Increasing Agricultural Productivity in Pakistan-Use of Improved Seeds - Ahsan - 2014

INCREASING AGRICULTURAL PRODUCTIVITY IN PAKISTAN: USE OF IMPROVED SEEDS INTRODUCTION Agriculture is the backbone of Pakistan’s economy. It contributes 21% to the Gross Domestic Product (GDP) and employs 45% of the total labour force (Ministry of Finance 2011). Agricultural commodities account for 13.6% of exports (ibid)1. Approximately 60% of the population lives in rural areas and is directly or indirectly dependent on agriculture for its economic sustenance. It has backward and forward linkages with the manufacturing sector, which thrives on agricultural raw materials and an effective demand for goods and services. Out of about 5,000 industrial units in Pakistan, about 60% are agro-based (Pakistan Bureau of Statistics 2011). Any investment in improving agricultural productivity and distributing its benefits more widely is likely to contribute positively to the national economy and social wellbeing - more so for the poorer segments of society, which are disproportionately located in rural areas (World Bank 2007). Unfortunately, however, agricultural development has not been accorded the priority it deserves during the last six decades. An indication of this is the relatively small effort that has gone into understanding the numerous issues and challenges that constrain progress in this area.

1

This does not include agro-based value added commodities (e.g. textiles).

This note was written by of Dr Muhammad Ahsan Rana at the Lahore University of Management Sciences to serve as basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. This material may not be quoted, photocopied or reproduced in any form without the prior written consent of the Lahore University of Management Sciences. This research was made possible through support provided by the United States Agency for International Development. The opinions expressed herein are those of the author(s) and do not necessarily reflect the views of the US Agency for International Development or the US Government.

© 2014 Suleman Dawood School of Business, Lahore University of Management Sciences

13-102-2014-2 This paper is part of an effort to fill this gap. It aims to inform policy debate in key areas based on publicly available secondary data. With agriculture being a very large, diverse and complex sector, it is neither possible nor desirable to comprehensively examine numerous aspects of agricultural development in one paper. Instead, this paper focuses on one aspect i.e. using improved seeds to increase productivity per unit of land. Three components of the agricultural production system are central to productivity enhancement based on usage of improved seeds. These are: 1) development of new crop varieties 2) seed provision system and 3) extension services. These above mentioned components are internally linked. Continuous supply of new crop varieties is critical for productivity enhancement, as it not only enables farmers to fully harness the potential of their labour but also helps them cope with changing biotic and abiotic stresses in the field. Pakistan has an elaborate agricultural research and development (R&D) system for development of new crop varieties. Once a new crop variety has been developed, its seed is produced and marketed through a network of seed producers and dealers. Information on how to cultivate seeds and use various inputs efficiently to harness the full potential of new seeds is passed on from R&D organisations and seed producers to farmers through a network of extension service providers in public and private sectors. Harmonious working of these three components of the agricultural production system is integral to any meaningful effort to improve agricultural productivity in Pakistan per unit of land and other inputs. This paper is divided into six sections. Section 2 provides basic data on land use and ownership, technology use and crop production in Pakistan. This provides the context for informed policy discussion in the other sections. Section 3 provides an overview of the existing agricultural R&D system in Pakistan and examines the organisation of research at federal as well as provincial levels to understand current research priorities and capacity. An important aspect here is that of intellectual property rights (IPRs), which are emerging as the key driver of promoting or inhibiting investment in research. In coming decades, these will affect how research is carried out and commercialised by public and private sector agricultural research systems. The seed provision system for various crops, including the legal and institutional infrastructure for regulating seed quality, is broadly examined in Section 4. Since genetically modified (GM) Bt cotton seeds are now widely used in Pakistan, some background information on Bt cotton is also provided to inform the regulatory process and policy oversight on its cultivation. Section 5 briefly discusses the extension provision and argues that both public and private extension systems are inadequate and exclusionary, as -2-

13-102-2014-2 they target a group of elite farmers for providing advice on a small set of agricultural problems. Section 6 concludes the paper. OVERVIEW OF THE AGRICULTURE SECTOR Land Utilisation Pakistan has a total area of 196.6 million acres, of which 142.7 million acres are potentially available for cultivation – the rest being deserts, mountains and rivers. Only 54.4 million acres are actually cultivated – 17.6 million acres are cultivated more than once in a year (Ministry of Finance 2012). Land utilisation statistics given below (Table 1) show that cultivable waste is only 20.5 million acres. Potentially, this area can be brought under cultivation after land development and appropriate irrigation. Practically, however, there is limited scope for expanding area under cultivation since water is scarce and much of cultivable waste comprises marginal lands. Hence, any increase in production will have to come from productivity increase, rather than increase in cultivated area. Table 1 Land Utilisation Statistics 2012-13 (million acres) Total

Forest

Not

Cultivable

reported

area

available

waste

area

10.5

57.2

Sown more than

for

once

cultivation 142.7

Cultivated area

Fallow 20.5

16.6

Sown 37.8

Total 54.4

17.6

Source: Ministry of Finance. Pakistan Economic Survey. Islamabad: Ministry of Finance, Government of Pakistan, 2012.

Subsectors and their Contribution to GDP Agriculture sector comprises four sub-sectors, viz. livestock, major and minor crops, forestry and fisheries. Their respective contribution to agricultural GDP is given in Figure 1. Livestock contributes the largest share in agricultural GDP (55.3%), followed by major and -3-

13-102-2014-2 minor crops (28.8% and 12% respectively). Wheat, cotton, rice and sugarcane are the most important in the major crops sub-sector and together account for on average 91% contribution to agricultural GDP in this sub-sector (Ministry of Finance 2011). Forestry and fisheries contribute only 2% each to agricultural GDP (ibid). Figure 1 Contribution to agricultural GDP (2010-11) Fisheri es 2%

Forestr y 2% Minor crops 12%

Livesto ck 55%

Major crops 29%

Source: Ministry of Finance. Pakistan Economic Survey. Islamabad: Ministry of Finance, Government of Pakistan, 2011.

