Pakistan Policy Note—Increasing agricultural productivity 79570 Pakistan Policy Note 6 S. Amer Ahmed and Madhur Gautam Increasing Agricultural 1 J une 2 0 1 3 Productivity Agriculture remains a socioeconomically and politi- accompanied by a decline in the share of pri- cally important sector in Pakistan, even as its share mary agriculture and a commensurate increase in the overall economy continues to fall. Sluggish in the share of manufacturing and services. growth in productivity has constrained farm income Pakistan has experienced this trend, with the growth, limiting its potential for reducing poverty. share of agricultural value added in real GDP There remains, however, substantial scope for accel- declining from 46  percent in 1960 to 26  per- erating broad-based agricultural growth to boost cent in 2000 and to 21 percent in 2010 (World returns, which requires stimulating productivity Bank 2011a). growth through technology and innovation, better water use management, and the right trade policies. Nevertheless, agriculture remains a socioeconomically More specifically, the national agricultural and politically important sector in Pakistan’s current research system requires fundamental institutional transformation. Agriculture directly accounts for reforms to make it more efficient and effective. For more than 40 percent of employment, but the water, the most important intervention is institutional sector’s contribution to overall employment is reform of the entire management system, including likely much higher, considering the down- completing the devolution of authority to the appro- stream activities through the supply chains, priate scale with provision of sufficient resources and transportation, and processing sectors to which THE WORLD BANK GROUP SOUTH ASIA REGION capacity building to the devolved authorities. Finally, it contributes (World Bank 2011a). Agriculture improving agricultural trade will require removing also contributes substantially, directly and indi- discretionary instruments like the statutory regula- rectly, to foreign exchange revenue. Its exports tory orders and simplifying the trade regime. Distor- account directly for more than 11  percent of tions in domestic commodity markets also need to be total exports, with exports of downstream removed. Food price stability is important, but it can industries like textiles accounting for more be achieved through mechanisms more cost-effective than another 40  percent (Planning Commis- than those in use today. Further, food security for sion 2009). the most vulnerable can be supported more efficiently through well-targeted social safety net programs. While the poverty rate has continued to fall in the past decade, agriculture’s poor performance has limited its Pakistan’s real GDP has grown substantially over contribution to poverty reduction. The proportion the past decade, at an average of about 4.9 percent of the population below the national poverty a year. Growth in agricultural value added line declined from 34.7  percent in 2001/02 has been lower at 3.3 percent a year. As is the to 21.9  percent in 2005/06—and to 17.2  per- case in transforming economies, transitioning cent in 2007/08 (World Bank forthcoming). from an agrarian to a developed economy is Of the 12.8  percentage point decline in the Pakistan Policy Note—Increasing agricultural productivity poverty headcount ratio between 2001/02 and for a quarter of annual export revenue, and 2005/06, growth in farm income accounted for their share is increasing rapidly. In 1990, for 2.8 percentage points (Inchauste and Winkler example, dairy, eggs, and meat had virtually 2012). When 2001/02–2007/08 is considered, no exports (Hazell and others 2011). But in farm income growth accounted for 3.2 percent- 2011, exports of dairy and eggs were valued at age points. $30.1  million (real 2000 dollars), while those of meat and livestock were valued at $106 mil- The Planning Commission (2009) estimates that lion. 2 Fisheries grew 45  percent a year over 2 average yields tend to be far below the achievable 2008–11, while fruits, vegetables, and oilseeds upper bound of progressive farmer yields.1 The collectively grew just 15 percent. national average yields of major crops like rice and wheat are only about 55  percent of pro- Sluggish Productivity gressive farmer yields, the highest achievable yields in Pakistan (Figure  1). The yield gaps Pakistan’s agricultural output growth rate has been are even greater for some commercial crops, decelerating, reflected in its declining total factor pro- like sugarcane in Sindh (73 percent). Despite ductivity (TFP) growth rate.3 In the 1980s, aver- the large potential for improvement, yield age annual output growth reached 4.8 percent, growth has slowed. For example, rice yields making the country an international leader in grew at an average annual 5.2 percent in the agricultural growth. However, the rate slowed 1960s but just 3.2 percent in the 1990s and 1.7 to a more modest 3.3  percent over the past percent in the 2000s. A