In the late 1960s and the 1970s, the Green Revolution in Pakistan increased agricultural production by introducing hybrid seeds, chemical fertilizers, and pesticides. In the 1980s and the 1990s, further gains were made through the extension of the cultivable land area, mainly due to the expansion of irrigation facilities and intensive use of farm inputs (Kirby et al., 2017). Increased agricultural production has paved the way for the country to overcome food shortages and supply raw materials. However, new evidence of a slowdown in crop yield and productivity indicates that the period of high growth in Pakistani agriculture has ended.
The official data reported in the Pakistan Economic Survey 2020-21 shows that the annual growth rates of wheat, rice, and cotton yield per hectare have declined since 2000 (GoP, 2021). Empirical evidence on agricultural Total Factor Productivity (TFP) growth in Pakistan also suggests that it has declined over the past two decades. For instance, Fuglie et al. (2012) estimated Pakistan’s TFP growth per annum as 3.21% for 1984–1990, 1.19% for 1991 – 2000, and only 0.59% for 2001–2009. Siddique (2020) estimated the TFP growth rate for the 1980s as 1.14% per annum, 0.90% in the 1990s, –0.7% in the 2000s, and 1.66% in the 2010s. All these studies merged data from the crop and livestock sectors, which makes it difficult to draw conclusions about productivity trends in crop agriculture alone.
In two background papers to the World Bank’s Pakistan Country Economic Memorandum (World Bank Group, 2022), we provide new evidence on the productivity trends in Pakistan’s crop agriculture and the sensitivity of crop yields and productivity to climate change (Burki et al., 2022a, Burki et al., 2022b).
Crop agricultural productivity and sensitivity to climate change
Based on data from 1993 to 2019, Burki et al. (2022a) showed that TFP in Pakistan declined at an average annual rate of –1.15%, mostly due to failure to improve existing technologies, deterioration in farm management practices, and diseconomies of both scale and scope. These results conceal the TFP growth patterns in the four provinces. TFP in Punjab Province grew at an annual average of 0.44% (far slower than TFP growth in earlier decades), which can be attributed to growth in the uptake of technology (at 2% per annum) and diseconomies of scale and scope (at − 1.4% per annum). TFP growth in Sindh was 0.59% per year, largely because of the combined effects of growth in the uptake of technology (0.88% per annum) and a decline due to diseconomies of scale and scope (–0.33% per annum). However, two smaller provinces, Khyber Pakhtunkhwa (KPK) and Balochistan, witnessed large TFP declines at average annual rates of –1.1% and –4.6%, respectively, mainly because of the large technological regress (at –1.26% per year in KPK and –4.51% per year in Balochistan).
This was corroborated by farm-level data from wheat, rice, sugarcane, and cotton farms in Punjab. For example, Burki et al. (2022b) investigated the impact of spatial variations in extreme weather patterns on crop yield and TFP in the Punjab Province of Pakistan. Evidence of recent trends shows that, on average, the farm level TFP of wheat, rice, sugarcane, and cotton farms in Punjab declined over the period 2013 – 2020 at average annual rates of 4%, 2%, 3.2%, and 4.6%, respectively. The least productive small (<5 acres) and medium (5 – 12.5 acres) farms hold a large share of gross output as they account for 60% of the total cultivated area in Punjab, which contributed to a decline or slowdown in the aggregate TFP of the four crops. Measuring farm size by landholding, the average TFP of large wheat, rice, sugarcane, and cotton farms was at least 9-times higher than that of small farms, and at least 4-times higher than that of medium farms. These results imply that TFP can be significantly increased by adopting policy measures that help raise the TFP of small and medium farms and by moving away a higher share of production from small and medium farms towards large ones.
