The budget 2020-21 was released in the unprecedented circumstances when the coronavirus (COVID-19) spread has badly affected the economy. The slowdown of trading activities has resulted in the negative growth rate for the first time. According to the Economic Survey of Pakistan 2019-20, despite the overall negative growth, the agriculture sector grew by 2.67% in the current fiscal year. For the next year, the government has set the growth rate target of 3.5% for the agriculture sector.
The budget allocations for current expenditures for the agriculture sector were Rs.4,916 million in 2019-20 which has increased to Rs13,696 million in the current budget. On the other hand, revenue expenditures allocated Rs77,450 million which were Rs82,200 million in the budget of 2019-20.
Apart from FY 2018, the growth rate of the agriculture sector is highest in the current fiscal year. Growth rate of crops increased significantly from -4.96% in FY 2018-19 to 2.98% in FY 2019-20. Production of wheat, maize and rice increased while sugarcane and cotton decreased. This also implies that we have to rely more on cotton imports this year to meet the demands of the textile sector. Area under cultivation increases for cotton, rice, wheat and maize, while the cultivated area decreases for sugarcane.
The budget allocations for current expenditures for the agriculture sector were Rs.4,916 million in 2019-20 which has increased to Rs13,696 million in the current budget. On the other hand, revenue expenditures allocated Rs77,450 million which were Rs82,200 million in the budget of 2019-20
The agriculture sector has been hit hard due to locust attack in several districts of Pakistan causing crop losses for the farmers. Around 37% area is vulnerable to Locust attack which includes 15% area of Punjab, 25% area of Sindh and 60% area of Balochistan. Rs.10 billion are allocated in the recent budget to deal with locust swarm. Growth rate of livestock decreased from 3.82% to 2.58% which is a worrisome sign considering that the share of livestock in the agriculture sector is 60.56% and it contributes 11.69% towards GDP. This is the lowest growth rate for the livestock sector in the last five years.
Livestock is also important in the exports of live animals, meat and milk production. From Jul-Apr in FY 19, the exports of live animals were $5,303 thousand which increased to $6,664 thousand in the same time period for the current fiscal year while export of meat also increased during FY 20.
It is time for the government to focus on the agriculture sector and address the problems it is being encountered for the past many years. The sector is significant in the contribution towards GDP and the employment provision. COVID-19 has increased unemployment in Pakistan and there is fear of losing millions of jobs in the coming months due to lack of economic activities. Promoting the agriculture sector can generate employment prospects while it can also ensure employment for those who are working in the value chains related to the agriculture sector.
The recent Locust attack is to be tackled as quickly as possible to minimize the damage for farmers in terms of crop losses and ensure the food supply in the country. Food security can become an issue which may give rise to the prices of food items. The government should also devise mechanisms for future for speedy action in this regard including the information provision, awareness, and timely spray.
Considering the climate change impact and damages such as from the locust attack, it is vital to provide adequate credit facilities and insurance schemes for small farmers. However, budget allocations for Crop Loan Insurance Scheme, Livestock Insurance Scheme and Credit Guarantee Scheme for small farmers are not sufficient. The productivity of major crops is not as per the international standard which is why the increase in crop area is also not enough to increase the production. For this, the government should ensure the availability of quality inputs to farmers. Livestock sector observed the lowest growth rate in the last five years and considering its significant share in the agriculture sector and the export potential of live animals and meat, measures should be taken to increase the production and exports of the sector.
The writer works at the Sustainable Development Policy Institute, Islamabad