similar pattern can be decade, driven by more complex changes in seen with wheat, which had average annual input use and TFP. yield growth of 2.9  percent in the 1960s, 2.0  percent in the 1990s, and 1.1  percent in In earlier decades, TFP growth was responsible the 2000s. for substantial shares of output growth (Figure 3). For example, TFP accounted for 44  percent These crops and others represent major shares of the of output growth in the 1960s, 67 percent in country’s crop production, and narrowing the yield the 1980s, and 37  percent in the 1990s. By gap for major cereals (rice and wheat) and for high- contrast, TFP now accounts for less than a value crops (cotton and sugarcane) would boost fifth of the growth. Relative to other coun- agricultural GDP substantially (Figure 2). High- tries, agricultural TFP growth since 1990 and value agricultural products, in particular, have especially since 2000 has been very slow (Fig- been increasing their contributions to Paki- ure 4). Pakistan’s TFP growth has gone from stan’s exports. Agricultural exports account among the best in the world in the 1980s to Figure National average yields as a share of progressive farmer yields 1 75 1.8 2.6 2.1 50 2.9 Percent 50.0 55.0 25 0 Wheat Cotton Sugarcane Sugarcane Maize Rice (Sindh) (Punjab) Note: Numbers above columns indicate national average yields in tons per hectare. Source: Planning Commission 2009. Figure Composition of agricultural production 2 Fishing 3% Other eld crops Forestry 1% 8% High-value crops 17% Livestock 52% 3 Cereals 19% High-value crops Cereals Nonirrigated wheat 4% Sugarcane (irrigated) Cotton 28% (irrigated) Rice Irrigated 37% 39% wheat 57% Fruits and vegetables 35% Source: Debowicz and others 2012. Decomposition of output growth in agriculture by land, input intensity, and total Figure factor productivity, 1961–2009 3 Total factor productivity Input/area New land Irrigated 100 75 Percent of output growth 50 25 0 –25 1961–70 1971–80 1981–90 1991–2000 2001–09 Note: Land quality is adjusted by converting rainfed cropland, permanent pasture, and irrigated cropland into rainfed equivalents. Source: Fuglie 2012. the lowest among such Asian comparators better. With TFP growth progressively slow- as Bangladesh, China, India, and Sri Lanka. ing, output growth has been driven increas- Until the mid-1990s, Pakistan had even ingly by input use (fertilizer, labor, livestock, higher TFP growth than China and almost and machinery) and irrigation, highlighting the same rate as B­ razil—two of the world’s the importance of using these inputs effi- outstanding long-term agricultural perform- ciently and sustainably. ers. Since the mid-1990s, however, Pakistan’s TFP has been f lat while the comparators Land ownership and poverty have a strong inverse (including high-performing Indonesia, Thai- relationship. The majority of the rural poor land, and Vietnam) have done markedly are landless or own very small plots. Anwar, Pakistan Policy Note—Increasing agricultural productivity Average annual total factor productivity growth for agriculture in Pakistan and Figure comparator countries, 1961–2009 4 Pakistan India Bangladesh Sri Lanka China 6 4 Percent 2 4 0 -2 1961–70 1971–80 1981–90 1991–2000 2001–09 Source: Fuglie 2012. Qureshi, and Ali (2004) estimate the poverty discounted value of potential agricultural earn- headcount of rural nonfarm households at ings from the land. An important constraint about 48 percent, second only to that of land- for the landless is a lack of access to credit due less farmers (55 percent) but greater than that to a lack of collateral—land is the most com- of farmers with less than a hectare (32 percent). monly accepted collateral for formal loans. Poverty among farm households with more than a hectare is virtually absent. Moreover, agricul- Given the land limitations, increased crop yields tural performance is constrained by the highly accounted for much of the past growth and can be unequal distribution of land in rural areas. In attributed to major scientific breakthroughs in tech- 2000, 61 percent of farm households owned less nology. Major contributions came during the than 2.0  hectares of land (15  percent of total Green Revolution, from the investments in agri- land holdings). Only 2  percent of households cultural research undertaken by the national had holdings greater than 20.2  hectares, but agricultural research system. While helping in stark contrast they accounted for 30 percent achieve national food security, past research of total land holdings (World Bank 2007). Yet efforts focused primarily on technologies rely- past evidence suggests that land productivity on ing on modern inputs but did not attend to smaller farms may be higher than that on larger issues of sustainability and efficiency, such as farms and that small farms generate higher integrated crop management, soil health, eco- profits per hectare than large farms (World nomical use of inputs and resources, and the Bank 2004). This suggests that greater access balancing of external input use