Land Ownership Pakistan has skewed land ownership, which shapes and constrains its agricultural potential in several ways. The land ownership is askew at both ends; on one hand, there are very large landholdings and on the other, a large number of very small landholdings. Around 4% of large landowning households (25 acres and above) own 41% of the total farm area, whereas 17% households own less than 1 acre (Table 2)2. If the entire farm area is equitably distributed among farming households, every household would own 6.5 acres of farmland.

2

There is substantial inter-provincial variation in land ownership. Balochistan and Sindh have greater concentration than Punjab and Khyber Pakhtunkhaw (KPK). In Balochistan, for example, 17% households own more than 25 acres (81% of total farmland in the province), whereas in KPK, only 1% farmers own more than 25 acres (accounting for 28% area).

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13-102-2014-2 Table 2 Land Ownership Private farms

Owners Number

Percent

Area Owned Acres

Percent

Under 1 acre

1426188

17

593480

1

1 – 5 acre

4172525

50

9584844

17

5 – 12.5 acre

1917387

23

14176615

25

12.5 – 25 acre

510682

6

8545537

15

25 – 50 acre

215240

3

6837696

12

50 – 100 acre

76816

1

4770064

9

Above 100 acre

36934

*

11090040

20

Total

8,355,772

100

55,598,276

100

*Less than 1% Source: Pakistan Bureau of Statistics. Agricultural Census of Pakistan. Government Report, Islamabad: Bureau of Statistics. Government of Pakistan, 2010.

Two land reforms were carried out in 1959 and 1972 respectively. These reforms set upper limits on the land that a household could own. However, due to numerous exemptions and poor implementation, most large landowners were able to keep their landholdings intact in one form or the other. Since then, there has been substantial fragmentation of land due to inheritance; yet land ownership remains concentrated in Pakistan. This presents challenges as well as opportunities for agricultural growth. On one hand, skewed land ownership means agricultural production and dividends therefrom are disproportionately consumed by a smaller proportion of landowning households. Moreover, very small farms are inefficient as they offer poor returns on labour and limited opportunity for use of capital. A more equitable distribution of land will, therefore, produce a better distribution of wealth in the agriculture sector as well as improve productivity per unit of land by encouraging farmers to intensify their family labour. On the other hand, large landowners are more likely to command the resources to improve farm infrastructure and to use modern farming inputs. Their capacity to intensify use of capital can improve productivity and overall production. In other words, in terms of -5-

13-102-2014-2 improved productivity, what a small landholder dominated farming system can achieve through labour intensification, a large landholder dominated system can achieve through capital intensification. Thus, while there is a strong social case for land reforms in Pakistan, the economic argument for the same is less clear. Farm Mechanisation and Irrigation Use of agricultural machinery is common across all farm sizes. For example, tractors are used on 77% of all farms; on another 20%, tractors as well as draught animals are used; draught animals are used for ploughing only on 4% of the farms. Some variation notwithstanding, the pattern holds true across farm sizes. However, there are important interprovincial differences in tractor usage (Figure 2). These differences arise from the particular terrain and the landholding size in these provinces. For example, KPK’s mountainous landscape produces terracing in several areas, which is more susceptible to cultivation by draught animals than by tractors. One method to promote mechanisation in these areas is to invest in development of smaller tractors that can be efficiently used on smaller plots and can easily move from one plot to another at a different level. Unfortunately, development of appropriate technology for small farmers has not received much official or private attention in Pakistan. Figure 2 Use of Tractors (%age of Farms) 90 80 70 60 50 40 30 20 10 0

Punjab KPK Pakistan

Sindh Balochistan

Tractor only Draught animals Tractor and only draught animals

Source: Pakistan Bureau of Statistics. Agricultural Census of Pakistan. Government Report, Islamabad: Bureau of Statistics. Government of Pakistan, 2010. -6-

13-102-2014-2 Figure 3 Modes of Irrigation Unspecifi Sailaba ed source 1% 1% Not Barani irrigted 19% 0% Karez only 0% Spring/Rod kohi only 2% Tank/Band at only 1%

Tubewell only 14%

Canal only 29% Canal and tubewell only 33%

Source: Pakistan Bureau of Statistics. Agricultural Census of Pakistan. Government Report, Islamabad: Bureau of Statistics. Government of Pakistan, 2010.

There is a large rental market for tractors. Rented tractors are used on 91% of farms. Use of other machinery – thresher, tube well, drill machine, spray pump, sheller, and harvester – is also common. Low-ticket items, such as drill and spray machine, are generally owned; others are available on per hour basis in the rental market. Pakistan has one of the largest irrigation networks in the world. This comprises canals that transport water from various rivers to farmers’ fields mainly in Punjab and Sindh, but also parts of KPK and Balochistan. 29% farm area is irrigated exclusively with canal water; another 33% area is irrigated with canal water and tube wells. Distribution of farms across various modes of irrigation is given in Figure 3. Production of Major Crops Pakistan has two major crop seasons – kharif and rabi. Kharif crops are sown in April-May and harvested in October-November. These include rice, cotton, sugarcane, maize, mung, mash, bajra and jowar. Rabi crops are sown in November-December and harvested in March-April. These include wheat, gram, lentil, tobacco, rapeseed, barley and mustard. Data in Table 3 and Figure 4 show strong scope for productivity increase in major crops, as -7-

13-102-2014-2 Pakistan’s production of these crops per unit of land is less than the world average. A brief discussion on major crops follows. Table 3 Production of major crops (2011-12)

Crop

Area (000 acres)

Production (000 ton)

Wheat

21,472

23,473

Rice

6,350

6,160

Maize

2,685

4,338

Sugarcane

2,613

58,397

Cotton (000 bales)

7,002

13,595

Source: Ministry of Finance.

Pakistan Economic Survey. Islamabad: Ministry of

Finance, Government of Pakistan, 2012.

Figure 4 Yield Gap 120 100

Pakistan China

India World average

80 60

40 20 0 Wheat

Rice

Cotton Sugarcane

Source: Ministry of Finance. Pakistan Economic Survey. Islamabad: Ministry of Finance, Government of Pakistan, 2009.

