Globalisation and Its Impact on Agriculture, Food Security and Well-being of People in Pakistan

2

Globalisation and Its Impact onAgriculture, Food Security and

Well-being of People in Pakistan

Usman Mustafa and Muhammad A. Quddus

Introduction

Globalisation may literally be defi ned as the process or trans-formation of local or regional phenomena into global ones. It may be described as a process by which the people of the world are unifi ed into a single society and function together. It is a com-bination of economic, technological, socio-cultural and political forces (Croucher 2004). Tom G. Palmer of Cato Institute defi nes ‘globalisation’ as ‘the diminution or elimination of state-enforced restrictions on exchanges across borders and the increasingly integrated and complex global system of production and exchange that has emerged as a result’ (Palmer 2003). Globalisation has brought about the most economic, political, cultural, inputs, output, information, and technology changes since the 1970s. However, what this term denotes has been among the most contentious processes across the world. Ever since the term was fi rst used to make sense the large-scale changes, debates and discussion have been continuously taking place about its impact. Thomas L. Friedman ‘examines the impact of the “fl attening” of the globe’, and argues that international trade, outsourcing, supply chaining, and the political forces have modifi ed the world in good and bad form permanently. He also argues that the pace of globalisation is quickening and will continue to have a growing impact on business organisation and practice (Friedman 2008).

This article is a revised and updated version of Mustafa and Quddus 2008.

46 Usman Mustafa and Muhammad A. Quddus

Noam Chomsky in his interview with ZNet emphasised that the word ‘globalisation’ is also used, in a doctrinal sense, to describe the neoliberal ways of economic globalisation (Chomsky 2006).Daly (1999) argued that the terms ‘internationalisation’ and ‘glob-alisation’ are sometimes used interchangeably. He further elab-orated that there is a slight formal difference. ‘Internationalisation’ refers to the signifi cance of international trade, relations, treaties, agreements, etc. International means between or among nations. ‘Globalisation’ means removal of national boundaries for eco-nomic purposes; international trade (governed by comparative advantages) becomes inter-regional trade (governed by absolute advantage).

Agriculture and livestock remain the largest contributors to the livelihood of 75 per cent of the world’s poor living in rural areas. Agriculture is the mainstay of the economy of Pakistan.It is the single largest sector which contributes 21 per cent toGDP, employing 44 per cent of the country’s work force and contributes substantially to export earnings. It also provides raw material for the industrial sector and market for industrial products. The performance of agriculture greatly affects the overall growth of GDP (Government of Pakistan 2008). As in other developing countries, poverty in Pakistan is largely a rural phenomenon. Therefore, development of agriculture will be a principal vehicle for alleviating rural poverty. Empiricalevidence suggests that higher growth in agriculture on a sus-tained basis had a lasting impact on poverty reduction in Asia (UNESCAP 2008).

Agriculture in developing countries as well as in Pakistan is at the subsistence level. Land holdings are small and production is labour-intensive with relatively low intensity of farm inputs and irrigation, dependent on the vagaries of nature. Consequently, the farm productivity is low. During the last three decades, in spite of the signifi cance of agriculture in the economy and involvement of nearly half the population, most of the government policies have been discriminatory against agriculture and there has been a declining share of public investment in agricultural sector(ADB 2001; Chaudhry 1995; Faruqee 1998; Hamid and Tims 1990; Khan 1985; Mustafa et al. 2001). These policies have retarded growth, depressed the value of agriculture and possibly also lowered rural wages, implicitly transferring income from the

Globalisation and its Impact on Agriculture 47

rural to the urban areas. It has resulted in migration from ruralto urban centres, increase in unemployment, decrease in real wages, higher-dependency ratio, etc. The urban industrial sector is not robust enough to absorb the fl ux of rural migrants. The situation is the worst in rain-fed and marginal areas where a substantial number of small peasants are located. All these are considered to be the major determinants of poverty in Pakistan (Amjad and Kemal 1997; Arif 2001; Mustafa et al. 2001; Qureshi and Arif 1999; Zaidi 1999).

During the last three decades, the structure of global trade has changed considerably due to globalisation through WTO agreements, structural adjustment programmes and formation of various regional trade blocs. Pakistan is one of the founder members of the General Agreement on Tariffs and Trade (GATT) since 1948 and a signatory of Uruguay Round (UR) of Multilateral Trade Agreement (MTA) with WTO. The Agreement made signifi cant progress in three major areas (IMF 1994): (i) market liberalisation which could add approxi mately 1 per cent to world real GDP (US$ 212–274 billion) and 10 per cent to world trade upon full implementation ofthe Agreement; (ii) strengthening of rules and institutional structure, particularly the creation of WTO, which could decide on dispute and impairment of trade rules and principles, and integration of new areas into the multilateral trading system such as General Agreement on Trade in Services (GATS); and(iii) trade-related intellectual property rights (TRIPs), trade-related investment measures (TRIMs) and the traditionally sen-sitive and contentious sectors such as agriculture, textile and clothing (Abidin 1994; GATT 1995). World exports rose from8.5 per cent of Gross World Product (GWP) in 1970 to 16.1 per cent of GWP in 2001 (Global Policy Form 2008).

