Agriculture - the Prime and Not Peripheral Sector

By Asad, S. Hasan | Economic Review, December 1994 | Go to article overview

Agriculture - the Prime and Not Peripheral Sector

Asad, S. Hasan, Economic Review

Agriculture dates back to centuries ago when during the pastoral age man used to grow food for his consumption. This article, therefore, seeks to highlight the characteristics of agriculture sector, its growth rate and reasons for slower growth followed by suggestions.

Pakistan is basically an agriculture oriented country because it is the largest sector in terms of its contribution to GNP, total employment and export. The present share of agriculture is 24 per cent of GDP and 48 per cent of total employment. Over 70 per cent of the population resides in rural areas who are directly or indirectly dependent upon agriculture because of lack of non-agricultural activities. It provides food in the form of wheat, rice, pulses and sugarcane. No less significant is its contribution to manufacturing sector through the supply of basic raw materials like cotton, sugarcane, hides and skins and tobacco. The initial drive towards industrialisation was such that those industries were promoted which had access to these materials. As a result, textile, leather, cigarette, grain milling and cotton ginning industries developed. Notwithstanding the growth of chemical and engineering industries, textile and other agro-industries still dominate industria value added, employment and export earning. In other words, the whole economy depends upon the performance of agriculture as witnessed during 1992-93 when its production witnessed a fall of 5.3 per cent following a plunge of 29 per cent in cotton production which led to reverse spiral effect upon national economy. GDP grew by a meagre 2.3 per cent, per capita GNP fell by 0.7 per cent, and export fell by 1.3 per cent. In sum, the whole economy revolves around one crop namely cotton whose decline led to cataclysmic impact upon the whole economy.

During the early days in 1950's, the contribution of agriculture in GDP was a predominant 60 per cent declining to the present 24 per cent. This decline is part of the development process because of slower growth than GDP following a more rapid growth in manufacturing, service and other non-agricultural sectors of the economy. Smaller contribution of agriculture in national economy is normally considered a sign of economic development as the experience of USA, Britain and Germany indicates. Nonetheless, it is not universally true as certain countries like Netherlands, Denmark, Australia and New Zealand are developed with agriculture being the predominant sector. In Pakistan, we adopted the approach of the former categories of countries and, therefore, our efforts were directed to the growth of manufacturing and other non-agricultural sectors. During the 1960's, growth in agriculture was 4.9 per cent per annum which exceeded population growth due to Green Revolution. However, this high rate could not persist as it fell to 2.3 per cent per annum over the 1970's, that is, below the population growth of 3 per cent. During the 1980's, a growth rate of 4 per cent was witnessed which was followed by a fall to 2.8 per cent during the early 1990's. It will be noticed that for quite a large part of the period under review, growth in agriculture has lagged behind rapid population growth which may be cataclysmic for the economy if it persists in future. Agriculture must grow at a rate faster than population in order to become self-sufficient in food and provide abundant raw materials to the manufacturing sector. In fact, population growth sets a floor below which agriculture must not grow otherwise per capita income will decline and the whole economy will be out of gear as experienced during 1992-93. During 1992-93 and 1993-94, economic growth rate was equal to population growth, indicating stagnant per capita income, because of poor performance of agriculture. This phenomenon is food for thought for the policy makers.

The factors responsible for slower agricultural growth are multitudinous and complex. Agriculture is characterised by backwardness and all its ratification, such as illiteracy, poverty and absence of infrastructure facilities. …

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