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13-102-2014-2 

Wheat is Pakistan’s staple food and ipso facto lies at the centre of several agro-food policy debates. It contributes 10.1 per cent to the value added in agriculture and about 2.2 per cent to GDP (Ministry of Finance 2012). Pakistan imports/exports small quantities of wheat to meet shortfalls or to dispose of surpluses from year to year. Wheat is the only crop for which the government still implements a support price. Until 2001, the government used to set support price for eight crops, viz. wheat, rice, sugarcane, cotton, non-traditional oilseeds (sunflower, soybean and canola), gram, onions and potatoes. As part of its market liberalisation policies, the government now sets support prices for only four crops, viz. wheat, rice, cotton and sugarcane. Of these, the government actively interferes only in the wheat market to ensure that the support price is implemented. The support price was increased to Rs. 1200 per maund in 2011-12, which prompted the farming community to allocate larger acreage to its cultivation and invest in inputs to increase production. The support price is set every year and is based on recommendations from the Agricultural Price Commission. Federal and provincial governments have elaborate organisational infrastructure to procure wheat at harvest time. Since support price is often set higher than the market price in April-June, effectively federal/provincial governments pay substantial subsidy when they procure large quantities of wheat at this price. As official procurement takes place immediately upon harvest, neither farmers nor grain merchants have developed significant storage capacity. Wheat stocks are released over the year to flour mills. Since issue price of wheat does not fully account for the government’s cost of wheat procurement and its storage, it represents another substantial subsidy in the wheat value chain. Provincial governments also set the flour price from time to time. Wheat support price is set ostensibly to safeguard small farmers from a potential market crash and flour price is set to protect poor urban and rural consumers. In both cases, the cost to provincial governments is substantial. Since this is a general rather than a targeted subsidy, only a portion of the subsidy is consumed by poor farmers and consumers. An appropriate targeting mechanism is required to ensure that the subsidy paid by the government as support to small wheat producers or as social protection to poor households is not consumed by large farmers or non-poor households.

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13-102-2014-2 

Rice is an important cash crop and export item for Pakistan. It accounts for 2.7 per cent of the value added in agriculture and 0.6 per cent in GDP (Ministry of Finance 2012). Pakistan grows two types of rice. Fine (Basmati) rice is grown on about 40% area and the coarse type is grown on 60% area3. Basmati is consumed locally as well as exported to the Gulf States, Europe and North America. Rice market is deregulated in Pakistan, as the government neither implements a floor price nor procures large quantities as strategic reserves. Export is also deregulated and takes place under market vicissitudes. Over the years, farmers, grain merchants and exporters have developed storage facilities of various kinds to keep the grain until it is consumed locally or exported. All this is in sharp contrast to wheat where the government plays an important role in stabilising the market.



Cotton production is critical to Pakistan’s economy. It is grown by more than 1.3 million farmers on about 7 million acres, mainly in the provinces of Punjab and Sindh4. It contributed 7% to the value added in agriculture and 1.5% to the overall GDP in 2011-12 (Ministry of Finance 2012). Its main consumer is the Pakistani textile industry, for which cotton lint is a key input in production of yarn, cloth, garments, apparel and other textile products. On its part, the textile sector in Pakistan accounts for about 8.5% of total GDP, over 60% of total export income, 46% of total manufacturing and 38% of the industrial labour (Ministry of Finance 2010). Pakistan is performing far below its potential in cotton production per unit of land. Slight year-to-year variations notwithstanding, Pakistan’s lint yield per acre is only 7 maunds, which is better than India5 but less than the world average and approximately half the level achieved by China, Turkey and Brazil. It may not be possible for Pakistan to increase its yield per acre beyond a certain point, because of its hot climate and water scarcity. The extreme temperatures in which cotton is grown in Pakistan constitute a serious constraint on production (Forrester 2009), more so as average temperatures rise further due to global warming. Similarly, cotton is a water-thirsty crop and requires regular irrigation to realise its full potential, but Pakistan is already a water deficient country and finds it increasingly difficult to meet its water needs. Still, there is no good reason for Pakistan to remain so far below the world average.

3

Basmati rice fetches higher price in the market, but its production is resource intensive. Hence, resourceconstrained farmers continue to cultivate coarse types. Also, there is a large domestic market for coarse types. 4 Of the total area under cotton production in 2011, about 79% was in Punjab, 20% was in Sindh and about 1% was in Balochistan and KPK (Pakistan Bureau of Statistics 2010). 5 Better performance than India is no cause for complacency, as Indian cotton production is mainly rain-fed, whereas Pakistan produces cotton in fully irrigated areas.

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13-102-2014-2 

Sugarcane is another important cash crop in Pakistan. It is the raw material for sugar and sugar- related products. Its share in value added in agriculture and GDP is 3.2 per cent and 0.7 per cent respectively (Ministry of Finance 2012). During 2011-12, it was cultivated on about 2.6 million acres producing more than 58 million ton. Sugarcane cultivation has grown in recent years; so has its production per unit of land during the past few years (ibid). This is mainly because farmers have received good returns from the crop and have tended to improve farm management and intensify inputs.



Tobacco generates substantial export earnings every year. Initially tobacco production in Pakistan was restricted to a few low quality indigenous varieties and the country’s cigarette industry relied almost exclusively on imports for better quality tobacco. But now Pakistani farmers are cultivating a number of high-quality varieties of tobacco to meet the needs of the tobacco industry. The establishment of the Pakistan Tobacco Board in 1968 was a crucial development for Pakistan’s tobacco production. The Board has successfully overseen the modernisation of tobacco farming in Pakistan through research, advocacy and extension services. Pakistan’s total tobacco production stood at 86,930 tons in the year 1972 and has since registered an increase of around 21%. Since the area under tobacco cultivation slightly decreased from 125,000 acres in 1972 to 123,000 acres in 2010-11, the increase in production can be exclusively attributed to increase in productivity per unit of land, which compares favourably with other leading tobacco producing countries.