Under the new set-up of globalisation, the role of Pakistan’s agriculture in international trade is quite marginal. Except insome crops where it has a comparative advantage, Pakistan is a net food importing country. Therefore, even a small change in agricultural employment opportunities, or prices of inputs and outputs, can have major socio-economic effects in the country. There is a need to focus on the perspective of agriculture under the WTO regime and the poverty scenario in Pakistan.

The present study is designed to critically analyse the impact of globalisation and trade liberalisation on agriculture and food


security with special reference to social welfare and poverty in Pakistan. For this, the different global agreements in general and their impact on agriculture in particular within the framework of Pakistan are looked at fi rst. This is followed by a discussion of government policies regarding agriculture. This section also compares the cost of major agricultural crops and their profi tability overtime so as to bring out the consequences of globalisation on small peasants.

International Agreements Related to Agriculture

Having signed different WTO Agreements Pakistan is bound by rules and regulations which can tremendously affect agriculture-related matters including exports, imports, income, health, etc. The respective areas of four of these important agreements associated with Agriculture and food-related matters have been briefl y described below.

Agreement on Agriculture (AoA): The main provisions of AoA are related to tariff reduction. Under the agreement, all non-tariff barriers to trade were to be converted into tariffs by developed countries by 2005. However, subsidies and support prices, polices which had minimal or no effect on production or trade distorting effects (Green Box) were not subject to reduction commitments. There is provision of food aid in grant form, and credit guarantees for the least-developed and food-importing countries in case of an anticipated increase in world food prices. The agreement would be implemented in different stages.

Agreement on Trade Related Intellectual Property Rights (TRIPs): This Agreement was also negotiated at the UR of GATT and is now implemented and monitored by the WTO regime. Intellectual Property Rights (IPRs) refer essentially to patents, copyright and trademarks. The accord requires countries to have available enforcement procedures to permit effective action against any infringement of IPRs covered by the agreement.

Agreement on the Application of Sanitary and Phyto-sanitary Measures (SPS Agreement): The Agreement deals with the enforcement of sanitary (related to human and animal life and health) and phyto-sanitary (related to plant life


and health) laws. The Codex Alimentarious Commission (CAC) has developed the standards, guidelines and other recommendations as baseline for consumer protection.The SPS Agreement covers all food-hygiene and food-safety measures including maximum level of plant protection, chemical and veterinary medicine residues in plants and animals, food additives and restrictions on imports from a disease-infested area.

Agreement on Technical Barriers to Trade (TBT Agreement): The Standards Code mainly prevents the member countriesfrom using national or regional technical standards as tech-nical barriers to trade. It is focused on the implementationof international standards.

Government’s Agricultural Policies

The Government of Pakistan is using the public expenditure programme and public institutions as the key instrumentsfor infl uencing and implementing globalisation-driven agricul-tural policies.

The government is bound as a signatory of WTO agreements; besides, there is also a tremendous pressure from the international fi nancial institutions to bring a number of macro-economic policy reforms/adjustments into the economy including the agricul-tural sector. A resumé of the government’s agricultural policies on prices, subsidies, credit, research and development, corporate farming and their implications on food security and poverty is discussed in the following pages.

Government Expenditure on Agriculture: The government ex-penditure under the Annual Development Programme (ADP) for agriculture and water sector, consolidated with the Public Sector Development Programme (PSDP) and per cent share of agri-culture and water are presented in Figure 2.1. The agricultural sector got the maximum share during the early 1980s; during 1980–81 it was the maximum (Rs 3,340 million), i.e., 12.78 per cent and it was minimum, i.e., Rs 540 million (0.13 per cent) during 2001–02 of the total PSDP. In the recent years it showed an increasing trend and reached 3 per cent during 2007–08. In case of water, government PSDP percentage expenditure fl uctuatedover time and varied from 6 to 13 per cent. Overtime, there has been a substantial decrease in per cent share for agriculture and


water sector (Figure 2.1). In the 10 year perspective development plan 2001–11, the total share of the agriculture sector is decreasing in real term but it has also been decreasing in nominal termsfrom 2005–06 (Government of Pakistan 2006b).

Agricultural Price Policy: The prices of farm commodities are not as stable as that of industrial products. They exhibit swingingtrends due to variability in output and the inelasticity of demand, high perishability of a number of products, biological nature (longer time period to cover different adjustments), and the seasonal nature of production (Salam 2001). Furthermore, agri-culture production is not only an enterprise but it is the livelihood of a large majority of farming communities. They have to sell their product, because they do not have enough money and storage capacity, even at lower prices, in order to fulfi l their urgent needs and return their loans.

