By
Masood Bakhtiar Siddiqui, Chairman, API
1. Abstract
Comparison of Crop Yields in Pak Punjab and Indian Punjab highlights significantly higher yields of food grains in Indian Punjab. Agriculture Policies in two segments of Punjab indicate that in Punjab (Pakistan) imposition of RGST on agriculture inputs and implements may be withdrawn. Moreover fertilizer and electricity for tubewells may be further subsidized. Greater subvention may be provided in Agriculture Credit and Agriculture Insurance be developed on scientific lines
2. Introduction
Punjab was one of the agrarian provinces in British India. Partition of the sub-continent took place in 1947 and Pakistan and India came into being. Punjab province was divided between India and Pakistan according to an agreed distribution plan. The geographical area of the Punjab was about 26 million hectares of which 21 million hectares were allocated to Pakistan and 5 million hectares to India. Meaning thereby that in the distribution of Punjab, the share of Pakistan was 80 percent, and that of India was 20 percent.
The significance of agricultural development in the two parts of Punjab is of paramount importance in the food security of the two countries. The land of the province is fertile having most developed canal irrigation system. The irrigation system is supplemented by tube wells and widespread rains during the rainy season.
Indian Punjab encompasses only 1.5 percent geographical area and 3 percent of its cropped area. Its share in cereal production is 13 per cent. Its cereal productively is 4 tonnes/ha which is almost double than that of country level productivity of cereals. About 85 percent of the geographical area of Punjab is farmed compared to 46 percent of the country as a whole. Rice and wheat are major cereal crops of the province which occupy about 95 percent of the irrigated area.
The part of Punjab available with Pakistan shares 76 percent area of the country and 71 percent of the cropped area. Punjab’s share in cereal production stands at 73 percent. Cereal productivity in Punjab is 2.54 tonnes/ha which is marginally up by 0.07 tonnes/ha when compared with country level productivity. Wheat and rice occupy about 50 percent irrigated area. Farming occupies 60 percent area of the province.
Salient features of agriculture of the two Punjabs are placed in Table-1. These include geographical area, farming area, cropped area, net area sown and irrigated. Wheat, rice, cereals and food grains area. The yield data given in the table also refers to these crops.
Table-1 indicates that farming area and cropping intensity far exceeds in two parts of Punjab. Moreover, there is marked difference between the yields of
Table-1: Comparison of Agriculture Parameters: Pakistani and Indian Punjab
Parameters
|
Pak Punjab
|
Indian Punjab
|
Million hectares
| ||
Geographical area
|
20.63
|
5.04
|
Net area sown
|
10.98
|
4.24
|
Cropped area
|
16.73
|
8.07
|
Net irrigated area
|
14.57
|
4.04
|
Cropping Intensity (%)
|
152
|
190
|
Farming area (%)
|
60
|
85
|
Wheat area
|
3.08
|
3.47
|
Rice area
|
1.78
|
2.64
|
Cereals area
|
9.24
|
6.28
|
Food grains area
|
10.42
|
6.35
|
Yields
|
Kgs/hectare
| |
Wheat
|
2775
|
4179
|
Rice
|
1779
|
3858
|
Cereals
|
2537
|
4003
|
Food grains
|
2335
|
3700
|
Note: All Statistics relate to 2006-07.
Source: Agriculture Statistics of Pakistan and India.
wheat, rice, cereals and food grains. Here we have the opportunity to go through agriculture policies being followed in two segments of Punjab which have resulted in significant difference in per hectare yield of various crops. Both input and output policies have their due role in elevating yields.
3. Fertilizer
Balanced use of fertilizer is instrumental in raising crop yields. Proper soil testing and applying doses of fertilizers on the basis of soil testing improves yield of crops per unit of land. Generally the recommended ratio of N, P and K is 4:2:1. From this norm we can estimate the balanced use of fertilizer over time and space. An indicator of imbalance is given by the equation (Mehta 2007).
1 = [{(Na-Nn)2 + (Pa-Pn)2 + (Ka-Kn)2}/3]0.5
Where
1 = Measures of deviation from the norms
a = Subscript ‘a’ stands for actual and
n = Subscript ‘n’ stands for norm
If the N, P and K are used in the recommended ratio then I = 0. If the entire amount of fertilizer is in the form of K then I = 0.49. Meaning thereby 0 means perfect balance and 49 percent means extreme imbalance.