DEVELOPMENT OF NEW CROP VARIETIES Development of new crop varieties is primarily undertaken in Pakistan’s large network of agricultural research institutes and universities in the public sector. It is one of the largest agricultural research systems in a developing country. Flaherty et al. (2012) estimated the total number of full-time equivalent researchers in 2009 at 3,532. However, total research investment was only Rs. 3.3 billion, which was the lowest in South Asia as a proportion of agricultural output (Box 1). Over one third of total research investment was in federal institutes and the rest was in various agricultural universities (Table 4). As for the private sector, its role has been very small, though it has grown somewhat in recent years (Beintema et al. 2006). There are no agricultural universities or institutes in the private sector. Private sector R&D is limited to developing public sector breeding material into crop varieties for the Pakistani market. - 11 -

13-102-2014-2

Box 1: Investment in Agricultural R&D In 2009, total agricultural R&D investment was 0.21% of the agricultural output. In comparison, India spent 0.4%, Sri Lanka 0.34% and Bangladesh 0.32% of its agricultural output on research. Source: Flaherty, Kathleen, Muhammad Sharif, and David J. Spielman. "Pakistan: Recent Developments in Agricultural Research Agricultural Science

and

Technology

Indicators."

Agricultural Science

and

Technology Indicators, 2012.

Table 4 Public Sector Agricultural Spending and Staffing – 2009

Type of Agency

Total Spending Million Rs.

% age

Total Staffing Number (FTE)

% age

Federal government PARC*

711

21.6

495

14.0

Other federal

498

15.1

581

16.4

Total federal

1,209

36.7

1,076

30.4

Punjab

929

28.3

968

27.4

Sindh

274

8.3

380

10.8

KPK

256

7.8

402

11.4

Balochistan

165

5.0

218

6.2

Total provincial

1,624

49.4

1,968

55.7

Higher education

454

13.8

487

13.8

Total

3,288

100

3,532

100

Provincial governments

Source: Flaherty, Kathleen, Muhammad Sharif, and David J. Spielman. "Pakistan: Recent Developments in Agricultural Research Agricultural Science and Technology Indicators." Agricultural Science and Technology Indicators, 2012. * PARC – Pakistan Agricultural Research Council

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13-102-2014-2 Agricultural R&D Institutes Federal and provincial governments operate a number of research institutes that carry out breeding research for development of new crop varieties. The largest network is maintained by the Pakistan Agricultural Research Council (PARC), which is an autonomous arm of the Ministry of National Food Security and Research. PARC manages the National Agricultural Research Centre and nine area/crop-specific research centres and institutes. PARC scientists and technicians conduct traditional breeding and agronomic research as well as modern genomic and biotechnology research. PARC also runs an institute for preservation of plant genetic resources, which holds in its Gene Bank more than 27,000 accessions of different crop species (PARC 2013). This is a large pool for Pakistani breeders to draw from on a need basis. Another important federal research outfit is the Pakistan Central Cotton Committee (PCCC), which is attached to the Ministry of Textile Industry. PCCC is the federal government’s dedicated institution for cotton research and has to its credit the development of several popular varieties of cotton. It is funded by federal grants and a small cess on cotton recovered from the textile industry under the Cotton Cess Act of 1923. In 2012, its management control was transferred to the All Pakistan Textile Mills’ Association (APTMA). Since then, PCCC operations are managed by APTMA nominees, though overall policy and oversight continues to be provided by the Ministry of Textile Industry. In addition to PARC and PCCC, the federal government runs another 17 research institutes in various federal ministries (Stads and Rahija 2012). Examples are the Centre of Excellence in Molecular Biology (Lahore), Nuclear Institute of Biology and Genetic Engineering (Faisalabad) and Nuclear Institute of Agricultural Biology (Faisalabad). These institutes use modern techniques and tools in agricultural biotechnology to support breeding of new plant varieties. The first two institutes have also developed GM varieties of cotton and are actively pursuing development of GM varieties of other crops. In parallel with the federal government, provincial governments have their own set of research institutes for agricultural R&D. In all, there were 41 institutes in 2009 (ibid). The largest and the best known is the Punjab Government’s Ayub Agricultural Research Institute (AARI) in Faisalabad. AARI has several crop-specific research institutes and stations spread throughout the province. These research outfits develop new crop varieties, find novel and effective ways of countering pests and pathogens, and suggest appropriate farming practices - 13 -

13-102-2014-2 to boost production and reduce costs. AARI also has to its credit the development of several new crop varieties over the past few decades. There is extensive overlap and duplication among variety development programs of these federal and provincial institutes. Perhaps the most obvious case is PCCC’s Central Cotton Research Institute and AARI’s Cotton Research Station – both located across the road to each other in Multan. Both maintain breeding programs for developing new cotton varieties, but work independently without any collaboration whatsoever. Consequently, they have often ended up duplicating each other’s work, rather than specialising in development of specific traits in new varieties as required by farmers. Agricultural Universities There are five major universities in Pakistan that undertake multi-disciplinary research on a range of subjects including plant breeding. These are the University of Agriculture (Faisalabad), University of Arid Agriculture (Rawalpindi), Khyber Pakhtunkhwa (KPK) Agriculture University (Peshawar), Sindh Agriculture University (Tando Jam), and Lasbella University of Agriculture, Water and Marine Sciences (Lasbella). These universities conduct research in inter alia plant breeding, plant physiology and agricultural biotechnology. All these universities offer Bachelors, Masters, MPhil and PhD programs for Pakistani and foreign students (the number of foreign students is very small). Current total enrolment is estimated at 27,000 (Flaherty et al. 2012). University of Agriculture, Faisalabad (UAF) is the largest agricultural university and has a current enrolment of about 12,000 students (UAF 2013). Trends in Variety Development As far as contribution to variety development is concerned, Punjab Government’s AARI has been by far the most productive. It has to its credit the development of 39% of all new crop varieties approved so far for commercial cultivation in Pakistan (Figure 5). Next in line is KPK’s Agriculture Research Institute with the development of 13% of new varieties. PCCC and PARC occupy the third and fourth positions with development of 9% and 8% varieties to their credit respectively.