with internal to land by smallholders leads to higher over- nutrient sources. About 52  percent of public all agricultural productivity. Further, the land research expenditure is on crops, 25  percent market rigidities that perpetuate the histori- on natural resources, about 14 percent on live- cal inequity in land distribution also seriously stock and fisheries, and about 9  percent on affect the development of the nonfarm sector social sciences (World Bank 2011c). (Safavian, Aftab, and Shaikh 2013). Public agricultural research has historically been suc- Land is rarely bought and sold, so the status quo of cessful. Estimated internal rates of return from unequal land distribution tends to hold, and land investments in it have ranged from 57 percent rental markets are highly inefficient. The inequality to 65  percent, with most of the returns from in landholdings by province remained mostly Green Revolution research (Ahmad and Nagy unchanged from the 1970s to 2000 (World 2001). After a period of nationalization of large Bank 2007). The low rate of transactions is and medium-size private agribusinesses in the largely attributable to high transaction costs mid-1970s came a slow process of their dena- and, possibly, speculative prices in excess of the tionalization and deregulation. Investment in private agricultural research and development and spending nearly PRs  2.4 billion (2000 (R&D) was thus curtailed severely for a long PRs). Of these, 37 were federal agencies, 44 time, with only recent outreach to the private were provincial agencies, 17 were higher educa- sector through programs like the Ministry of tion institutions, and 13 were private entities. Science and Technology’s Science and Tech- The Pakistan Agricultural Research Council nology for Economic Development program. (PARC) coordinates the activities of a large network of public national and provincial However, the current agricultural research system agricultural research bodies, institutes, and labors under severe technical capacity constraints. experimental stations. PARC does not conduct 5 Pakistan’s public investment in agricultural agricultural research itself, but it is responsible research has been on the decline, and in 2009 for the administration of the National Agricul- stood at about 0.21 percent of agricultural GDP tural Research Centre (NARC). Since the 18th and ranked at the bottom of agricultural R&D Amendment to the constitution passed in 2010, spending as a share of agricultural GDP in the the public agricultural system has been devolv- region (Figure  5; ASTI 2012). The Planning ing from the federal to the provincial level, Commission (2009) notes that persistent fund- creating new opportunities for reenergized ing constraints may have contributed to limited public agricultural research. With the research technology advancements (by limiting research agenda moving down, agricultural research activity)—for example, the wheat cultivar that can potentially have a greater focus on the has dominated production since 1991 is suscep- needs of local farmers and environmental con- tible to rust disease. Another critical constraint ditions, though challenges of coordination, is the limited human resource capacity: only duplication, and cost-effectiveness could arise. 15  percent of agricultural research staff hold PhDs, lower than in the rest of South Asia (Bein- Inefficient Water Use Management tema and others 2007). Qualified researchers are discouraged from public research agencies A critical factor in improving crop yields (besides tech- because of institutional disincentives, such as nology) is water availability and the performance of few promotion opportunities and low salaries. irrigation. Pakistan’s irrigated land as a propor- tion of cropland is the highest in South Asia, The technical capacity constraints are compounded with about 95 percent of arable land equipped by inefficiencies generated by a complex institutional for irrigation.4 Historically, Pakistan’s rate of environment. Beintema and others (2007) iden- irrigation expansion was the slowest in South tified 111 agencies involved in agricultural Asia. Indeed, in the 1970s the average annual R&D, employing more than 3,600 researchers rate was 1.2  percent, against a South Asian Agricultural research and development spending as a share of agricultural GDP in Figure Pakistan and comparator countries, 1996 –2009 5 Pakistan India Bangladesh Sri Lanka Nepal 0.6 Percent of agricultural GDP 0.4 0.2 0.0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: ASTI 2012. Pakistan Policy Note—Increasing agricultural productivity average of 2.2 percent. In the past decade, how- only 41 MAF reaches crops, a loss about 61 per- ever, Pakistan’s rate of irrigation expansion cent of the water delivered at the head. Of accelerated to 1.4 percent a year, exceeding the this 106 MAF, about 25 MAF are lost in water- 1.1 percent South Asian average.5 courses and 17 MAF in fields, the most vulner- able components of the irrigation system (Yu But cropland expansion has