(Source: https://www.statista.com/statistics/383256/pakistan-gdp-distribution-across-economic-sectors)
By Sara Nazir 1 April 2023
Pakistan’s economy is semi-industrialized and has a successfully combined agricultural industry. The country’s economy was the 23rd biggest in the world in 2018, in terms of total Gross Domestic Product. Around 22.67% of Pakistan’s GDP was derived from agricultural land in 2021, 18.8% from production, and more than half of it originated in the services sector. There are three primary economic sectors: Agriculture, fishing, and mining. The industrial sector, also referred to as the manufacturing sector, is the secondary sector. The third, known as the services sector is where services and immaterial products such as telecoms, banking, financial services, and tourism exist. Today, majority of the industrialized nations have a strong services industry that contributes to the bulk of their GDP. Similarly, in case of Pakistan, the services industry generates more than half of its yearly GDP. On the other hand, countries that still require assistance and are in the early stages of development frequently depend on agricultural land for economic growth. Nearly all economies initially relied heavily on the agricultural industry.
Since Pakistan has a lot of agriculture land, most of it’s population naturally resides in rural areas where they cultivate and sell products like sugarcane, rice, flour, cotton, and other crops that are later on exported to the global markets. Since agriculture is a major part of Pakistan’s economic system, its development will increase economic advantages and agriculture based exports. Agriculture is still by far the country’s largest provider of labour and is crucial for stability of economy. The agricultural industry in Pakistan is under pressure to boost output as well as adapt to a shifting and diverse food consumption tendency in response to the country’s population development and rate of urbanization. From an average annual growth rate of over 4% between 1970 and 2000 to a low of 3% afterward, the growth of agriculture dropped. A shift to a more water-efficient, higher-value agriculture is discouraged by badly operating agricultural markets that involve substantial government involvement and by a pattern of public expenditure on agriculture that is characterized by ineffective and inadequately targeted subsidies.
At the national scale, agriculture generates 21% of GDP, uses 44% of the labour force, and contributes nearly 80% of Pakistan’s exports in both direct and indirect ways. A comparable low and extremely irregular development in agriculture has also been observed in Punjab, where it accounts for 26% of the GDP and 40% of jobs. This is true even though Punjab’s wide-ranging lands, which comprise approximately 27 million acres of irrigated land, are rich in natural assets and have climate conditions that are ideal for varied, fruitful agriculture.
However, the five main commodities—wheat, rice, cotton, sugarcane, and maize—take up 90% of the land area that is used for agriculture, leaving only 10% for agriculture and other high-value crops. Punjab holds 77.7% of the country’s watered land and 72.6% of the land used for agriculture. The Indus Basin Water System is home to roughly 60% of the region that is farmed. The region supplies significant portions of the nation’s main products, including rice (52%), sugarcane (63%), cotton (73%), and maize (78%). Punjab agriculture has several issues that are holding it back, but the main ones are low cultivation productivity growth, which leads to high unit production costs and a lack of competitiveness, distorted agricultural practices with little diversification to high-value crops, and sizable herds of low-producing animals. Poor quality of service, a weak agricultural market infrastructure, and a lacklustre uptake of new technologies are all factors limiting agricultural development.
Punjab may restore its farming supremacy through advances that spur on-farm productivity development and enhance effectiveness and quality along the post-harvest value chain. In contrast to high-value crops and animal goods, food grains, sugarcane, and cotton still receive the majority of study funding in the farming sector. Post-harvest management, such as enhancing value, excellence, food safety, and nutrition, receives little funding. Redirecting public spending and related policies to the areas with the best chances of producing the desired results, with a focus on wheat, irrigation, subsidies, and marketing reforms and concurrent investments to enhance service provision, agricultural research and development, and insurance, could result in a significant payoff.
The agricultural research output and results in Punjab are greatly influenced by federal institutions. The federal research institutions should primarily be engaged in fundamental and strategic research, while province research institutes should concentrate on practical and adaptable research, and agriculture institutions should conduct research spanning the basic to adaptive research range. The Pakistan Agricultural Research Council (PARC), which oversees six other research centers with a present emphasis on two commodities (sugarcane and tea) and four regional areas, is the most significant government agency.
China imports more than $100 billion worth of agricultural products annually, making it the biggest importer of agricultural commodities in the world. But regrettably, out of $2.93 billion in food purchases, Pakistan only exchanges 1% with China. Making it a key component of CPEC will, therefore, not only increase the bilateral commerce in agricultural goods between Pakistan and China but will also give Pakistan a strong global market.
Favourable weather circumstances are necessary for the agriculture sector’s development. Agriculture and climate are closely related, with temperature, precipitation, floods, and other weather factors all having an impact on agricultural output, crop values, and ultimately economic development. According to the Asian Dev Bank (ADB), the number of heat wave days increased by 31 days between 1980 and 2007 with rainfall in arid plains/coastal areas decreasing by 10-15 %. The year 2022 saw historical heat waves in March and April follow by “biblical floods.” The climate anomalies have far reached impact on Pakistan crops and their yield. In addition to climate change impact, Pakistan has been facing crops yield stagnation due to lack of agriculture growth through technology and use of traditional methods of plantation e.g rice export has stagnated to USD 2-2.5 billion over past 2 decades. Recent years have seen a shift in the global policy emphasis toward the growth of the agricultural industry due to the emerging issues of food security and climate change. Pakistan continues to be one of the top 10 nations most susceptible to global warming, and the effect of environmental change as a result of droughts, floods, and unpredictability of the weather has accelerated this decline over the last decade or so. We’ll need to update our policies from previous decades, use technology more frequently, and significantly boost private value chain investment to achieve this.
Investment possibilities in the agriculture industry are vast. But unless the government chooses to stop meddling in the market and remove itself from the supply chain, its involvement will stay constrained. Following last year’s heatwave, which caused wheat grains to significantly shrink, the recent wet weather in Punjab and other parts of the world is to be embraced. It will be beneficial for the coming wheat crop, particularly in rain-fed areas. The province’s 16.041 million acres of the primary product were only damaged by hailstorms on 123,000 of those acres, according to the agriculture department. They believe that the current rainy period will aid in crop enlargement and help make up for the previous production loss. However, farmers, particularly those with small properties, must prepare themselves for considerable financial losses because their crops have been destroyed by hail and gusts. Many may not have enough money left over to purchase supplies for the summer harvest and will require government assistance.
Pakistan’s agriculture sector has been trying to embrace the third industrial revolution whereas, the world has implemented fourth industrial revolution (by using of AI based technology) which is major stumbling block in country’s agriculture sector growth. One of Pakistan’s agriculture sector’s greatest problems is a lack of sufficient “new practices” and technology, which could be fixed by implementing modern technologies. Laser levelling technology should be practiced for efficient cultivation and water conservation. Additionally, environmental threats could be detected in advance by early warning systems and vigilant tracking, enabling prompt and focused action. To reduce the effect of climate change on agriculture and food security, states and institutions especially private organizations need to work together and implement a variety of strategies. To guarantee the widespread implementation of climate-smart agriculture, Pakistan must expand the use of technology to enable agricultural and livestock producers. The government should introduce “Disease – free zone” with a complementing vaccination regime which can be pillars of livestock-based export. Pakistan’s economic growth target must include 4% real GDP growth in agriculture to overcome food insecurity in prospects.