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13-102-2014-2 Figure 5 Share in Variety Release (up to 2013)

Others 29%

AARI 39%

ARI 13% PARC 2%

PAEC 8%

PCCC [PERCEN TAGE]

Source: Author’s calculations based on data from the Federal Seed Certification and Registration Department

Data on varieties registered with the Federal Seed Certification and Registration Department (FSC&RD) of the Ministry of National Food Security and Research presented in Table 5 show that 613 new varieties have been released by the Pakistani public and private sectors so far6. Of these, the public sector has released 96 per cent and the private sector has released only 4%. Most variety development is concentrated in a few crops. Cotton and wheat, in particular, account for a disproportionately large share of 40 per cent of all varieties released so far. As for the private sector, half of all varieties developed are cotton varieties. Almost half of all varieties were developed by research institutes based in Punjab. Balochistan and Sindh seem to largely depend upon new varieties developed in agro-ecologically different regions of Punjab.

6

It may be the case that the actual number of varieties released by the public and private sectors is larger than what is reported here, but these additional varieties have been released in the informal sector and thus are not included in FSC&RD data sets.

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13-102-2014-2 Table 5 Number of Varieties Registered with FSC&RD (up to 2013)

Crop

Private

Public Sector

Sector

Total

Punjab

Sindh

KPK

Balochistan

Islamabad

Wheat

59

24

40

8

3

Barley

3

–

3

4

–

Maize

11

–

12

–

–

2

25

Rice

16

13

06

–

–

–

35

Cotton

74

21

1

–

–

13

109

Sugarcane

14

8

16

–

–

1

39

Pulses

43

4

19

1

5

–

72

Oilseed

20

5

22

–

8

5

60

Fodder

27

–

7

1

–

2

37

Vegetables

36

1

12

8

–

–

57

Fruits

2

–

33

–

–

–

35

Total

305

76

171

22

16

23

613

–

134 10

Source: FSC&RD data.

Emerging IPR Regime IPRs in plant breeding affect how breeding is carried out and how new varieties are commercialised. They are created under several instruments, such as copyrights, patents, geographical indications, trademarks and plant breeders’ rights (PBRs). Of these, the most relevant are patents and PBRs. A robust patent/PBR regime promotes investment in breeding, but constrains farmers’ rights to freely cultivate new varieties and use them in their farmlevel breeding initiatives. A notable development in recent years is the substantial conditioning of Pakistan’s IPR regime as part of on-going globalisation. Of special significance is the agreement on Trade Related Aspects of the Intellectual Property Rights (TRIPS), which requires all members of the World Trade Organisation to harmonise their IPR regimes with TRIPS’ provisions. - 16 -

13-102-2014-2 Pakistan, being a signatory to the TRIPS agreement, took several steps in the past decade to conform to its international obligations and commitments in this area. These include inter alia overhaul of the patent law in 2000 and efforts to enact PBR legislation. Both of these have serious implications for breeding research and therefore, merit some discussion. When the Government of Pakistan repealed the Patent Act of 1911 and promulgated the Patent Ordinance in 2000, it borrowed several Articles from the TRIPS agreement to become compliant with the global IPR regime. These borrowed Articles were inserted as Sections 7, 30 and 61 in the Patent Ordinance, 2000. They determine rights of the patentee and how these rights would be enforced (Government of Pakistan 2000). Rights granted to a patentee under the Ordinance of 2000 include the exclusive right to make, use, sell, offer to sell or import the protected item or an item produced using a protected process. This means the patent holder – be it an individual or a company – can exclude others from use and commercial appropriation of a patented product unless they obtain a license from the patent holder. These rights are legally enforceable during the life of the patent, viz. 20 years. A more significant addition to the patent regime was to make biological organisms a valid subject of patents. Hitherto living organisms and biological processes, being products of nature, were considered outside the purview of patent protection. But the new Ordinance extended patent protection to microbiological organisms i.e. very small living organisms such as bacteria and to microbiological processes. Plants were still not patentable; however, if a patented microbiological product or process was used in development of a new plant variety, patent protection effectively extended to the plant as well. Since development of GM varieties involved using microbiological processes and organisms, their cultivation was subject to conditions imposed by the patent, if any had been granted. For this very reason, Bt cotton varieties – now under large-scale cultivation in Pakistan – could not be commercialised in Pakistan during 2002-10 because of fears that it might infringe upon Monsanto’s patent rights (Rana 2010). Bt cotton varieties were approved for commercial cultivation by the Government of Pakistan only after it became clear that Monsanto did not have any enforceable rights over them in Pakistan (ibid). The second important development of the past decade that influences development and commercialisation of new seed varieties is the PBR Bill prepared by the Intellectual Property Organisation (IPO) of the Government of Pakistan. The agreement on TRIPS requires WTO member countries to provide protection to plant varieties either through patents or through a sui generis system of plant variety protection. Since the Patent Ordinance of 2000 - 17 -

13-102-2014-2 specifically excludes plants from patenting, the Government has opted for a sui generis system. The Bill proposes the establishment of a Plant Variety Protection Registry in IPO, which will grant PBRs for 25 years for trees and vines and for 20 years for other plants. A plant variety can be registered with the IPO Registry if it is novel i.e. has not been sold before in Pakistan for more than a year and meets the distinctiveness, uniformity and stability criteria. Under the existing legislation for variety registration -the Seed Act of 1976- there is an additional criterion i.e. the new variety must demonstrate Value in Cultivation and Use (VCU). This means that it must be superior to existing varieties. The Bill has dispensed with the VCU requirement, which means a variety can be registered as long as it is new, distinct, uniform and stable. This is a paradigm shift, as it enables release of new rather than superior varieties. The Bill accepts farmers’ right to save, use, sow, exchange and sell in small quantities their seed of protected varieties. If the Bill – currently pending with the Government of Pakistan – is approved, it will have far reaching and mixed effects on variety development. On one hand, the ability of seed companies and public sector breeding institutes to enjoy exclusive rights on their new varieties will attract greater investment in variety development activities. On the other hand, this will constrain farmers’ ability to freely cultivate new varieties on which exclusive PBRs have been granted. The farmer seed-saving clause in the draft PBR Bill is an effort to protect farmers while providing entrepreneurs and inventors legitimate opportunities for making money. SEED PROVISION SYSTEM Once a new variety has been developed, its seed is multiplied and marketed by a variety of seed providers, including seed companies, public sector organisations and the informal sector. These transactions take place in a poorly regulated market which hardly offers any quality assurance. Consequently, farmers are often unable to procure good quality seeds of new (and existing) crop varieties. Improving seed production and marketing is, therefore, integral in order to enhance agricultural productivity in Pakistan. Development of new varieties and seed production are regulated by the Seed Act of 1976. When this Act was passed, the private sector played a very small role in seed provision. There were only a handful of seed companies, whose operations were limited to multiplying - 18 -