been slow—a phenom- and others 2012). enon common to the region. From the 1970s to the 1990s, Pakistan maintained a cropland expan- Improving the efficiency of water use is therefore a 6 sion rate of 0.6 percent a year, even when such — not only to boost current pro- high priority growth was almost stagnant in South Asia as a ductivity but also to mitigate the impending whole. In the past decade, though, the coun- risks associated with climate change (Box  1). try’s cropland has been shrinking at an average Yu and others (2012) simulate various climate 0.4 percent a year, faster than the 0.1 percent in change scenarios for 2020–80 and estimate the South Asia as a whole.6 sensitivity of the 2008 benchmark economy to future climate risks. They find that, faced with Despite the high irrigation intensity, average farmers’ future climate risks, overall GDP could decline access to water is less than it could be due to limi- 1.1 percent from its benchmark year value and tations of the water allocation system. At the farm agricultural GDP 5.1  percent. They also find level, access to canal water is determined by that improving canal system efficiency to save physical location along the canal and through just an additional 12 MAF could not only miti- the warabandi water allocation system of admin- gate the adverse impact of climate change but istratively set rotations. Access to canal water further boost overall GDP 0.9 percent and agri- then becomes contingent on access to land and cultural GDP 4.2 percent, on average, relative the location of that land. There might not be to the benchmark. enough water by the time it gets to land at the tail end of distributaries or watercourses, espe- Financial unsustainability is another critical chal- cially if upstream farmers are accessing water lenge to the irrigation system under the current water illegally (Yu and others 2012). management system. The canal irrigation man- agement system recovers only a quarter of its The irrigation system is highly inefficient, with steep annual operating and maintenance costs, with seepage losses in almost every component of the deliv- the shortfall expected to increase with rising ery system. Of the 106 million acre-feet (MAF) costs and stagnant Abiana (water charges) per of irrigation water that goes into the system, acre of crops irrigated (Planning Commission Box Water management reform—promising but incomplete 1 Recognizing the importance of a robust and efficient water management system, the government pushed through reforms in the 1990s. These reforms restructured the public irrigation departments to provincial irrigation and drainage authorities; to area water boards to manage main and branch canals; and to farmers’ organizations and water user associations to manage distributor and minor canals. They aimed to enhance water use efficiency, streamline water resource management, and facilitate user participation. These reforms have not been completely successful, however, owing to problems at the provincial and local levels. Provincially, the devolution of autonomy from the irrigation departments is incomplete. For example, in Punjab’s public irrigation department and public irrigation and drainage authority, the secretary of the department is also the managing director of the authority. Another example is in Sindh, where even though the posts of irrigation department’s secretary and irrigation and drainage authority’s manag- ing director are held by different people, the latter has a direct reporting relationship to the former. Locally, the farmers’ organiza- tions do not have the resources or the capacity to fulfill their roles. Nor do they have input into the Abiana setting process, even though they might be responsible for collecting charges. Farmers’ organizations also vary widely in their role as charge collectors, because this role is determined by management that these organizations may not have any voice in. The lack of clarity in the role of the farmers’ organizations and their widely varying mandates by local government has contributed to the Abiana collection inef- ficiencies that are damaging the system’s financial sustainability. Source: World Bank 2011b. 2012). The collection rate of assessed Abiana is implicit tax on crop production serves to also low—at only 60 percent of assessed values. depress production, despite implicit net input The Planning Commission (2012) estimates subsidies. Basmati rice, for example, had nega- that the overall budget gap is about PRs 5.4 bil- tive effective rates of protection in 2008–10, lion annually, with the system subsidized by the when farm income would have been 21–40 per- federal government. cent higher under a no-intervention regime (Valdes and others 2012). The case of sugar is The current Abiana for different crops might also also illustrative: the surge in the world price of be distorting farmer decisions. The national aver- refined sugar raised the parity price, but the 7 age Abiana per acre in 2000–09 was PRs 126– increase in the general sales tax