Hunger Pains Pakistan s Food Insecurity: Production Related Issues

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1 Hunger Pains Pakistan s Food Insecurity: Production Related Issues Sohail Jehangir Malik PhD Chairman, Innovative Development Strategies (Pvt.) Ltd at the Woodrow Wilson Center Washington DC June 3, 2009

2 Plan of this Presentation Food Security in Pakistan and the importance of wheat Agricultural Production Challenges Prime Minister of Pakistan s Food Security Task Force Report 2009 Agriculture the Neglected Sector: Production Related Macro Challenges

3 Prime Ministers Task Force on Food Security 2008 Reports that.. Currently 77 million people, almost half the population, is food insecure in Pakistan - daily calorie intake below the minimum recommended level

4

5 FOOD SECURITY IN PAKISTAN is tied to WHEAT PRODUCTION and AVAILABILITY Wheat accounts for over 55% of total caloric consumption and this share is significantly higher for the poorest household and poorer Provinces Food Security in Pakistan: interpersonal, intra-household, inter-sectoral and regional dimensions

6 Household Expenditure Shares by Level of Vulnerability of District of Residence

7 Food Security Inter Provincial Dimensions 2008 Punjab produces on average 16 to 17 million mt against consumption requirements of 12.5 million mt NWFP largest wheat deficit and most vulnerable required highest allocation - almost 2.3 million mt in 2007/08 Changes in domestic wheat marketing policies immediately affect NWFP supply situation Porous borders with Afghanistan - large share of the allocated wheat does not reach intended Provincial consumers

8 Subsidies for wheat flour and other food products - substantial burden on national budget High universal subsidy at all stages - procurement, storage, transport, and handling. Curtails private sector initiative and creates excess milling capacities resulting in high processing costs Benefits the: millers some larger traders consumers, in general Additional Subsidy Utility Stores Corporation markets 1.6 million tonnes or about one quarter of the tradable wheat

9 Putting Agriculture in Perspective Some Basic Facts Rural Areas 68% of the Pakistan s population lives in rural areas. Crop Income accounts for only about 50% of rural incomes Farmers Baluchistan 2% Agricultural Laborers 5% Non-farm Self- Employed 17% 60% of Pakistan s rural poor are landless. 45% are non-agricultural households 15% are landless agricultural laborers. With a poorly developed Non Farm Sector the overwhelming burden is on the agriculture sector Farmers NWFP 6% Farmers Sindh 11% Farmers Punjab 24% Non-farm Other 35%

10 Distributional Implications of Agricultural Growth Simulations carried out by the World Bank (2005) indicate that even large increases in agricultural production have only minor impacts on incomes of agricultural laborers and the rural non-farm poor. The implication is that agricultural growth alone, (even including multiplier effects), without specific interventions targeted to agricultural laborers and the rural non-farm poor, will not alleviate poverty for much of the poor in rural Pakistan.

11 The List of the challenges to Pakistan s Agriculture Production is well known 1. flat (low) yields and large yield gap; 2. low productivity of water; non-reliability of water services; 3. under-performance of rural factor and product markets and extension services; 4. under-investment in research and technology development

12 The Persistent Yield Gap Crop Progressive National Average Yield Farmers Yield (Avg. of last 3 years) Yield Gap (%) Wheat Cotton Sugarcane Sindh Punjab Maize Rice Inadequate Certified Seed Coverage Improper Fertilizer Use Low Farm Mechanization Inefficient Water Use

13 And Slow Diversification to higher value-added crops Share of Different Crops in Total Cropped Area 1990 and 2000 (Agriculture Census Data) All farms < 0.5 ha 2 to under 5 ha 20 ha and above Total cropped area (000 ha) 21,340 23, ,981 7,659 3,455 3,103 Grains Wheat Cotton Wheat Cotton Pulses Sugarcane Oilseed Fodder Vegetables Orchards Other crops

14 Land: the Number of Small Farms is Increasing Rapidly (Size of Farm Distribution based on Agriculture Census Data) % 0.5% 1.2% 9.0% 19.0% 8.8% 3.9% 0.2% 23.8% < 5 5 to < % 57.7% 12.5 to < % 25 to < to < 150 > 150

15 WATER: Estimates indicate that Requirements will Outstrip Availability by 2015 [World Bank (2004)] Water Resources available to meet future needs Average annual flow to the sea MAF Additional ground water 1-2 Saving from water conservation 5-10 Estimated total Projected incremental water requirements Environmental flow requirements 10 Urban domestic and industrial demand 9 Accord deficit 11 Increase in irrigation water demand 5-30 System losses 5-10 Estimated total (93% in Kharif)

16 Proposed Food Security Strategy for Pakistan Prime Minister s Special Task Force Agricultural growth rate of at least 4 percent in the period with special attention to the livestock sector. 2. Efficient and equitable system of food procurement, storage and distribution to ensure that food is available at reasonable prices throughout the country throughout the year. 3. Pro-poor growth, non farm employment generation to substantially improve the access of poor households to food. 4. Safety nets for the poor

17 Proposed Strategic Interventions are well articulated But NOT NEW!! policy regime to remove market imperfections, increase productivity and farmers profitability, and foster exports corporate farming agriculture credit reform scaling up of diversification into new, higher value crops including technology adoption and adaptation; use of new and more efficient irrigation technology. focus on livestock and especially dairy

18 Official Schizophrenia over the Role of Markets and a fixation on commodities

19 Much Needed Wheat Policy Reforms to Promote More Efficient Wheat Markets Lower levels of government procurement: Modest government carry-over of stocks as a security measure: Liberalization of private sector international trade: Cash-based safety nets: Promotion of a competitive domestic market: Enhanced analytical capacity and information sharing:

20 Agriculture - the Neglected Sector: Production Related Macro Challenges Serious Disconnects between Policy and Implementation Weak Data and Weaker Analyses and lack of capacity Absence of M&E and effective policy research and extension Scant evidence of what works and what doesn t and how it can be replicated and up-scaled Little understanding or consideration of the complex micromacro linkages and sectoral inter-relationships No consideration of the importance of institutions Need for a holistic approach Budgeting and Expenditure Reform Issues

21 Thank You

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