13-102-2014-2 Basic Seed7 obtained from government organisations and selling the same to farmers. Development of new varieties and production of Basic Seed were the exclusive privilege of the public sector. The Seed Act of 1976 sought to strengthen this arrangement, rather than encourage private sector participation in various stages of seed business. With this objective, the Act created several institutions to regulate variety registration and carry out seed business in Pakistan. These included the National Seed Council and the Provincial Seed Councils as apex institutions to oversee seed provision in various areas and advise governments on the seed business. FSC&RD was created as the Secretariat for the National Seed Council. Its role was to coordinate varietal trials (regional as well as nation-wide) for generating data on performance of various varieties to inform decisions by the Seed Council. Punjab Seed Corporation and Sindh Seed Corporation were also created to multiply seed on their farms and distribute the same through field outlets. Until the 1980s, development of new varieties and production of seed were almost exclusive public sector preserves. Agricultural research institutes and universities developed new crop varieties, seed councils approved them for commercial release and provincial seed corporations multiplied and distributed seed. FSC&RD certified seed production to maintain quality. Gradually, the private sector also started participating in the seed business. The Government supported this process. During 1980s, several dozen seed companies were established and registered with FSC&RD. Their number grew steadily and stood at 759 in 2013 (86% are Punjab based) (Rana 2014)8. The private sector is now a major player in seed provision in Pakistan. Although basic R&D is still strong in the public sector, the private sector now takes the lead in near-market research – most significantly in development of new crop varieties and hybrids. For example, almost all popular Bt cotton varieties currently in the market were developed by the private sector (Rana et al. 2013). As for seed multiplication and distribution, the seed of cash crops (e.g. cotton, maize, rice, sugarcane and vegetables) are

7

A category of seeds comprising highly pure variety of a seed. Basic Seed is multiplied to produce large quantities of seed for commercial distribution to farmers. 8 As per FSC&RD records, 972 companies were registered until December 2013, but 213 companies were deregistered for various reasons (Rana 2014).

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13-102-2014-2 now provided mostly by the private sector (Table 6). The public sector is now confined to a small set of crops, which have as yet not attracted private sector attention. Table 6 Availability of Certified Seed (2012–2013) (Metric Tons) Total Certified Seed Availability Total

Crop

Estimated

Pakistani Public and Private Sectors

Seed Requirement

Total certified seed Imported

Metric

% of

ton

Requirement

Public

Private

Total

1,085,400

72,112

187,792

259,904

–

259,904

24

Rice

42,480

5,068

40,699

45,767

3,725

49,492

116*

Maize

31,914

245

3,460

3,705

10,303

14,008

44

Cotton

40,000

801

3,829

4,630

–

4,630

12

Potato

372,725

34

29

63

4,558

4,621

1

Pulses

47,496

24

892

916

–

917

2

Oilseed

10,582

134

448

582

1,284

1,866

18

Vegetables

5,070

4

237

241

5,177

5,418

107*

Fodder

40,138

12

14

26

21,253

21,279

53

Total

1,675,804

78,434

237,400

315,834

46,300

362,137

22

Wheat

Source: Constructed from FSC&RD Data. * This means that either total seed requirement for rice and vegetables is more than what FSC&RD estimates, or some of the certified seed remains unused.

Data presented in Table 6 make it clear that the private sector is now the biggest provider of seed in most crops. It is also clear that there is substantial import of seeds from other countries and that only a small portion of the total seed requirement is provided by the formal sector. The rest is either farmer-saved or is provided by the informal sector. The large footprint of the informal sector is largely due to Pakistan’s archaic system of variety approval and registration. The procedures are long, cumbersome and susceptible to misuse. It is standard practice for a new variety to take 3-4 years to complete the process. During the evaluation phase, there are opportunities for unscrupulous officials to leak varietal - 20 -

13-102-2014-2 seeds into the market. Additionally, the trials are carried out at various research stations and/or fields of farmers, most of which are competitors in development of seed varieties. On the other hand, formal registration with FSC&RD does not add any commercial value to new seeds. Because of these factors, most public and private sector breeders are unwilling to put their new varieties into the varietal approval system and instead seek to commercialise these varieties in the informal market. In some cases, breeders first commercialise their variety informally and later submit it to FSC&RD for evaluation and registration. This makes regulation and quality control problematic. The situation warrants a rethinking of regulation in the seed sector. Radical changes will have to be made in the legal and institutional framework to attract a larger proportion of seed providers to the formal system of variety approval and registration. Another related issue is the growing irrelevance of seed certification. FSC&RD field staff is supposed to monitor the process of seed production in various stages. The staff visits fields of seed producers registered with the department and issues tags to be displayed prominently on seed bags. In practice, however, this process suffers from several problems. Firstly, inspection of growers’ fields and seed certification are possible only for registered growers and for seeds of varieties approved by the department. Since the size of the informal sector is significant in Pakistan, FSC&RD seed certification, even if carried meticulously, covers only part of the seed production. Secondly, in the absence of an effective performance management system, the field staff has little incentive to carry out a thorough job in terms of field inspections. Consequently, seed certification has become irrelevant, at least to the extent of major cash crops such as cotton (Rana et al. 2013). Finally, lack of reliable and updated data on the Pakistani seed market undermines any effort to improve regulation. The data maintained by FSC&RD (presented in Table 6) is only for certified seed, which is a small part of the total seed market in Pakistan. In the absence of reliable data, public policy has to rely on anecdotal evidence in important matters, such as developing an effective legal and institutional framework to regulate the seed sector and taking measures to support the development of a robust seed industry. Similarly, private sector activities are hampered by the lack of reliable data and analyses, which could feed into sound business decisions.

