a bold recovery gets underway and the farming community begins earning incomes large enough to cover their losses from yesteryears, only then will there be a legitimate case to slap new taxes on what continues to be an underperforming sector of the Pakistani economy.

- The writer is a journalist based in Pakistan.