SEMINAR IN ECONOMIC POLICY

-----------------------------------------------------------------------------------------------AGRICULTURAL DEVELOPMENT AND CHANGES IN THE LAND TENURE AND LAND REVENUE SYSTEM IN PAKISTAN -------------------------------------------------------------------------------------------------

MADE BY: SYED MUHAMMAD FARAZ ALI REG# 3415 INSTRUCTOR: MR. QAZI MUHAMMAD SALMAN DATE: 21 May 2011

Agricultural Development and the changes in the Land Tenure and Land Revenue System in Pakistan
Summary
The agricultural sector of Pakistan including its structure of production and resource utilization has undergone significant changes which have affected the national economy in one way or other since Pakistan came into being. The process of agricultural transformation has been greatly distorted by the influence of the landed elite and the wrong government policies. This chapter focuses on some explanations of the process of agricultural transformation in Pakistan since its inception in 1947. It analysis the following main aspects of the transformation process: o Changes in agricultural production, productivity and their underlying sources, including inputs, technology and public policy o Changes in the agrarian structure and land reforms o Problem associated with the land tax About 85% Pakistanis lived in rural areas and with agriculture contributing to 50% to the GDP. Even though, non-agricultural sources have become quite important contributors to the national income, agriculture remains the key sector in terms of its backward and forward linkages affecting the living of rural and urban household The transition has been brought about several factors: Growth of output diversification of agriculture Employment of labor in non-farm activities Migration of rural labor to urban areas Population growth Changes in patterns of land ownership.

USE OF MAJOR INPUTS Irrigation System

Irrigation water from the Indus river system is the lifeline of agriculture in Pakistan. The agriculture is dependent on water from rivers and Rain. Pakistan Still has the system which Britishers gave us. Pakistan still has not improved that much in this area which it should have.

Increase in usage of chemical fertilizer

There are several important constraints to sustainable agriculture and causing low productivity. They include soil degradation (soil salinity, erosion and soil fertility depletion), depletion of water resources, mismanagement of irrigation systems, the distribution of the land holdings and poor farming practices. The use of farm inputs, particularly of fertilizers, is inadequate and inefficient. Farm energy use is low. The availability of quality seed is limited. Agricultural research is lagging behind the new challenges. Agricultural extension services are not tuned to modern technology. In 1965, the fertilizer use was 35000 Metric Ton which rose to around 300,000 metric ton in 1970-71 to 2.2 million tons till mid 90s

Technological Progress
Technical progress in Pakistan began in mid 1970s in the shape of Tractors and threshers. But their impact has been controversial. The increased used of these machines resulted in unemployment. Some argued that they would increase crop yields, reduce the farm cost by replacing draft animal increasing the cropping intensity by hastening the pre-sowing and post harvest operations and lead to more demand for labour which will result in the net increase in the employment.

FARM CREDIT
Credit in the farm sector is available from sector is available from two sources--Non institution and institutional. These two sources of credit are now discussed in brief.

Non-institutional sources of credit.

The major non-institutional sources of farm credit are money-lenders, friends, relatives, landlords, shopkeepers and commission agents. Before 1947, the money lenders mostly nonMuslims were the main suppliers of loans to the farmers. After Partition however their importance has decreased to a great extent and the short term credit needs of the farmers are met from commission agents, friends and relatives which supply roughly 50% of total rural borrowings. The traders and commission agents advance loans to the farmers for short period These loans are provided mostly for productive purposes before the maturity of crops. The commission agents force the farmers to sell the produce to them which generally is purchased at low rates. The lenders of the informal sources (friends, relatives etc) have certain advantages over the formal credit sources. The informal lenders usually know the borrowers personally. They require little security for advancing loans. The loan are given for consumption as well as production purposes. The lenders are approachable at all times. They are also lenient in rescheduling loans. However, the informal lenders are also accused of charging higher rates of interest. They extract monopoly profits from the borrowers. As such a need was felt to organize and develop the institutional sources of credit.