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13-102-2014-2 EXTENSION SERVICES The final step in the use of improved seeds to enhance productivity is the availability of timely and appropriate extension services to farmers on cultivation of various major and minor crops. This is quite a weak area in Pakistan. Extension services are provided by a mix of public and private sectors, neither of which adequately meets farmers’ needs, resulting in continued widespread use of archaic farming practices (Davidson and Ahmad 2003). The public sector maintains extension wings at the provincial Departments of Agriculture. It follows a linear model of dissemination of innovation, whereby a product or farming practice developed at the research centres (discussed above) is transferred to the farming community through extension agents of Departments of Agriculture (Davidson and Ahmad 2002). Typically, the extension agents identify a group of contact farmers, visit their fields regularly and advise them on innovation. It is hoped that the innovation, once successfully adopted by the contact farmers, would spread to nearby farmers through demonstration effect. When multinational companies started selling their pesticides in Pakistan in the 1970s, they also provided advice to farmers on a range of issues related to pest control. This was the beginning of the private sector extension services. In 1980, the new National Agricultural Policy formalised their role and urged the private sector to take greater responsibility in the delivery of agricultural services including extension (ibid). Since then, the private sector has emerged as a major provider of extension services. All local and foreign companies maintain a cadre of extension workers who provide advice to farmers, particularly on the use of chemicals for crop protection. Like their counterparts in the Departments of Agriculture, they identify a select group of farmers and visit them regularly. Often these are individual meetings, but sometimes they organise field days where messages are delivered in groups. It is hoped that the ones not contacted/visited directly will benefit from the ones who are. In practice, however, both types of extension services i.e. the ones provided by the public and private sectors are not effective in terms of the appropriateness of information, timing of provision and the outreach (Davidson and Ahmad 2003). The linkage between research institutes and extension agents is weak. Continued education and training of extension workers are not regular features. Furthermore, the public sector has a bias for educated farmers and the private sector for large ones (ibid). Both approaches are exclusionary in a country where literacy rate in rural areas is 49 % (Pakistan Bureau of Statistics 2011) and where 67% farms are less than 5 acres (Table 2). Most private sector extension is limited to - 22 -

13-102-2014-2 the use of pesticides and herbicides. Other issues such as farming practices, cropping patterns, efficient irrigation, seed quality, plant density, integrated pest management, etc. are not relevant enough to feature in its advice. The public sector extension service is limited to approved varieties and subject to official priorities. Inadequacy of public and private sector extension services has been amply documented in various studies. A recent example is the survey of cotton farmers in Sindh carried out by Rana et al. (2013) in which 91% of the participating farmers reported that they had never attended an extension workshop organised by the Sindh Agriculture Department. Only 5% had attended a workshop during the previous year. Rana et al. (ibid) observed that larger farmers were more likely to have attended a government workshop than their smaller neighbours. Only 8% had been visited by a government extension worker in the previous year. Another 7% had been visited once or more during the preceding 2-3 years. 85% had never been visited. Seed company representatives visited farmers far more often. 34% farmers had been visited at least once during the previous year and another 21% had been visited in the preceding two years. Private company representatives visited large farmers far more often than they visited smaller farmers. An important problem with the public sector extension system is its agnostic attitude towards the informal sector, which is an important market segment as seen in the previous section. Large-scale cultivation of Bt cotton varieties in Sindh and Punjab during 2002-10 without any extension support at all is a case in point. Since Bt cotton varieties were not approved by the government during this period, they simply did not exist for extension wings in the Departments of Agriculture. Provision of advice on cultivation of Bt varieties thus fell outside the mandate of public sector extension workers. This had serious consequences for farmers. In the absence of appropriate advice on issues of sowing time, water requirements and the need to protect crops through conventional means after the protection offered by Bt had tapered off, farmers were unable to harness the full potential of Bt varieties. The ineffectiveness and inadequacy of extension services is intrinsic to the paradigm in which these services are provided. Larger seed companies also provide agro-chemicals. For them, an important indicator is the annual sale of chemical inputs. It is hardly surprising that the extension agents contact only those farmers who are present or potential buyers, and deliver only those messages that induce them to use chemicals. Since multiple companies are out in the field trying to sell their products, it is not necessary that the advice offered by one is consistent with the advice provided by another. - 23 -

13-102-2014-2 Similarly, public sector’s extension services are ineffective due to an acute lack of human resource and disconnect with on-going research in institutes and universities. The USAIDFIRMS project estimated in its report (2010) on the districts Multan and Bahawalpur that on average, one government extension agent was supposed to provide advice to around 9,000 farmers on 43 major and minor crops. This is simply a task too herculean to be undertaken. The problem is confounded by the lack of accountability of extension workers to farming communities, especially small and medium farmers. The current structure of internal governance subjects the extension hierarchy to political control at two levels – the district and the province. Both levels are too far removed from the small, resource poor and uneducated farmers. In both cases, the political control is not exercised by the farmer but it is exercised in his name by the representatives of his representatives. The layered system of representation dilutes the effectiveness of his demand. There is hardly any horizontal political control on the working of the officials who are discharged with the actual responsibility of providing extension services. It is also wellknown that access to state resources and services, such as extension, are provided or withdrawn in Pakistan as a matter of patronage. It is considered a legitimate privilege of power. The extension agents are smart enough to assess the relative political importance of a farmer and decide to provide him or withhold the extension advice accordingly. It is not uncommon for the extension agents to start providing services to a different group with a change of their political fortunes. Relatively unimportant small farmers remain on the fringes in this distribution of patronage and can only hope to pick the crumbs, if at all. CONCLUSION The above high-level overview of the agriculture sector in Pakistan and the discussion on use of improved seed to enhance agricultural productivity raises several policy questions. Firstly, it highlights how skewed land ownership comprises a constraint as well as an opportunity for agricultural development. On one hand, it allows profits and rents to be appropriated by small landowning elite. On the other, it allows capital investment in land development and various stages of agricultural production. Secondly, the above discussion points out that Pakistan’s budgetary allocations for agricultural R&D are the lowest in the region. Further, research priorities are lopsided – most variety development research is concentrated on a few crops and there are several overlaps in research programs of various federal/provincial institutes/universities. This means farmers - 24 -