The Government of Pakistan is intervening in the commodity market via deregulation of agricultural prices and removal of the subsidies. Four agricultural crops, i.e., wheat, cotton, sugarcane and rice were covered through the support price in Pakistansince 1999–2000 but during 2006–07 the government announced support price only for wheat. The support price does not represent

Figure 2.1 Share of Agriculture, Water and Both in PSDP / ADP (%)

Source: Government of Pakistan (2010).


the minimum guarantee price because the government does not have the capacity to procure substantial crop from the peasant, nor does it have enough storage capacity for long periods of time. The price support programme has positive as well as negative impacts. The government announced in 2005–06 support prices which are, in general, lower than the market prices and in real terms not proportionate to the input prices (Figure 2.2).

Figure 2.2 Real Support Prices of Major Crops (1990 basic)

Source: Agriculture Price Institute (API), Government of Pakistan (Various Issues 1990–2007).

The profi tability situation in 2007 of the major crops was not as good as of 1990–91. Between 1990 and 2007, the net profi tper 50kg wheat and rice declined (even became negative) fromRs 20 to –4.2 and 10 to –12.6, respectively. Only cotton and sug-arcane production remained profi table as of 1990–91 to 2006–07(Table 2.1). The input costs increased much more than the pro-curement price of the different crops. Farmers spent 2.78, 2.19, 4.36, 1.21 and 20.30 Pakistani Rupee (with every unit of 50kg) of wheat, rice (fi ne), rice (coarse), cotton and sugarcane to pur-chase a bag of DAP diammonium phosphate (DAP) during 1990, while is 2008 they had to buy the same bag by paying 6.2, 3.53, 5.54, 2.98, and 64.59 (with every unit of 50kg), respectively. The urea prices were decreased over time as were the prices of wheat, rice, cotton and sugarcane, respectively (Table 2.2 and 2.3).


The average annual increase in price over the period 1990 to 2008 was 10.1, 12, 13, 11.3, 9.6, 8.1 and 13.5 Pakistani Rupees for wheat, rice (fi ne), rice (coarse), cotton, sugarcane, urea and DAP, respectively. Though these are the government prices, most small

Table 2.1 Net Profi t (Rs/50kg)∗∗

Years Wheat Cotton Rice Sugarcane

1990–91 20.0 57.5 10.0 2.51991–92 13.4 41.5 –14.9 1.61994–95 1.9 72.1 –7.2 1.01995–96 0.4 39.9 –8.4 1.01998–99 –13.7 136.2 6.9 3.31999–2000 3.9 42.8 –1.1 1.72006–07 –4.2 69.1 –12.6 5.8

Source : Agricultural Price Institute (API), Government of Pakistan (various issues 1990–2007),∗ based on 1990–91 CPI.

Note : ∗Farm level costs were taken from Government of Pakistan (1990, and 2000) of average growers. The prices are defl ated with CPI 1990–91as base years.

Table 2.2 Bag of Wheat, Rice (Fine and Coarse), Cotton and Sugarcane(each in unit of 50kg) Required to Buy a Bag of DAP

During 1990–2008

Year Wheat Rice (Fine) Rice (Coarse) Cotton Sugarcane

1990 2.78 2.18 4.26 1.28 20.411991 2.74 2.19 4.36 1.21 20.301992 2.54 1.89 3.89 1.10 18.861993 2.10 1.81 3.74 1.06 18.681994 2.74 2.25 4.61 1.19 23.111995 2.50 2.70 5.35 1.50 27.851996 2.88 2.71 5.36 1.39 28.801997 2.94 2.28 4.61 1.41 20.141998 2.78 2.53 4.75 1.01 23.751999 2.70 2.31 4.39 1.13 23.182000 2.79 2.18 4.09 1.15 23.262001 2.96 2.30 4.33 1.14 21.132002 3.19 2.49 4.66 1.20 23.912003 3.26 2.85 5.31 1.34 28.542004 3.13 3.01 5.44 1.35 31.292005 3.25 2.70 4.50 1.39 29.982006 1.94 1.16 2.69 0.80 13.692007 5.30 2.65 5.00 1.88 37.502008 6.20 3.53 5.54 2.98 64.59

Source: Calculated by different sources of prices.


