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Contribution of agriculture in GDP

Published on 4th Feb, Edition 06, 2013

 

Agriculture is a predominant activity in most developing countries. As economic growth and development take place, importance of agriculture tends to decline according to the sources. The declining share of agriculture is, however, a slow phenomenon and is felt only over a relatively long time horizon.

In Pakistan, the agriculture sector continues to be an essential component in the economy. It currently contributes 21 per cent to GDP. Agriculture generates productive employment opportunities for 45 per cent of the country’s labour force and 60 per cent of the rural population depends upon this sector for its livelihood. It has a vital role in ensuring food security, generating overall economic growth, reducing poverty and the transforming towards industrialization.

During FY 2011-12, the overall performance of agriculture sector exhibited a growth of 3.1 per cent mainly due to positive growth in agriculture related sub sectors, except minor crops. Major crops accounted for 31.9 per cent of agricultural value added and experienced a growth of 3.2 per cent in FY 2011-12 with negative growth of 0.2 per cent in 2011. The significant growth in major crops was contributed by rice, cotton and sugarcane minor crops contributed 10.1 per cent value addition in agriculture and exhibited a negative growth of 1.3 per cent in FY 2011-12 against 2.7 per cent growth of 2011. The Livestock sector, which had a 55.1 per cent share in the agriculture, grew by 4.0 per cent in FY 2011-12.

During FY 2011-12, the availability of water as a basic input for kharif 2011 had been 10 per cent less than the normal supplies but 13 per cent higher than last year’s kharif 2010 season. The water availability during rabi season was estimated at 29.4 MAF, which is 19.2 per cent less than the normal availability, but 15 per cent less than last year’s rabi crop.

Cotton

Cotton is an important cash crop which significantly contributes to the national economy by providing raw material to the local textile industry, surh as cotton link as an export item. It accounts for 7.8 per cent of value added in agriculture and 1.6 per cent of GDP.

Sugarcane

The sugarcane crop is the second major cash crop and is used as a raw material in the production of refined sugar and gur. Its share in value added in agriculture and GDP is 3.7 and 0.8 per cent, respectively.

Rice

Rice ranks as second amongst the staple food gain crop in Pakistan and it has been a major source of foreign exchange earning in recent years. Rice accounts 4.9 per cent of the value added in agriculture and 1.0 per cent of GDP.

 

Wheat

Wheat is also the basic staple food for most of the population and largest grain source of the country. Its importance is always recognized when formulating agricultural policies. It contributes 12.5 per cent to the value added in agriculture and 2.6 per cent to GDP.

Agricultural Credit

The role of credit is instrumental in the agriculture sector where Pakistani farmers often lack finances necessary for carrying out vital farming activities. This issue, if not addressed, can cause a multitude of problems, ranging from the exploitation of poor farmers at the hands of informal sources of credit, to a slowdown in the adoption of modern farming techniques and inputs, resulting in slow development of this chief sector.

Currently 26 commercial and microfinance banks, with around 3,900 agriculture designated branches, are facilitating farmers by extending agriculture credit throughout the country.

These banks provide credit to the farming community for all types of farming activities such as growing crops, livestock, poultry, fisheries, orchards, forestry, nurseries, apiculture and sericulture. The increasing demand for credit is due to an array of factors, such as the rising pressure from the quickly expanding population. Credit on food resources and high prices of agriculture inputs, and the reasonable prices of agricultural commodities are attracting investment into Pakistan’s agriculture sector.

The Agricultural Credit Advisory Committee (ACAC) had allocated an indicative agriculture credit disbursement target of Rs. 285 billion for FY 2011-12 as compared to the target of Rs. 270 billion. Out of the total amount of agricultural credit disbursed, Rs. 195.1 billion was allocated to commercial banks, Rs. 70.1 billion to ZTBL, Rs. 12.2 billion went to the microfinance banks, and Rs. 7.6 billion was allocated to PPCBL. During July-March, 2011-12 five major banks, as a group, disbursed Rs 107.7 billion or 76.3 per cent of their whole year’s targets. ZTBL disbursed Rs 37.9 billion or 54 per cent of its targets and Domestic Private Banks (DPBs) disbursed Rs 37.3 billion or 69 per cent of their targets. MFBs disbursed Rs 8.5 billion or 69.9 per cent of their target and the PPCBL disbursed Rs 6.0 billion or 79.1 per cent of its allocated target.

During the period July-March, FY 2011-12, bank disbursement to the agriculture sector surged by 17 per cent on a year-on-year basis to Rs 197.4 billion, or 69.2 per cent of the target, of Rs. 285 billion.

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