Fertilizer consumption separately for nitrogen, phosphate and potash for Punjab (India), and Punjab (Pakistan) are placed in Table-2. An indicator of imbalance has been calculated for each of these regions. This table provides us a complete picture of fertilizer use efficiency/inefficiency between two Punjabs.
The comparison of fertilizer use per hectare brings to fore that over all and nutrient specific fertilizer use in India is more than in Pakistan. India (Punjab) consumes 47 percent more fertilizer. As far as balanced use of fertilizer is concern Indian application is close to balanced use while in Pakistan (Punjab) it approaches to extreme side of imbalance.
Table-2: Fertilizer Consumption
Nutrients
|
Punjab(India)
|
Punjab (Pakistan)
|
------- 000 tonnes -------
| ||
Nitrogen
|
1299
|
1785
|
Phosphate
|
353
|
684
|
Potash
|
39
|
31
|
Total
|
1691
|
2500
|
------- Kgs/ha -------
| ||
Nitrogen
|
161
|
107
|
Phosphate
|
44
|
41
|
Potash
|
15
|
2
|
Total
|
220
|
150
|
Consumption ratio
|
11:3:1
|
54:21:1
|
Index of imbalance
|
3.9
|
30.5
|
Source: Agricultural Statistics of Pakistan and India.
A close positive association exists world wide between level of fertilizer application and crop productivity. For example the overall rate of N+P+K application in India (Punjab) is 47 percent higher than Pakistan (Punjab) and the wheat yield in India is also 51 percent higher than in Pakistan (4179 kg/ha vs 2775 kg/ha). For cereals as a whole it is 58 percent higher than in Pakistan (4003 kg/ha vs 2537 kg/ha).
In India comparison of three Northern States (Behar, Punjab and Uttar Pradesh) with fairly similar soil and climatic conditions brings to fore close association between the level of fertilizer use and crop yields. In case of cereals yield in Behar and UP is 43 and 63 percent that of Punjab and the average rate of fertilizer consumption in Behar and UP as a percentage of Punjab is also close to yield gap i.e. 46 percent and 66 percent, respectively.
Adequate and balanced use of fertilizer which is strongly associated with crop yields is dependent upon a lot of factors. Urea (Rs 508) and DAP (Rs 1148) fertilizer prices are highly subsidized in India while in Pakistan urea prices have increased by 120 percent and that of DAP by 240 percent (Annex-1). Both countries subsidize fertilizer to promote its use. The average per hectare fertilizer subsidy in India and Pakistan during the last five years is Rs 3403 and Rs 896 respectively. Meaning thereby that Pakistani farmer is receiving only about a quarter of the subsidy what the Indian farmer is getting (Annex-II). In the budget 2011-12 government of Pakistan has imposed 16 percent Reform General Sales Tax (RGST) on fertilizers, pesticides and agriculture implements which were previously duty free. This would further detoriate the relationship between yields of crop and fertilizer application.
In the Standing Committee Meetings of Agriculture Policy Institute the grower members of the Committee express their serious reservations over short supply of fertilizers during sowing and growth period of crops. Black marketing of fertilizers, under weighment and other malpractices in fertilizer trade are hampering crop sector. The wrong doing in the fertilizer sector be checked and soil testing be popularized before application of fertilizer to pickup the yield level of crops.
Response rates needed for a value cost ratio (VCR) of 3 for wheat in India and Pakistan at current input and output prices are given in Table-3.
Table-3: Economic Returns from Fertilizer Use at Current Input and Output Prices
Country
|
Kgs of wheat needed to pay for 1 kg
|
Response rate needed for VCR of 3
| ||
N
|
P
|
N
|
P
| |
India
|
1.05
|
1.62
|
3.15
|
4.81
|
Pakistan
|
1.36
|
4.28
|
4.08
|
12.84
|
Sources: 1. Fertilizer Review NDFC 2010.
2. Agricultural Statistics of India.
The response rate needed to have a VCR of 3 far exceeds in case of Punjab (Pakistan). In case of phosphatic fertilizers it is about three times high. This situation simply reflects how much privileged the Indian farmer is as compared to Pakistani farmer as he is receiving much needed fertilizer subsidy at a higher rate. The imposition of RGST on fertilizer would further worsen the relationship for Pakistani farmer.