Table 2.3 Bag of Wheat, Rice (Fine and Coarse), Cotton and Sugarcane(each in unit of 50kg) Required to Buy a Bag of Urea

During 1990–2008

Year Wheat Rice (Fine) Rice (Coarse) Cotton Sugarcane

1990 2.18 1.70 3.34 1.00 15.991991 1.96 1.58 3.13 0.88 14.551992 1.98 1.46 3.01 0.85 14.641993 1.64 1.43 2.91 0.84 14.591994 1.70 1.39 2.86 0.74 14.331995 1.39 1.50 2.98 0.84 15.531996 1.78 1.66 3.30 0.85 17.711997 1.78 1.38 2.79 0.85 12.181998 1.44 1.31 2.48 0.53 12.361999 1.36 1.16 2.21 0.56 11.682000 1.51 1.18 2.21 0.63 12.602001 1.64 1.28 2.40 0.64 11.732002 1.71 1.34 2.50 0.64 12.852003 1.50 1.31 2.44 0.61 13.132004 1.46 1.41 2.54 0.64 14.632005 1.54 1.28 2.13 0.65 14.142006 1.55 0.93 2.15 0.64 10.982007 1.68 0.84 1.59 0.60 11.882008 1.25 0.71 1.11 0.60 13.03

Source : Calculated by different sources of prices.

farmers have to sell their crop just after the harvest because they have to pay loans and other liabilities, and thus generally, avail of still lower prices.

Although there is a price-support policy but in 2007–08 the prices fell below the support price fi xed by the government while the government agencies were unable to intervene. Likewise, prices have fallen below the support price in the past as well, before 2005–06, when support prices were announced for potatoes,gram, paddy, onion, etc., to the disadvantage of the growers. Currently, only wheat has a support price, as announced by the government, and even for that there is no effective institution available for implementation of the support prices.

Subsidies: During the last decade, i.e. 1999–2000, the total crop production subsidies in all forms, federal as well as provincial, have shown a decreasing trend. The government provides little subsidy to fertiliser to boost their application in spite of an increase in the prices. The support provided under aggregate measurement


of support (AMS) of WTO agreement in the case of Pakistan is negative. The domestic support prices have been considerably below their corresponding border prices. In contrast to the de-veloping countries the developed countries are continually pro-viding support and subsidies to their farming communities, as seen in the following quotation.

In 1998, 24 countries of the Organization for Economic Co-operation & Development (OECD) provided a total agriculture support of about $335 billion, with producer support at $251 billion. This makes total support to domestic agriculture in these countries three times larger than the level of offi cial aid coming in. In 1997, in 24 OECD countries, producer support to rice and wheat was, respectively, 4.11 and6.18 times the value of world export of these products (ActionAid 2001).

It is important to note that the farmers in Indian Punjab are getting free electricity for their tubewells. The Pakistani farmers not only have substantially high electricity tariff rate but they also have serious load-shedding problem. Tubewell irrigation is a vital input for agricultural production in Pakistan.

Agricultural Credit: Agricultural credit provides fi nancial re-sources to the farming community particularly, for the purchase of primary inputs like fertiliser, seed, pesticides, machinery, equipment, etc. There are four major agencies — viz. Agricultural Development Bank of Pakistan (ADBP), Taccavi, Cooperatives and Commercial Banks — distributing credit to the farming com-munities in the country. The nominal credit disbursed by these agencies between 1990–91 and 2000–01 fi scal years seems very impressive, i.e. Rs 14,915.29 million during 1990–91 toRs 44,790.90 million during 2000–01 and Rs 108,732.91 million during 2004–05 but in real term (1990–91 as base year) its value had decreased by 2,427.02 and 36,128.7 million rupees, respectively (Government of Pakistan 2008).

There are a number of alternative profi table cropping sys-tems available but framers are still adopting a cropping pattern which includes wheat as rabi and rice or cotton as kharif crops. This is because wheat and rice are the stable crops they want to ensure food security for themselves. Further, they do not follow crop diversifi cation because the new or high-value crops require more inputs, have higher risk factors and also require better


technical skills and marketing expertise. The subsistence farmers are unable to manage all these.

Agricultural Research and Extension: In theory, returns to research expense on agriculture can be even upwards of 40 per cent in a year for limited periods (Alston et al. 2000; Mustafa et al. 2004). Agriculture research increases output for market and farmers’own consumption and counters the negative impact of shrinking land and water resources. In practice, however, agricultural re-search system is funded, organised and managed at a level where only a basic maintenance of the system is being covered, withlittle prospect for boosting crop yield and livestock production through research (Nagy and Quddus 1998) or to even create a corpus to meet disaster. The research fi ndings can only be useful if they are properly transferred to the farmer’s fi eld. The available extension services are poorly equipped, funded and managed.

Improved inputs being available at the farmer’s fi eld at the right time and price is a primary requirement to boost the production and yield of crops. In this connection seed and fertiliser are the basic and crucial inputs. Unfortunately, overtime their availability to farmers has decreased and prices have surged, which reduces their use affecting production and profi tability of crops (Table 2.4). Research and extension are the only effective and effi cient ways to boost the yield as well as to reduce the cost of production.