applied to 214 for cotton, PRs 185–428 for sugarcane, sugar offsets higher border prices. Sugar’s par- PRs  125–210 for rice, PRs  69–136 for maize, ity prices are roughly twice the observed farm- and PRs  75–131 for wheat. But though rice gate prices, with this price wedge discouraging requires 60 percent more water than cotton— production. both major export crops—their irrigation charges per acre are about the same, and so The benefits of some domestic trade policies have also may not reflect the crops’ relative profitability, been unclear, as illustrated by the public procurement leading to possible overproduction of rice. of wheat. Government procurement of wheat is extensive, involving federal, provincial, and Policy Distortions to Trade district agencies. The government sets the pro- curement price with targets that the Pakistan International and domestic trade are critical to Agricultural Storage and Services Corporation improving agricultural production but face chal- and provincial food departments are respon- lenges to growth. Policy changes since 2006 have sible for meeting. Provincial governments steadily eroded the effects of trade liberaliza- (mainly Punjab and Sindh) and the corpora- tion that Pakistan implemented over 1996– tion procure about 20  percent of total wheat 2003. During this period, the government production each year (Prikhodko and Zrilyi simplified the tariff structure and abolished 2012). This federal and provincial procurement its state trading monopolies for agricultural is absorbing the price transmission that would products. But it introduced exceptions in 2006 otherwise prevail in open markets, contributing and reversed several of the more important to a price stabilization effect. Indeed, because liberalizing reforms in agriculture, particu- the government controls domestic wheat prices larly for wheat, sugar, and fertilizer. The use and procurement volumes, as well as the inter- of statutory regulatory orders (SROs) has also national wheat trade, price transmission from expanded since 2006. SROs and new regula- world to domestic markets is minimal. tory duties have been used to provide exemp- tions to normal tariffs in some cases and to The impact of these procurement policies on consumer raise tariffs in others. The resulting trade welfare is ambiguous, and they can become fiscally regime has thus become highly discretionary unsustainable while also leading to perverse out- and uncertain, leading to input-price distor- comes like subsidized exports. All procured wheat tions and highly variable output prices. The is bought and then sold to flour millers in the expanded ad hoc use of SROs also has fiscal same wheat-marketing year, with the govern- implications, as preferential provisions provide ment absorbing the costs of procurement, the beneficiaries of the orders with special tax storage, and financing. Millers can buy the and duty concessions and exemptions, leading subsidized wheat at below market prices and to a loss of potential tax revenue (Lopez-Calix then sell the flour at open market prices, which and Touqeer 2013).7 would be the prices for consumers. This price stabilization role is perhaps one reason for In most years, major crops like wheat, rice, sugar, and the recent rise in wheat stocks, which has led cotton are implicitly taxed by the various price distor- to exports at subsidized prices in years of high tions introduced by policies. The policy-induced wheat production. Pakistan Policy Note—Increasing agricultural productivity Policy Recommendations there is a need to reflect these activities in human resource and performance incentives. Broad-based agricultural growth can be achieved This may require moving personnel from the through narrowing the wide yield gaps and diversi- center to provincial institutions, or even chang- fying toward high-value agricultural products. This ing the composition of the staff, to increase growth can improve the agricultural incomes the proportion of scientific research staff, for of farmers (and especially of smallholders), as example. Third, these reforms will require well as improve rural incomes more generally, additional spending in agricultural R&D, 8 through higher returns on land and labor—the whether for supporting agricultural research latter benefiting the many rural landless poor. in provincial research centers or capacity build- Actions are needed in the following key areas ing of science staff, with the exact composition to enhance agricultural growth and improve of the additional spending depending on the farm incomes (Table 1). nature of the institutional reforms. Improve agricultural productivity These reforms to the R&D architecture, by their nature, would be very wide ranging and require Substantial reforms to the national agricultural substantial groundwork prior to execution. The research system are needed. First, the system first step (of two)—a stocktaking of the cur- requires fundamental institutional reforms rent agricultural research system—would need to make it more