4. Agriculture Credit
Credit is the life line of agriculture. Farmer takes credit for the cultivation of crops, pays it back after harvesting them. He again takes credit for the husbandry of next crop and pays it back after selling the mature crop. The system continues, agriculture progresses and the government through provision of institutional credit plays an important role in sustaining agriculture.
In Pakistan ZTBL, five Commercial Banks, Fourteen designated Private Banks and PPCBL extend agriculture credit to the farming sector. ZTBL provides subvention in credit interest while the other banks charge the market rate. ZTBL’s interest rate is from 8 to 9 percent. Pakistan Credit Advisory Committee (PCAC) of State Bank of Pakistan sets, monitors and evaluates agriculture credit disbursement.
In India agriculture credit is disbursed through four main sources which include Cooperatives, State Governments, Scheduled Commercial Banks (SCB) and Regional Rural Banks (RRB). They have variety of agriculture credit schemes including collateral free credit. Under this scheme credit is disbursed to farmers group and each one of them is held responsible for the repayment. They also have Kissan Credit Card scheme as well. The interest rate on agricultural loans ranges from 8 to 9 percent. Average short term interest rate is around 6 percent.
The comparison of credit disbursement per cropped hectare is placed in Table-4.
Table-4: Disbursement of Agriculture Credit per Hectare: 2005-06 to 2009-10
Year
|
Pakistan
|
India
|
Pak credit as percent of Indian credit
|
Rs/cropped hectare
| |||
2005-06
|
6519
|
10100
|
65
|
2006-07
|
10091
|
13700
|
74
|
2007-08
|
12474
|
15800
|
79
|
2008-09
|
13739
|
17320
|
79
|
2009-10
|
14630
|
-
| |
Average
(2005-06 to 2008-09)
|
10706
|
14230
|
75
|
Source: Calculated from Economic Surveys of Pakistan and India.
Table-4 mentions that on average Pakistani farmer is getting only 75 percent of Institutional credit what his Indian counter part is getting on cropped hectare basis that too on higher interest rate. In Pakistan the situation has improved over time as the disbursement per hectare has increased from 65 to 79 percent during last five years. The share of ZTBL in total institutional credit may be kept at 50 percent for the benefit of the farming community.
5. Irrigation
Both parts of Punjab enjoy world’s largest canal irrigation system facility. In Pakistan Indus and its distributaries supply surface water at an historic average of 104 MAF per annum through 40000 mile long canals and 130000 water courses. Annual water requirement at canal head could range from 135-170 MAF. Existing irrigations mechanism has reportedly working on 40-45 percent efficiency.
Irrigation water charges were introduced in the subcontinent in 1873. From then on they are being revised and updated over time and space. Farmers receiving water from publically built projects rarely pay more than 20 percent of water real cost and often much less. According to one estimate the irrigation subsidies on a world wide basis are $ 33 billion per year. If full cost of environmental damage, human resettlement from dam cites and increased water born diseases from irrigation projects were factored in, the total subsidy would be much higher. Prevalent crop specific canal water rates are given in Table-5.
Table-5: Water Rates (Rs/Acre)
Crop
|
Punjab
|
Sindh
|
Wheat
|
50
|
53.30
|
Rice
|
85
|
88.78
|
Cotton
|
85
|
93.09
|
Sugarcane
|
250
|
181.87
|
Source: Agriculture Policy Analysis Papers for respective crops.
Electricity charges for agriculture tubewells are Rs 5.31 per unit in Punjab (Pak) while in Indian Punjab electricity is provided free of cost to the agriculture tubewells. In other provinces it is charged @ 20% of the operating cost. In Pakistan sales tax would be levied on electricity bills for tubewells. The overall per unit rate for agriculture tubewells would work out Rs 6.16. According to estimate the imposition of sales tax on tubewells bills would cost Rs 6 billion additionally to the farming community in Pakistan.
6. Agriculture Insurance
The need to protect farmers from agriculture variability has been continuing concern of agriculture policy. In both India and Pakistan Agriculture Insurance instruments are being used in different forms. India has experienced following agriculture schemes.
1. First Individual Approach Scheme 1972-78
2. Pilot Crop Insurance Scheme 1979-84 (PCIS)
3. Comprehensive Crop Insurance Scheme 1985-99 (CCIS)
4. National Agriculture Insurance Scheme 1999-todate (NAIS)
The premium rates under NAIS applicable on sum insured are as given in Table-6 below:
Table-6: Premium Rates of Different Crops in India
Crop
|
Premium (%)
|
Wheat
|
1.5
|
Other Rabi Crops
|
2.0
|
Bajra, Oil seed
|
3.5
|
Other Kharif Crops
|
2.5
|
Source: State Bank Task Force on Agriculture Insurance.