13-102-2014-2 have to deal with poor quality germplasm that does not germinate well and is vulnerable to diseases and pests. Thirdly, discussion in the earlier sections invites us to critically examine the emerging IPR regime and the influence international agreements, such as TRIPS, have had on important IPR decisions in Pakistan. Whether or not living organisms can be owned by private individuals and what rights breeders of new plant varieties should enjoy are important questions with serious implications. Similarly, the types and scope of IRRs that are available to Pakistani breeders/entrepreneurs and the rights conferred thereunder will significantly shape how research is carried out and how new seeds are commercialised. It is, therefore, imperative that important policy decisions regarding Pakistan’s IPR regime are informed by public debate on these issues. Furthermore, the legal and institutional framework under which seeds are supplied to farmers by public and private sector seed providers is archaic and anachronistic. Developed in the 1970s, when there was very limited private sector presence in the seed sector, the legal framework does not explicitly assign a role to the very large private sector that has emerged during the past three decades. Consequently, substantial seed provision takes place in the informal sector, devoid of any regulatory oversight and quality control. How the informal sector can be formalised is a challenge for the policy communities. Lastly, the paper highlights the inadequacy of the existing extension provision in Pakistan. Without adequate, timely and effective advice on cultivation of new seeds, farmers are unable to harness the full potential of their labour and the resources at their command. But improving extension services is a challenge in itself. It will require a far larger commitment of resources (especially in the public sector) that is presently the case. Moreover, it will require a shift away from the current paradigm that concentrates extension effort on resourcerich, large farmers. In short, the entire system of variety approval and registration, seed certification and provision of extension services needs a radical re-evaluation to become relevant to farmers’ needs in Pakistan.

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13-102-2014-2 Acronyms AARI

Ayub Agriculture Research Institute

APTMA

All Pakistan Textile Mills Association

Bt

Bacillus Thuringiensis

FSC&RD

Federal Seed Certification and Registration Department

GDP

Gross Domestic Product

GM

Genetically Modified

IP

Intellectual Property

IPO

Intellectual Property Organisation

IPRs

Intellectual Property Regime

PARC

Pakistan Agricultural Research Council

PCCC

Pakistan Central Cotton Committee

R&D

Research and Development

TRIPS

Trade Related Aspects of Intellectual Property Rights

UAF

University of Agriculture, Faisalabad

VCU

Value in Cultivation and Use

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13-102-2014-2 List of References: Beintema, Nienke, Waqar Malik , and Muhammad Sharif. Key trends in Pakistan’s agricultural R&D investments. Washington DC: International Food Policy Research Institute (IFPRI)., 2006. Davidson, Andrew P., and Munir Ahmad. "Effectiveness of Public and Private Sector Agricultural Extension: Implications for Privatisation in Pakistan." The Journal of Agricultural Education and Extension, 2002: 117-126. Davidson, Andrew P., and Munir Ahmad. Privatization and the Crisis of Agricultural Extension: The Case of Pakistan. Aldershot: Ashgate, 2003. Flaherty, Kathleen, Muhammad Sharif, and David J. Spielman. "Pakistan: Recent Developments in Agricultural Research Agricultural Science and Technology Indicators." Agricultural Science and Technology Indicators, 2012. Forrester, Neil. "Changing the Cotton Landscape in Pakistan." Lahore: Ali Tareen Farms, 2009. Hussain, Akhlaq. An Overview of Seed Industry. Islamabad: FSC&RD, Government of Pakistan, 2004. Hussain, Akhlaq. Seed Industry of Pakistan. Islamabad: Federal Seed Certification and Registration Department, 2011. Hussain, Akhlaq, and Tassawar Hussain. Seed Industry of Pakistan. Islamabad: Federal Seed Certification and Registration Department, 2007, 102. Ministry of Finance. Pakistan Economic Survey. Islamabad: Ministry of Finance, Government of Pakistan, 2010. Ministry of Finance. Pakistan Economic Survey. Islamabad: Ministry of Finance, Government of Pakistan, 2011. Ministry of Finance. Pakistan Economic Survey. Islamabad: Ministry of Finance, Government of Pakistan, 2009. - 27 -

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Ministry of Finance. Pakistan Economic Survey. Islamabad: Ministry of Finance, Government of Pakistan, 2012. Nathan Associates Inc. Pakistan's Food and Agriculture Systems. Washington: United States Agency for International Development, 2009. Pakistan Bureau of Statistics. Pakistan Labour Force Survey. Government Report, Islamabad: Bureau of Statistics. Government of Pakistan, 2011. Pakistan Bureau of Statistics. Agricultural Census of Pakistan. Government Report, Islamabad: Bureau of Statistics. Government of Pakistan, 2010. PARC - Pakistan Agricultural Research Council. 2013. http://www.parc.gov.pk. Patent Ordinance. Islamabad: Government of Pakistan, 2000. Rana, Muhammad Ahsan. Formalising the Informal: The Commercialisation of Bt Cotton in Pakistan. PhD Thesis, Melbourne: Melbourne School of Land and Environment, The University of Melbourne, 2010. Rana,

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Regulation,

Politics,

Entrepreneurship. Pakistan Strategy Support Program Working Paper no. 19 Washington DC IFPRI, 2014. Rana, Muhammad Ahsan et al. "Exploring Dynamics of Cotton Seed Provision in Sindh: Informing Policy and Business Decisions." Lahore: International Growth Centre, 2013: 53. Stads, G., and Michael Rahija. Public Agricultural R&D in South Asia: Greater Government Commitment, yet Underinvestment Persists. ASTI Synthesis Report, Washington DC: International Food Policy Research Institute., 2012. UAF. University of Agriculture Faisalabad: Profile. 2013. http://www.uaf.edu.pk/. USAID-FIRMS. District Economic Development Strategies – Multan and Bahawalpur. Unpublished Report, USAID-FIRMS, 2010. - 28 -