efficient and effective. With to include a detailed institutional audit that efforts under way to develop provincial agricul- examines the system as a whole and to clearly tural research institutions, the role of the PARC delineate the roles, functions, and mandates and the NARC needs to be adjusted to exploit of the public federal and provincial bodies their comparative advantage of being a federal that govern and conduct agricultural research. institution able to facilitate federal funding, More broadly, this stocktaking would also need intraprovincial knowledge, and capacity build- to account for the current roles of (and envi- ing. Second, with the shift in primary activi- ronment for) private R&D, including those of ties from federal to provincial levels and from domestic and multinational agribusinesses. It policy coordination to agricultural research, should then lead to a strategic road map for Table Policy matrix 1 Objective Short-run action Medium- to long-run action Improve agricultural Initiate reform of the national agricultural research system Carry out reforms of the national agricultural research productivity to make it more efficient and effective system (clarify mandate, shift personnel from federal to Develop plans for building scientific research capacity provincial institutions, shift budget, provide appropriate performance incentives) Increase budget for agricultural research Plan and implement long-run capacity-building program for scientific research capacity Improve water use Identify mechanisms for institutional reform of the Implement institutional reform efficiency management system: Provide sufficient federal and provincial resources for • Complete devolution of authority to the appropriate transition and capacity building scale (including provincial and farmers’ organization) Set up a third-party watchdog to evaluate the state of • Clarify the roles and mandates of each authority institutional reform and to monitor for rent seeking Remove protection Identify timetable for removal of statutory regulatory Remove statutory regulatory orders, reduce and harmonize variability and bias orders, tariff reduction and harmonization, and export- tariffs, and dismantle export barriers against agricultural barrier removal exports Identify World Trade Organization–compliant instruments that may be appropriate to use instead, such as special safeguard mechanisms Reduce distortions in Identify minimum volume of public wheat procurement Implement rules-based adjustable tariffs to maintain domestic grain markets (federal and provincial programs) designated price bands while protecting food Identify floor and ceiling prices to follow world prices for Develop and roll out social protection programs for food security wheat prices security, with clear triggers and graduation requirements Identify food-insecure groups for social protection programs overhauling the national agricultural research instruments like the SROs, shifting to a lower system, with particular emphasis on future bud- set of uniform tariffs, and simplifying the trade gets, human resources, and capacity building. regime by removing alternative trade policy In keeping with the spirit of the 18th Amend- instruments like export taxes. These three ment, this strategic planning would need to measures would reduce uncertainty, volatil- have the input and buy-in of provincial and ity, and the policy bias against agricultural local government institutions and should not be products like rice and sugar. Valdes and oth- left to just the PARC and the NARC. The sec- ers (2012) also point out that equalizing tariffs ond step would be to roll out the appropriate across agricultural products, while necessary, 9 reforms over the next one or two budget cycles. is not sufficient for equal effective protection across products, because protection or support Improve water use efficiency in the input markets could still be substan- tial, at varying levels. Their study argues that The most important intervention would be institu- the best approach to reducing the variation in tional reform of the entire water management system. effective protection across outputs is to also Given the system’s high dysfunction, clarify- reduce the variation in protection of all inputs, ing the institutional environment would be a including raw materials, capital, and tradable prerequisite for any other intervention under inputs. From a practical perspective, the mea- consideration, such as revising the Abiana. sures will require a realistic timetable, as well The reforms to the water management system as instruments compliant with the World Trade include completely devolving authority to the Organization that may still be able to protect relevant scale, clarifying the roles and man- national interests. dates of each authority, and providing sufficient resources and capacity building to allow the Improve domestic trade of agricultural devolved authorities to fulfill their mandates. products while protecting food security As with the reforms to the