Strong institutions needed for robust economic growth

An edited version of this article was first published in The Express Tribune on Feb 22, 2013.

Islamabad – Strong public institutions, better research and policies that explore the potential of ignored commodities such as dairy products and horticulture could help improve Pakistan’s agriculture growth.

These were the thoughts expressed by John Mellor, an American economist and chief of the Pakistan Strategy Support Programme (PSSP), at a seminar in Islamabad on Thursday. The seminar titled “Agricultural growth and the economic transformation” was organised by the PSSP.

Mellor said the government institutions must take charge

“Rapid agricultural growth requires high quality public institutions,” he said. “The private sector can supplement and support, but when you talk about national coverage for 3 million small commercial farmers, you need a strong public sector.”

He said Pakistan could learn from India’s experiment with urban industry. He said the growth of large scale goods and urban services industry as a result of Manmohan Singh’s economic policies in the 1990s did not pull agriculture sector perhaps because of weakened public institutions.

He said US farmers change the wheat and maize varieties they use almost every three years because of extensive research on crop yields and better seed varieties. But similar research institutions are almost absent in Pakistan.

Mellor emphasised the need to focus on the unexplored potential of dairy industry and horticulture to push the overall agriculture growth rate as opposed to only focusing on the growth rate of wheat crop.

He also established a link between agricultural growth and poverty reduction.

“For Pakistan, agriculture growth is twice as more important in employment growth than Gross Domestic Product (GDP) growth,” Mellor said. “It is employment growth that reduces poverty.”

According to Mellor, the employment growth does not directly happen in the farm sector because the farmers who benefit from agricultural growth are already prosperous.

The poverty reduction takes place when small commercial farmers, who own cultivable tracts in the 5 to 150 acre range, use their incomes to buy non-tradeable services and goods in their own localities, thereby increasing job opportunities for the Rural Non Farm sector in their area.

Mellor said Pakistan’s policymakers need to target the small commercial farmers in order to increase agricultural output. The 5 to 150 acre farms make up 36 per cent of all farms and 74 per cent of all cultivable land, he said.

Shahid Sattar, member of the planning commission, appreciated Mellor’s emphasis on employment growth.

“Mellor’s discussion goes to the heart of our problem which is employment generation especially keeping in view the youth bulge,” Sattar said.

He said we must not forsake agricultural sector in economic policies.

PSSP is funded by the United States Agency for International Development (USAID). It is being implemented by the International Food Policy Research Institute (IFPRI) and other partners under the guidance of a National Advisory Committee.

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