The recent increase in the price of DAP fertiliser will affect its use further. The recommended proportion of Nitrogen and Phosphate fertiliser intake is 2:1, which is not practiced in the country. The proportional consumption of these fertilisers has varied a lot even going up to 4.7:1 though it became better during 2006–07 (Table 2.5). However, recent steep increase in the price of DAP fertiliser, combined with inadequate extension services, is likely to substantially decrease its use affecting production and profi tability.

High and Volatile Food Prices

Starting around the second half of 2007 and continuing through 2008, the commodity markets have seen a steady and steep upward trend in prices. The unusually steep rise in the world commodity prices is subject of much discussion. Many reasons

Tabl

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4 Di

strib

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Impr

oved

See

d in

the

Coun

try (T

hous

and

Tons

)

Cro

ps19

98–9

919

99–2

000

2000

–01

2001

–02

2002

–03

2003

–04

2004

–05

2005

–06

2006

–07

2007

–08

Whe

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4.21

106.

3715

9.22

143.

2512

9.41

135.

5117

1.20

168.

1216

3.46

204.

25Pa

dd

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283.

812.

274.

864.

497.

559.

7212

.52

11.9

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Mai

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512.

842.

402.

964.

505.

185.

959.

069.

259.

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33.4

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.46

39.8

731

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28.3

928

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34.1

731

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29.8

7G

ram

0.35

0.19

0.25

0.31

1.51

1.34

0.57

0.41

0.38

0.26

Oil

Seed

s0.

110.

150.

200.

320.

990.

801.

781.

791.

821.

65G

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Tot

al13

4.48

146.

7619

3.80

191.

5717

2.02

178.

7721

8.12

226.

0721

8.60

264.

67

Sour

ce:

Gov

ernm

ent o

f Pak

ista

n (2

009)

.

Tabl

e 2.

5 Co

nsum

ptio

n of

Fer

tilis

ers,

Qua

ntity

Sol

d, P

erce

ntag

e Ch

ange

Ove

r Pre

viou

s Ye

ar a

nd N

.P. R

atio

inPa

kist

an (I

n Th

ousa

nd N

/Ton

nes)

Year

Nit

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n%

Cha

nge

Pho

spha

te%

Cha

nge

Pot

ash

% C

hang

eTo

tal

% C

hang

eN

.P. R

atio

1990

–91

1471

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) 0.3

388.

5(+

) 1.6

32.8

(–) 1

8.2

1892

.9(+

) 0.1

3

.8:1

1991

–92

1462

.6(–

) 0.6

398.

0(+

) 2.4

23.3

(–) 2

9.0

1883

.9(–

) 0.5

3

.7:1

1992

–93

1635

.3(+

) 11.

848

8.2

(+) 2

2.7

24.1

(+) 3

.4

2147

.6(+

) 14.

0 3

.4:1

1993

–94

1659

.4(+

) 1.5

464.

2(–

) 4.9

23.2

(–) 3

.7

2146

.8(–

) 0.1

3

.6:1

1994

–95

1738

.1(+

) 4.7

428.

4(–

) 7.7

16.6

(–) 2

8.4

2183

.1(+

) 1.7

4.1

:119

95–9

619

90.9

(+) 1

4.5

494.

4(+

) 15.

429

.7(+

) 78.

9 25

15.0

(+) 1

5.2

4.0

:119

96–9

719

85.1

(–) 0

.341

9.5

(–) 1

5.1

8.4

(–) 7

1.7

2413

.0(–

) 4.1

4.7

:119

97–9

820

75.0

(+) 4

.555

1.0

(+) 3

1.5

20.0

(+) 1

50.0

26

46.0

(+) 9

.7 3

.8:1

1998

–99

2099

.0(+

) 1.2

465.

0(–

) 15.

621

.0(+

) 5.0

25

85.0

(–) 2

.3 4

.5:1

1999

–200

022

17.0

(+) 5

.659

6.0

(+) 2

8.2

18.5

(–) 1

3.1

2831

.5(+

) 9.5

3.7

:120

00–0

122

64.5

(+) 2

.167

6.7

(+) 1

3.5

22.8

(+) 2

3.2

2964

.0(+

) 4.6

3.4

:120

01–0

222

85.3

(+) 0

.962

4.5

(–) 2

7.6

18.8

(–) 1

8.0

2928

.6(–

) 1.2

3.7

:120

02–0

323

49.1

(+) 2

.865

0.2

(+) 4

.120

.5(+

) 9.2

30

19.8

(+) 3

.1 3

.6:1

2003

–04

2526

.7(+

) 7.6

673.

5(+

) 3.6

21.8

(+) 6

.332

22.0

(+) 6

.73.

8:1

2004

–05

2796

.4(+

) 10.

786

5.1

(+) 2

8.5

32.5

(+) 4

9.2

3694

.0(+

) 14.