national agricultural Distortions in domestic markets of commodities like research system, reforms to the whole water manage- wheat need to be removed. The simplest set of ment system will require action over multiple years reforms would be to reduce the wheat procure- and will need to be carefully considered. Water man- ment volume while designing and implement- agement systems show wide divergence in bud- ing complementary social safety net programs. gets, capacity, and extent of devolution from The wheat procurement contraction would the federal to provincial level. The reforms reduce the effective subsidy to wheat produc- need to first identify their current state, from ers and thus the fiscal burden. If food price public irrigation departments down to the stability is important, price bands can be imple- farmers’ organizations and water user asso- mented using rules-based adjustable tariffs ciations, which will help clarify the roles and that set floor and ceiling prices to follow world mandate of each authority and outline a devo- prices.8 In parallel, social safety net programs lution plan for each area where devolution has that target food-insecure groups can be estab- not occurred (such as the public irrigation and lished, with clearly defined triggers and gradu- drainage authority still managing public irri- ation requirements. gation departments). For entities that require capacity building and management reform Notes (such as farmers’ organizations), budgets to 1. “Progressive farmers� refers to farmers train and support personnel are needed. in Pakistan who have achieved high crop yields applying the available technology Improve international trade in and management practices. They thus pro- agricultural products vide good benchmarks of what is currently achievable. The trade regime must be simplified. This will require 2. Estimated from the United Nations Com- removing unpredictable and discretionary modity Trade Statistics database. Pakistan Policy Note—Increasing agricultural productivity 3. The statistics in this section are authors’ References calculations based on Fuglie (2012). The Aftab, Safiya, Caesar Cororaton, Sohail Malik, TFP estimates in Fuglie (2012) are based and Hans G.P. Jansen. 2010. “Domestic on agricultural data on comparable out- Terms of Trade in Pakistan—Implications put as well as inputs (labor, land, livestock, for Agricultural Pricing and Taxation Poli- machinery, fertilizer, and land quality cies.� Report 68404, World Bank, Washing- adjustments due to irrigation) for more ton, DC. than 170 countries. Since TFP estimates Ahmad, Mumtaz, and Joseph G. Nagy. 2001. In 10 are sensitive to model specification and Private Investment in Agricultural Research and the level of aggregation of inputs included International Technology Transfer in Asia, ed. in the calculations, the agricultural TFP Carl E. Pray and Keith O. Fuglie, 56–75. Agri- estimates in Fuglie (2012) for Pakistan cultural Economic Report AER-805. Wash- may differ from the estimates from other ington, DC: U.S. Department of Agriculture, studies at a more aggregated level, such Economic Research Service. as Lopez-Calix, Srinivasan, and Waheed Anwar, Talat, Sarfraz K. Qureshi, and Hammad (2012), which takes a more multisectoral Ali. 2004. “Landlessness and Rural Poverty in perspective and uses different input defi- Pakistan.� The Pakistan Development Review 43 nitions. The trends in both studies are (4): 855–74. similar, however—rising in the 1980s and ASTI (Agricultural Science and Technology declining thereafter. Indicators. 2012. ASTI Data Tool. www.asti. 4. All estimates in this paragraph are authors’ cgiar.org/data/. estimates based on Fuglie (2012). Beintema, Nienke M., Waqar Malik, Muham- 5. Pakistan has an irrigation potential of mad Sharif, Gert-Jan Stads, and Usman 21.3  million hectares of land, of which Mustafa. 2007. Agricultural Research and Devel- 19.3  million are equipped for irrigation: opment in Pakistan: Policy, Investments, and 35.9  percent for surface water, 21.4  per- Institutional Profile. ASTI Country Report. cent for groundwater, and 41.3 percent for Washington, DC: International Food Policy a mix of surface and groundwater (FAO Research Institute. 2010). Debowicz, Dario, Paul Dorosh, Sherman Robin- 6. All estimates in this paragraph are based son, and Syed Hamza Haider. 2012. “Implica- on Fuglie (2012). tions of Productivity Growth in Pakistan: An 7. Agricultural incomes are not taxed, and Economy Wide Analysis.� Pakistan Strategy taxing farm income has the potential to Support Program Working Paper 2. Interna- increase the tax base and increase rev- tional Food Policy Research Institute, Wash- enue. 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The findings, interpretations, and conclusions expressed herein are those of the authors and do not necessarily reflect the views of the World Bank’s Board of Executive Directors or the countries they represent. The report was designed, edited, and typeset by Communications Development Incorporated, Washington, DC.