In Pakistan Crop Insurance Scheme is still in development stage. ADBP and SBP has made some efforts on Pilot Project basis. In the recent past Crop Loan Insurance Scheme was in operation. Under the scheme the maximum sum insured was Rs 2.0 million and amount of premium was 2% plus applicable levies. The scheme was applicable to loanee farmers only. The premium of small farmers upto 12.5 acres of land was to be paid by the government. Later on this scheme was extended to the agriculture sector as a whole with generalized 2 percent premium.
Agriculture Insurance in Pakistan is still in infancy in Pakistan.
7. Tractor and Diesel
Tractor is instrumental in farm mechanization and stable prices of diesel play an important role in keeping cost of production of crops at moderate level.
In India tractor prices range between Rs 0.35 million to Rs 0.5 million depending upon horse power. These prices in Pakistani Rupees work out to Rs 0.659 million to 0.941 million. Prices of locally manufactured tractors in Pakistan range between Rs 0.58 million to Rs 1.55 million Annex-III.
An average Indian tractor costs about Rs 0.08 million. Prima facia it appears that price of Indian tractor is about 10 percent higher than Pakistani tractor. Depreciation of Pakistani Rupee as compared to Indian Rupee may be one of the factors as one Indian Rupee is equal to Pak Rs 1.882. However, after imposition of RGST prices of Pakistani tractors would be higher to the tune of 5 percent.
Cost of diesel per litre in India is Rs 37.75 (Pak Rs 71.05). While in Pakistan it is Pak Rs 92.30 i.e. about 30 percent higher than in India. This difference significantly adds to cost of production of crops. In case of wheat tractor operation charges in total cost of production work out to 12 percent. The overall impact on cost of production of wheat works out to 4 percent.
8. Seed
Policy Changes in Agriculture and technological innovations in seed in shaping growth of material plays a vital role in realizing the yield potential of any crop.
In Pakistan Public Sector is taking care off of all the crops of interest for which certified/improved seed is required. The sector usually work on 20 percent of total seed requirement of crops of interest including wheat, gram, maize, rice, cotton etc. Private Seed Companies are registered under FSC&RD. Distribution of seed in Pakistan in 2011 is given in Table-7.
Table-7: Distribution of Certified Seed in Pakistan: 2011
Crop
|
Local
|
Imported
|
Total
|
Wheat
|
347.9
|
-
|
347.9
|
Cotton
|
7.2
|
-
|
7.2
|
Paddy
|
25.6
|
3.9
|
29.5
|
Maize
|
1.5
|
4.6
|
6.1
|
Pulses
|
1.1
|
-
|
1.1
|
Oilseeds
|
0.1
|
0.6
|
0.7
|
Fodders
|
0.01
|
4.0
|
4.0
|
Vegetables
|
0.3
|
5.2
|
5.5
|
Potato
|
0.1
|
4.2
|
4.4
|
Total
|
383.9
|
22.6
|
406.5
|
Source: Federal Seed Certification and Registration Department, Pakistan.
In India public sector meets the seed need of large sections of farmers particularly for self pollinated crops, the private seed companies are supplying in increasing proportion of hybrid seed (Table-8).
Table-8: Distribution of Certified Seed in India
Year
|
Production of breeder seed
|
Production of foundation seed
|
Distribution of certified seed
|
-------------------- 000 tonnes ------------------------
| |||
2005-06
|
6.864
|
74.0
|
1267.5
|
2006-07
|
7.383
|
79.6
|
1550.1
|
2007-08
|
8.008
|
85.0
|
1620.0
|
Source: Agricultural Statistics of India.
9. Support Prices of Wheat
Both India and Pakistan has a long history of providing support to domestic farmers by announcing support prices. Wheat support prices both in Pakistan and India from 2005-06 to 2009-10 are given in Table-9.
Table-9: Support Prices of Wheat in Pakistan and India: 2005-06 to 2009-10
Year
|
Pakistan
|
India
|
Increase/Decrease in India price (%)
|
2005-06
|
415
|
348
|
-16
|
2006-07
|
425
|
412
|
-3
|
2007-08
|
625
|
617
|
-1
|
2008-09
|
950
|
711
|
-25
|
2009-10
|
950
|
792
|
-17
|
Source: Economic Survey of Pakistan and India.