73.

2:1

2005

–06

2926

.6(+

) 4.7

850.

5(–

) 1.7

27.0

(–) 1

6.9

3804

.1(+

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3.4:

120

06–0

726

49.7

(–) 9

.597

8.7

(+) 1

5.1

43.1

(+) 5

9.6

3671

.5(–

) 3.5

2.7:

1

Sour

ce:

Nat

iona

l Fer

tilis

er D

evel

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entr

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FDC

), Is

lam

abad

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ote:

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may

be

due

to th

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have been offered among which the rise in oil prices, diversion of corn and cropland for the production of biofuels, especially in the US and Brazil, and an increased consumption of cereals and meat in China and India have topped the media list. Among other causes, the indirect effects of oil price rise on fertilisersand transport, falling world food stockpiles (at their lowest for25 years), local hoarding, increase in political instability, sub-prime mortgage crisis in the US, use of productive agricultural land for urbanisation, hurricanes, animal diseases and even climate change have all been mentioned. In the words of FAO (2006, 1),

Amid political uncertainties and surging energy prices, agricul-tural markets over the past year have also had to confront abnormal incidences of natural disasters, ranging from devastating hurricanes to fast spreading animal diseases. Based on current indications, sev-eral agricultural commodities are likely to experience still more unstable months ahead and, in most instances, the fundamentals point to even further gains in prices.

Interestingly, while ill-advised exports and cross-border smuggling have been considered a prime cause for the rise in food prices in Pakistan, United Nations (UN) agencies on the other hand have called for further freedom of movement and lifting of restrictions on cross-border movement of food to ease the crisis of shortages and price rise.

Perhaps the most important factor responsible for food price rise, speculation and future trading in commodities including oil, has found the least mention in the international media. Irre-spective of where, speculation is taking place and food is being used to produce biofuels, the effects are being felt universallyunder the new globalised regime. It is diffi cult to imagine how Third-World countries like Pakistan can ensure food security for their people without questioning and reconsidering the new world order of globalisation, which they have so enthusi-astically welcomed and adopted under advice of WTO and other multilateral agencies.

Biofuels are a new phenomenon and need further comment. According to a recent report in the New Statesman:

What biofuels do is undeniable: they take food out of the mouths of starving people and divert them to be burned as fuel in the car


engines of the world’s rich consumers. This is in the words of the UN special rapporteur on the right to food, Jean Ziegler, nothing less than a ‘crime against humanity’ […] According to the World Bank, global maize production increased by 51m tonnes between 2004and 2007. During this time, biofuels use in the US alone (mostly ethanol) rose by 50m tonnes, soaking up almost the entire global increase […] The EU, meanwhile, persists in the erroneous belief that biofuels can help reduce greenhouse-gas emissions […] Yet recent research suggests otherwise: two major studies published in Science magazine in February showed clearly that once the agricultural displacement effects of the new fuels on rainforests, peatlands and grasslands are taken into account, emissions are many times worse than from conventional mineral petrol (Lynas 2008).

Food Security

High food prices have profound impacts on both the consumers as well as producers of the country. Food security refers to the availability of food and one’s access to it. A household is considered food secure when its occupants do not live in hunger or fear of starvation. Food security in Pakistan is a serious challenge and it remains a real one notwithstanding the growth in agriculture production since it depends both on availability of food as well as its accessibility and affordability. Over time, the continuing increase in population absorbs the food growth and over thelast 10 years the per capita availability of wheat, rice and cereal (kg/annum) has decreased (Table 2.6). The public sector food and fi bre storage capacities have not increased. The wheat storage capacity during 1995 was 4,596,000 tons, which increased up to 1,840,000 tons 1999 but since then has decreased and was 4,339,000 tons during 2001 and remained constant up to 2006. The situation with respect to rice and cotton has also shown a decreasing trend (Table 2.7).

Implications of Globalisation-driven Policies on Agriculture, Food Security and Well-being of People

It is mandatory for all signatory members of WTO to comply with its policies. Pakistan being not only a signatory but also one of its founder members, has to follow all the rules and regulation of WTO. This has brought a lot of opportunities and challenges.

Tabl

e 2.

6 Pe

r Cap

ita A

vaila

bilit

y of

Whe

at, R

ice

and

Cere

als

(kg/

annu

m)

Cro

p19

97–9

819

98–9

919

99–2

000

2000

–01

2001

–02

2002

–03

2003

–04

2004

–05

2005

–06

2006

–07

2007

–08

(P)

Whe

at14

0.17

140.

9213

1.48

113.

7911

4.92

119.

2311

9.31

122.

8511

9.9

119.

