Sohail J. Malik

Agriculture and the Rural Economy in Pakistan: Issues, Outlooks, and Policy Priorities

While policy makers, media, and the international community focus their attention on Pakistan’s ongoing security challenges, the potential of the rural economy, and particularly the agricultural sector, to improve Pakistanis’ well-being is being neglected. Agriculture is crucial to Pakistan’s economy. Almost half of the country’s labor force works in the agricultural sector, which produces food and inputs for industry (such as cotton for textiles) and accounts for over a third of Pakistan’s total export earnings. Equally important are nonfarm economic activities in rural areas, such as retail sales in small village shops, transportation services, and education and health services in local schools and clinics. Rural nonfarm activities account for between 40 and 57 percent of total rural household income. Their large share of income means that the agricultural sector and the rural nonfarm economy have vital roles to play in promoting growth and reducing poverty in Pakistan.

Chapter 4. Irrigation and Water Management in the Indus Basin: Infrastructure and Management Strategies to Improve Agricultural Productivity

ions consistent with a sustainable yield for the Indus aquifer (50 MAF, according to Briscoe and Qamar [2005] and Yu et al. [2013]). RWSM-Pak assumes nonirrigation water is drawn from groundwater only. For chis study, all water data are drawn from the new Indus Basin Model Revised, developed by the National Engineering Services Pakistan and the WAPDA, while crop data come from the 2010 Agricultural Census of Pakistan (GoP 2010). The Water Accord of 1991, which reflects a highly sensitive political compromise, dictates the sharing of water between the four provinces and that dams should be managed with irrigation as a priority (Briscoe and Qamar 2005). Implementing the Water Accord in the model leads us to impose rule-based constraints on the simulated system. The objective function is constrained by these stringent rules on dam storage while maximizing the water delivered to cultivated areas. However we do not constrain individual canal releases to follow historical patterns, because this is a usage not enshrined in provincial law. Eight MAF of water are reserved as an outflow to keep the delta healthy, which is also mandated by the Water Accord . The Hydropower Module Benefits from the Diamer-Bhasha Dam include not only extra irrigation water but also extra electricity production. We include a hydropower module to simulate the extra electricity chat would be produced by the dam. Hydropower generation depends on water flow and head (height of the dam and water level of the reservoir). Given that Pakistan explicitly gives priority to irrigation, we do not include hydropower generation in the objective function of the RWSM-Pak model. Instead, we compute hydropower electricity production after allocating water to the crops and include it as a source of energy in the CGE model. Hydropower is represented as a fixed quantity of the total energy production, because we assume no other hydroelectric dam than Diamer-Bhasha is built. The additional energy production is included in GDP and valued as a benefit of the dam. 14 The current CGE model does not disaggregate energy sources or consider substitution possibilities across energy types. More detailed data is currently being developed for the Pakistan SAM and will be included in future models.

Chapter 6. Pakistan’s Fertilizer Sector: Structure, Policies, Performance, and Impacts

The fertilizer industry in Pakistan, with US

Chapter 8. Public Service Delivery for Rural Development

3.74 billion per year in sales, now stands at a crossroads where, after an initial substantial contribution in boosting crop productivity, its future potential is being challenged. Fertilizer-responsive crop varieties, supplementary irrigation water, and a favorable policy environment in Pakistan have induced fast growth in fertilizer demand. On the supply side, the availability of gas at low prices along with a favorable investment environment resulted in the buildup of excessive manufacturing capacity. But recently, a shortage of gas and monopolistic behavior has led to underutilization and greater imports. Restrictive laws put fertilizer processing and marketing in a few hands, which has also affected its efficiency. Moreover, the yield response of fertilizer has tapered off and per hectare use is fast reaching its optimal level. The existing policy environment leads to higher costs, inefficient use, and a heavy burden on the government as it charges one-fourth of the market price for feedstock gas used in fertilizer manufacturing. In addition, the government imports urea and absorbs the difference in international and domestic prices.

Chapter 5. The Architecture of the Pakistani Seed System: A Case of Market-Regulation Dissonance

Introduction Despite the recognized, critical role of public services in raising rural welfare, Pakistan has recently struggled with the challenge of providing quality services to its rural population. Efforts to design and implement policies that ensure both access and quality have been hampered by events such as major flooding in 2010, 2011, and 2014, as well as the civil conflict and violence that continually affect the country (UNICEF 2012). 1 In the midst of these exceptional circumstances, Pakistan also experienced a major political transformation in 2010 with the introduction of the 18th Amendment to the constitution, which devolved federal political authority and responsibility for essential services to the provinces (DRI 2010) and made Pakistan the first federation in the world without a national or federal health ministry (Nishtar et al. 2013). Measures to ensure accountability have not kept pace with changes in responsibilities, generating concern about how service delivery can be improved (Arif et al. 2010; Bhutta et al. 2013). 2 This apprehension is well deserved given the state of public services in the country, starting with the health sector but also encompassing education, water, sanitation, and electric-

AN INVESTIGATION OF TECHNICAL INEFFICIENCIES OF PRODUCTION OF WHEAT FARMERS IN FOUR DISTRICTS OF PAKISTAN

Introduction Applications of modern science to the improvement of cultivated crop varieties (“cultivars”) have yielded tremendous gains for food security in Pakistan since the 1960s. The introduction of semi-dwarf rice and wheat cultivars—alongside strategic investments in the distribution of synthetic fertilizers, provision of irrigation, advice on crop management, and price support policies—encouraged rapid intensification in Pakistan’s high-potential areas in a manner that is still recognized as one of the country’s greatest development achievements. But since that moment in history, a constant onslaught of new threats to productivity growth—new pests and diseases, diminishing natural resource stocks, weather shocks and climate volatility, changing demands from farmers and consumers, and new market forces—has highlighted the need for continuous innovation in cultivar improvement and seed provisioning strategies for farmers. By most accounts, innovation has fallen short of the challenge.