Theme/Relevant Ministry:

AGRICULTURE POLICY/ COTTON:
M/o Food Security; PARC/NARC; Agricultural Departments Punjab, Sindh and Balochistan

Project Brief:

Pakistan having an agro-based economy relies on agriculture sector for the provision of raw material. The cotton crop not only shares 0.6 percent to gross domestic product but also contributes 70% to export earnings of the country. Yet, during last two decades’ cotton area and production in the country is under decline. Therefore, current study has adopted a holistic approach to evaluate the economic benefits, competitiveness of cotton and its competitive crops under current set of policies. Similarly, it has examined the various factors that contribute towards lower profitability of cotton crop and have led to decrease in cotton area. For the purpose, data is collected from 856 farmers of six districts of three provinces (Punjab, Sindh and Balochistan) of Pakistan. The results show that cotton crop adds more money to rural communities as compared to other competing crops and it also generates more revenues per cubic meter of water usage in the country. Policy Analysis Matrix is employed to evaluate the impact of set of agricultural policies on cotton production. We have observed that cotton producers across Pakistan are implicitly taxed, while sugarcane and rice producers are protected under current set of policies. The estimates of ordered probit model shows that lack of access to extension services, weather information, pest resistant varieties and quality seed are important factors that have discouraged farmers to grow cotton. While to enhance cotton by up to 4 acres on average, farmers have shown their willingness to pay additional amount for quality pesticides, seed and access to weather information. The study suggests that challenges to cotton production can be minimized by enhancing accessibility to weather information, extension services, premium quality seed and effective pesticides. Furthermore, price stability and availability of modern technologies to overcome labour constraints can significantly contribute towards cotton production. Similarly, exploring and converging on new potential areas for cotton production especially in Balochistan, can enhance the overall cotton area and production in the country.

Public Policy Relevance:

This research develops the Policy Analysis Matrix (PAM) to estimate the effect of agricultural policies on production systems and farmers’ decisions in Punjab, Sindh & Balochistan provinces.

Status:
In progress 90%

Unedited Working Paper and Policy Brief prepared for the Second RASTA Conference can be downloaded from the link: https://pide.org.pk/rasta/2nd-rasta-conference/