6112

1.35

Ric

e14

.98

19.3

220

.72

15.9

114

.03

17.2

118

.23

12.9

615

.08

12.9

013

.38

Cer

eal

5.92

7.01

6.63

6.81

6.58

5.94

6.25

6.77

8.18

6.86

7.94

Ed

ible

Oil

–12

.38

11.0

811

.48

10.6

710

.77

11.1

612

.35

12.7

512

.93

12.6

2

Sour

ce:

Gov

ernm

ent o

f Pak

ista

n (2

009)

.

Tabl

e 2.

7 Go

vern

men

t Sto

rage

Cap

acity

(Tho

usan

d To

ns)

Cro

p19

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

08

Whe

at45

9647

7747

7747

8047

8045

8043

3943

3943

3943

3943

3943

3943

3943

39R

ice

831

789

789

789

789

––

826

826

826

826

826

826

826

Cot

ton

550

520

500

500

500

––

450

450

450

450

450

450

450

Sour

ce:

1. G

over

nmen

t of P

akis

tan

(200

6a).


The problem is with the competition. The countries that produce competitive and quality products will fi ll the world markets, replacing the sub-standard imported stuff and as a result the Pakistani producers will suffer, especially the poor, small peasants. Pakistan is supposed to benefi t from international trade, but the conditions and the reality on the ground are quite different from the presumptions. Pakistan’s comparative advantage lies in its low cost of production achieved mainly through poverty. But poverty acts as brakes on productivity. At its current level of de-velopment Pakistan’s agricultural economy is neither prepared to face the challenges nor able to avail of the opportunities offered by globalisation. The consequences of trade liberalisation in Pakistan have been widely discussed since the mid-1990s (Goldin and Mensbrugghe 1995; Ingco and Winters 1995; Kemal et al. 2001; Khan and Mahmood 1996; Low 1995; Malik 2006; Mustafa et al., 2001; Mustafa and Qudus 2008; PIDE 1995). It has not only affected the economy but has also been one of the major causes of confl icts in Pakistan.

Pakistan has already fulfi lled all requirements of the WTO agreements. This includes reduction of tariff rate and subsidies. Even the AMS in the case of Pakistan was negative. The com-pulsory WTO enforcements have refl ected negatively on the pro-duction of agriculture in general but the new economic doctrinehas continued to consider the government-sponsored inter-ventions as factors that distort market and has banned them. Whereas, any effects on the farmers in the developed and indus-trialised countries were offset by increases in direct income sup-port programmes. These programmes, which are not designed to affect production, fall under green box measures and AMS, and therefore, are not considered as market distorting factors by the WTO. The AMS is an important area where developing countries can support their subsistence farmers but due to fi nancial prob-lem, this facility is not utilised.

In Pakistan, the negative impact of globalisation is becoming evident on both the urban as well as the rural segments of popu-lation. The farming as well as general communities are worse off because the reforms have adversely affected agricultural pro-duction, food security, and also increased poverty in the countryside. The large farmer might be better off but poor farmers and non-farming communities in rural areas have been badly affected.


Although, the agricultural product prices were increased over time but simultaneously the input prices have increased at a faster rate than the commodity prices. The farmers are getting less net profi t. The effect is more sever on the poorer segments of the farming community. They are unable to harness even the price increase benefi ts because they do not have enough savings tostore the crop and wait till the prices rise. Agriculture has become more capital- and technology-intensive. The poor farmers are lacking in these. The government support is inadequate. All agricultural-supporting institutes are not playing their role suffi ciently. Agricultural research and extension services are much behind the pace of development. Credit and timely input delivery is poor. The poor farmers have a number of liabilities which they have to pay off just after harvesting their crop and are forced to sell their harvest at even lower prices than the government-announced procurement prices. In case of the urban poor, the prices of cereals as well as other agricultural products have increased due to the reduction of subsidies in developed countries. Stagfl ation in the country has further enhanced their suffering.

The SPS measures of WTO specify that countries should base their technical regulations and SPS measures on international standards or face international trade barriers. Outbreaks of food-borne diseases have created pressures for the need of these rules and regulations. Pakistani products have been subjected to formal bans, e.g., meat to the Middle East, animal casing to Romania, oranges to Sri Lanka, mangoes to USA, Japan and so on. Recently, the Government implemented a voluntary export suspension of fi sh products to the European Union (EU) countries, to give the industry a ‘breathing space’ to attain the SPS standards required. Pakistan was subject to 26 EU food alerts indicating that there were real concerns related to some food exports during 2004–05 (The World Bank 2006). This is the area that the country needs to concentrate upon. There are a lot of products where Pakistanhas comparative advantages in production, i.e., rice, oranges, dates, spices, medicinal products, etc. Besides, a number of pro-ducts are produced under organic farming which can be exported for substantial foreign exchange.