Institutional sources of credit. Federal Agricultural Bank (FAB) This bank now known as Zarai Taraqqiati Bank Limited(ZTBL)
1 The

ZTBL was established in 1961 through the merger of Development Finance for the supply of credit to agricultural credit. The Pakistan. It contributes over 32.9% of the national institutional agricultural credit. The ZTBL provides short, medium and long term loans for farm and off farm activities. The Bank has five windows of investment (1) Development loans (2) Production loans (3) Agri-business loans (4) Cottage industry loans and (5) Off farm income generating activities loans. It provided about Rs. 34 billion as agricultural loans to farmers during the year 2006-07.

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http://hubpages.com/hub/SOURCES-OF-RURAL-CREDIT

Commercial Banks.

Commercial banks were inducted into the field of agricultural credit under the Banking Reforms Act of 1972. The banks, since them, are providing loans to the farmers for meeting their short and medium term requirements. The loans are advanced to the farmers against the security of land, crops, and fixed assets and even on personal security. The share of commercial banks in the supply of agricultural credit has considerably improved and was 46.9% during the year 2006-07. Commercial banks disburse agricultural credit for the purchase of inputs, cattle, tractors, dairy farming, installation of tube wells, etc. Banks provide loans under the Supervised Credit Scheme and outside the Supervised Credit Scheme.
y Cooperatives.

The cooperatives are oldest institutional sources of farm credit in Pakistan. The performance of the cooperatives in the spread and utilization of credit to the small farmers is not satisfactory. The loans are mostly utilized by big farmers who have got their pocket societies registered with the Cooperative Department. Share of cooperative banks in the supply of total agricultural credit was 5% in the year 2006-07.

Conclusion
Agriculture has always contributed in the economic development of Pakistan. In order to further increase the development of the economy the government should introduce policies which increase the efficiency of agriculture. E.g. government should introduce modern means of production through the initiation of technology in the agriculture sector. The government should also revise land reforms as small lands are not as productive as the large ones and should also increase the ownership of land to farmers and must take steps to eliminate feudalism. Effective measures for agriculture will definitely add up to the development of the weak economy of Pakistan.

Normative Statement Irrigation water from Indus river is the lifeline of the agriculture in Pakistan Alternative
2Dams

are one of the many instruments used for managing water resources and which is the lifeline for development of agriculture-based economies such as Pakistan.

Source: http://www.adb.org/water/topics/dams/pdf/Shah-speech.pdf

Evaluation Pakistan is highly dependent on agriculture, and is dependent on water. Out of 79.6 million hectares of land that makeup Pakistan, 20 million are available for agricultural. Of those 20 million hectares, 16 million are dependent on irrigation. It is estimated that up to 90% of Pakistan s agriculture is dependent on irrigation. An even more important fact is that many of Pakistan s industries are agro-based, such as the textiles industry. But even then, It seems to be that Dams are more important for our agriculture processes. They not only help to store the access of water, but provide alternate in the times of water shortage (like ongoing situation). Recent flood was the result of lack of Dams in Pakistan which if we had enough dams, could result in the other way around. NORMATIVE STATEMENT # 2 The changes in the growth of GDP have been affected by the growth in agricultural output Alternative
3If

one examines Pakistan economic growth record, the 1960 s stands out as the decade with the best performance. Throughout 60 s Pakistan maintained the average GDP of 6.2%. The reason for this was Ayub Khan s extensive industrialization and development. The high growth rate in large scale manufacturing continued in the first few years of the Ayub s regime with the average for the period 1960-5 rising to a phenomenal 16.9%. In 1966 the GDP fell to 3.1% because of war with India but it continued to grow after that and reached as high as 9.8% in 1970.

NORMATIVE STATEMENT #3 The unequal spread of the Green Revolution Technology - small farmers were latecomers and have faced greater constraints in getting new inputs the size of productivity relationship seems to have been reversed.
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http://www.scribd.com/doc/13225438/Economic-History-of-Pakistan

Alternative
The green revolution technologies, which had initially gone against the poor, have benefited them later on. Therefore, the benefits of technology will accrue to the second generation and not to those who are in the grip of poverty.
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Evaluation

http://www.southasianmedia.net/Magazine/Journal/11_sustainable_agriculture.htm