Based on the phenology of wheat, rice, sugarcane, and cotton crops, the TFP and yield of these crops are highly susceptible to elevated temperatures and variations in rainfall during the growing seasons (Burki et al., 2022b). Wheat crop is adversely affected by elevated temperatures during milk maturity and maturity growth phases (i.e., the last 27 days of the crop cycle). A one standard deviation (1-SD) increase in the sum of temperatures above 25°C in this phase is projected to lower TFP by 34% and per acre yield by 25%, which amounts to a reduction in wheat yield by 320 kg per acre or 8 maunds. Similarly, the sensitivity of rice crops to higher temperatures peaks in the reproductive phase, and to higher rainfall in the vegetative and reproductive phases. Likewise, sugarcane crops are impaired by extreme temperatures during the germination phase, whereas cotton crops suffer the most damage because of higher rainfall during the emergence and leafing stages and extreme temperatures during the leafing stage. In the future, extreme weather events are expected to occur with a greater frequency and severity in both temperate and tropical regions. With the extreme weather expected in this region, all major and minor crops are extremely vulnerable to climate change.
How can productivity be enhanced – the way forward?
Technology and innovation are major long-term drivers of agricultural productivity growth in Pakistan and there is ample room for improvement. Over the last two decades, the production possibility frontier has expanded slowly in Punjab, has not expanded in Sindh, and contracted in KPK and Balochistan. This clearly suggests the need to make public and private investments in agricultural research and development (R&D), which can lead to the development of relevant cultivars, new high-yielding cereal and non-cereal seed varieties, development and upgrading of agricultural machinery, and farm management practices. R&D can also help to improve the quality and provision of high-quality seeds. Introducing effective controls on the marketing of substandard seeds in the unorganized sector (informal seed market) can also contribute to more productive agricultural activity.
Empirical evidence shows that increased capital deepening through agricultural mechanization improves TFP by increasing the economies of scale and scope. Hence, policies that increase private investment to raise the stock and quality of agricultural machinery can become effective levers for increasing TFP in the crop agriculture sector. The development of new technologies and innovations can increase the efficiency and productivity, reduce costs, and improve the quality of agricultural production.
More measures include long-term investments in education, training, and alignment of crop extension services to accelerate the distribution of technology to lagging areas so that farmers can adopt new agricultural practices and technologies to improve the technical efficiency of farming operations.
An analysis of the sources of TFP and efficiency reveals that crop specialization is a dominant source of productivity growth. Districts producing a large share of value-added crops have the highest TFP and technical efficiency elasticity, indicating that specialization, considering comparative advantage, can pay the highest dividends.
Policies that increase private investment to raise the stock and quality of agricultural machinery can become effective levers for increasing Total Factor Productivity (TFP) in the crop agriculture sector.
Government policies such as subsidies, trade policies, and price controls, especially wheat support prices, directly affect crop production and producer prices. Low expected returns to growers lead to changes in the scale and input mix, leading to lower economies of scale and scope, which impact long-term growth in TFP. A move towards gradual liberalization of the product market can pay dividends in the form of long-term TFP growth.
Provision of adequate infrastructure, such as transportation networks, storage facilities, and irrigation systems, can enhance long-term growth in TFP and efficiency, and reduce post-harvest losses. Investment in road and transportation systems and storage facilities can provide greater access to local and international markets at higher producer prices, which in turn can raise TFP by improving economies of scale and scope. Moreover, the availability of irrigation water at affordable prices is a critical factor in crop agriculture, and policy reforms aimed at effective water management, water-use efficiency, and water scarcity considering climate change are urgently needed.
Large variations in production frontiers can also be partly attributed to climate change-related variations in yield, which warrant adaptation to mitigate the impacts of climate change. Policymakers may want to adopt practical steps to persuade farmers to adapt to climate change These can include recommendations to change schedules of sowing and harvesting in the light of late arrival of winter season, developing new cultivars that are resistant to high temperatures, introduction of early harvesting shorter duration varieties that are suitable to grow in vulnerable districts.
Biotechnology can be used to improve plant traits including water-use efficiency, heat tolerance, and frost resistance. To maximize gains, these technologies can be secured in developed countries, made economically accessible, and widely disseminated. Finally, new private sector research on genetically modified technology can help provide high-temperature-tolerant seeds for major crops, although issues pertaining to intellectual property rights and fair returns to private investors can hinder their best use. Therefore, public intervention may be required to adopt corrective measures in the case of market failure.
The writer is an adjunct Professor of Economics at LUMS CNM Department of Economics, where he was a regular faculty member from 2002 to 2021, most recently as a Professor of Economics.