Wheat support prices in India on an average are 14 percent less. This is so because input prices in India are highly subsidized. Higher support prices in Pakistan improved wheat production and stocks. As the prices in the neighbouring countries i.e. India and Afghanistan were low which has discouraged smuggling of wheat from Pakistan.
10. Conclusions
The analysis brings to fore that suitable policies to improve yield of crops to have sustainable food security in Pakistan are required. These include:
i) Popularize soil testing to have optimum benefit of fertilizer application.
ii) Provision of subsidies to Nitrogenous, Potassic and Phosphatic fertilizers to provide their balanced use.
iii) Fertilizer, other agriculture inputs and implements be exempted from RGST.
iv) Significant reduction in the charges of electricity for agricultural tubewells be made.
v) Institutional credit for agriculture may be enhanced and ZTBL’s share in agriculture credit may be maintained at 50 percent which is currently hovering around 30 percent.
vi) Agriculture Insurance may be developed on scientific grounds.
vii) Provision of certified/improved seed be enhanced.
11. Bibliography
1. Agricultural Statistics of Pakistan
2. Economic Survey of Pakistan
3. Agricultural Statistics of India
4. Economic Survey of India
5. Indian Punjab Agriculture, Farming outlook 2008
6. National Food Security vis-à-vis sustainability of agriculture in high crop productivity. Current Science vol 98 No.1, 10 January 2010
7. Policy Brief and Progress in Agriculture Insurance in India, National Centre for Agriculture Economics and Policy Research.
8. The Seed Bill 2010 – A critical Approach NCAP, India
9. Fertilizer Growth, Imbalances and Subsidies Trends and Implications, NCAP, India
10. Fertilizer Review 2009-10, NFDC, Pakistan.
Annex-I
Prices of Urea and DAP in Pakistan: 2000-01 to 2009-10
Year
|
Urea
|
DAP
|
Rs/bag of 50 kg
| ||
2000-01
|
363
|
669
|
2001-02
|
394
|
710
|
2002-03
|
411
|
765
|
2003-04
|
421
|
913
|
2004-05
|
468
|
1001
|
2005-06
|
509
|
1079
|
2006-07
|
527
|
993
|
2007-08
|
581
|
1931
|
2008-09
|
751
|
2578
|
2009-10
|
800
|
2267
|
Source: Agricultural Statistics of Pakistan: 2009-10
Annex-II
Subsidy per Crop Hectare in India and Pakistan: 2005-06 to 2009-10
Year
|
Subsidy (Pak Rs/ha)
|
Pak subsidy as percent of Indian subsidy
| |
India
|
Pakistan
| ||
2005-06
|
1280
|
346
|
27
|
2006-07
|
1865
|
726
|
39
|
2007-08
|
2558
|
860
|
34
|
2008-09
|
6442
|
1714
|
27
|
2009-10
|
4868
|
834
|
17
|
Average
|
3403
|
896
|
26
|
Source: Economic Survey of Pakistan and India.
Annex-III
Prices of Locally Manufactured Tractors: 2011
Tractors Model (Horse Power)
|
Price/Unit (Rs)
|
NH/FIAT- 480S (55 HP)
|
579,735
|
NH/FIAT-GHAZI (65 HP)
|
655,200
|
NH/FIAT 640 (75 HP)
|
840,060
|
NH/FIAT 640S (85 HP)
|
930,150
|
NH 55-56 (55 HP)
|
661,050
|
NH 60-56 (60 HP)
|
725,400
|
MF240 (50 HP)
|
630,630
|
MF 260 (60 HP)
|
700,830
|
MF 350 (50 HP)
|
665,730
|
MF 375S (75 HP)
|
958,230
|
MF 385 (85 HP)
|
1,058,850
|
MF 385 (4WD) (85 HP)
|
1,550,250
|
Universal- 530 (55 HP)
|
607,230
|
Universal- 530 (55 HP) Plus
|
654,030
|
Universal-533 (55 HP) Plus
|
654,030
|
Universal 640 (65 HP)
|
829,530
|
Universal 683 (83 HP)
|
923,130
|
JD-5055 B (55 HP)
|
643,500
|
JD-720 (72 HP)
|
789,750
|
Source: Economic Survey of Pakistan: 2010-11.
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