Pakistan as well as other underdeveloped countries are facing serious problems due to poor infrastructure which results in


subsequent problems for the agricultural producers in the poor and far-fl ung areas. Given the deplorable state of rural infrastructure in low-income countries in general, and in the poor and far fl ung areas in particular, massive investments are also needed in other economic risk-reduction services such as insurance, irrigation and storage. Lack of such investment gradually shifts the com-parative advantage back towards subsistence production at very low-income and little multiplier to the rural non-farm sector. Over time, the government’s spending on agriculture has been decreasing although in recent years there has been some increase in its share. Winters (2000, 16) notes that ‘the transaction costs of trade with remote villages are often so great that it can be cheaper for grain mills to buy from distant commercial growers than from small farmers located in the region’. Improved infrastructurealso lowers the fi nal cost of imported inputs in the producing areas. There is, thus, need for investment but this need is being used to build a case for corporate or participatory farming specially to benefi t small farming communities.

Participatory or co-operative farming is a good option for pov-erty eradication and the development of the small peasant but the implications of multinational corporate farming on poor farming community and its socio-economic and political issues, however, are complicated and serious. These corporations will profi teer and create monopolies, driving the small farmer out of farming. This in turn will have serious repercussions for the food security, poverty and sovereignty of the country. After signing of MTA and creating of the WTO, the prospects of trade warfare and the threat of protection will not just fade away. The conditions of perfect competition are just not there. The developed and industrial countries are not opening their economy fully and are protecting themselves through the safeguards, anti-dumping,and countervailing measures (Abidin 1994; Naqvi 1994; Streeten 1998). Globalisation and economic integration have many other adverse effects too. The gains from globalisations are not likely tobe evenly distributed, either within or between countries (FAO 2000). Wealth in some countries is combining with growing disparity between the rich and the poor (Petrovic et al. 2007). Today 1.2 billion people in the world live in extreme poverty (Dokmanovic 2003; ILO 1998). Unemployment, poverty, inequality and alienation are increasing, partly (though not solely) as a


result of the globalisation process (Rodrik 1997; ILO 2005). Global economic growth is increasingly failing to translate into new and better jobs that could lead to reduction in poverty(ILO 2005). Poverty in Pakistan has shown an increasing trend in all international measurements from 1990 to 2001 (Arif 2001; Arif et al. 2000; Mustafa 2000). However, according to the Govern-ment of Pakistan (2006a) between 2001 and 2005 the percentage of population living below poverty line fell from 34.46 per cent to 23.9 per cent, a claim now widely contested and believed to be largely a statistical manipulation. The poverty situation during 2009 was alarming mainly due to the increasing food prices and continued stagfl ation in the country. The double digit increase in electricity prices coupled with a load-shedding of four to six hours daily during 2010 will further crippled the situation.

With the emergence of globalisation and the WTO regime, the role of agriculture has been further enhanced as its protection through tariff and subsidies has been eliminated, and coupledwith the use of biofuel has reduced the world cereal production which has increased its prices. All these have serious conseq-uences on food security and the well-being of poor people. Unfortunately, however, most Third World countries, including Pakistan, have lost the initiative in controlling their national policies or to criticise the globalisation mantras of liberalisation, deregulation and privatisation. Paradoxically, today it is the US and UK themselves, the biggest champions of globalisation, who have now nationalised or quasi-nationalised some of their biggest investment banks and insurance companies and are calling for the need for regulation of the international fi nancial markets to save their own economies from a total meltdown The US House has okayed and the president has signed a mammoth economic rescue (USD 700 billion bailout bill, the Emergency Economic Stabilization Act of 2008) package aimed at saving the troubled US banks and easing a credit crunch. This will give unprecedented and unbelievable authority to the Treasury (Blake 2008; Davis 2008).

Similarly, most of the developed countries are coming forward to support and protect their economies from world fi nancial crises. The economies of the developing countries are still based on agriculture. It is worthwhile to notice that after 25 years, the World Development Report of the World Bank again focused on agriculture. Although, things have changed a lot during these


years, however, what has not changed is the central role that agriculture can play in triggering growth and in reducing world poverty, which is still overwhelmingly rural and will be so for the decades to come (World Bank 2008). So, there is lot of scope to harvest the benefi ts of globalisation by boosting agricultural productivities. Countries having comparative advantages in pro-ducing certain agricultural crops can earn substantial amountsof foreign exchange by exporting them. There is a lot of scope for the export of fruits, spices, medicinal plants, organic products, etc., to developed countries.

Pakistan has comparative advantages in the production and export of these crops but there is a big yield gap among sub-sistence farmers, progressive farmers, demonstration plots and research farm fi elds, which shows that there is a lot of room to increase productivity. For this, an adequate overall agricultural de-velopment strategy, profi cient price policy, timely and affordable inputs supplies, demand based R&D along with effective and effi cient credit and extension services are essentially required.

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Globalisation and Its Impact on Agriculture, Food Security and Well-being of People in Pakistan

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