Home / RDPI News Service / Agriculture / Agriculture ‘most protected, least integrated’ sector in South Asia

Agriculture ‘most protected, least integrated’ sector in South Asia

ISLAMABAD: Agriculture has been the most protected sector in South Asia, and at the same time is also the ‘least integrated’ in terms of intra-regional trade and investments, results of a joint study carried out by the Asian Development Bank and UN Conference on Trade and Development (UNCTAD) say.

The study, titled ‘Food Security in South Asia’, in Pakistan as in other South Asian countries generally, the agriculture sector is still more protected than the industrial sector on an average. This was, however, not the case before 2000. Until 1998, the average tariff for industrial products was closer to 50 per cent while that for agriculture products was around 40pc.

After 2001, the industrial sector in the country was liberalised much faster, resulting in an average of 13.4pc in 2009 while the average for agriculture is 17pc.

Amongst the most protected products in Pakistan, beverages and spirits have the highest tariffs – around 75pc. The products with the lowest tariffs include cereals and oil seeds, miscellaneous grains.

If all South Asian countries fully liberalise agricultural trade among themselves, the welfare effect is equivalent to $811 million. Pakistan gains the most, with 60pc of total welfare gains in the region going to it, the study notes.

Bangladesh and Sri Lanka have a minor decline in their welfare equivalent.

The lack of regional integration has led to resource constraints, limited the size of potential markets and lowered productive capacities in individual countries, the changing economic structures in many countries in South Asia and the growing demand for agricultural products have increased the potential for regional trade and investments in this sector, observes the study released by ADB.

Many countries have tried in vain to stimulate the growth of agriculture in their economies. The performance of agriculture vis-à-vis of the economy in most South Asian countries has remained poor, especially in the last decade.

The growth rate of per worker value-added in agriculture has been much lower in the last decade as compared to the previous decades in most countries, whereas the growth rate of per capita GDP has been much higher in the last decade than the decades before.

The prospects for increasing agricultural production through area expansion also look bleak. The percentage of area under cultivation has remained almost stagnant during the last two decades showing lack of scope for area expansion. Declining investment in agriculture, particularly public investment, is reflected in the almost stagnant percentage of area under irrigation.

About agricultural trade policy in the South Asian countries, the study points out that historically, the South Asian countries in general have followed inward-looking trade policies, both in terms of trade within the region and in terms of trade with rest of the world.

Trade policies in South Asian countries are quite varied, from being highly restrictive in India to being very liberal in Pakistan. The maximum decline in agricultural tariffs since 2000 has taken place in Pakistan from 43 per cent to 17 per cent in 2011.

Intra-regional agricultural exports grew at a much higher rate of 13 per cent than total intraregional exports of 5 per cent in the period of 2000-2010. Intra-regional trade has a greater share in total agricultural trade for the least-developed countries of the region.

India and Pakistan together contribute more than 85 per cent of the region’s agricultural exports, while India, Pakistan and Bangladesh together contribute more than 85 per cent of the region’s agricultural imports, study says.

Food products, processed rice, crops, and vegetable oils are the major exports of the region, while imports consist of mainly vegetable oils, vegetables and fruits, and sugar.

On the basis of 3-year averages, India is found to be a net exporter of rice, vegetables, eggs, meat, milk, and sugar. Pakistan is a net exporter of rice, fruits, eggs, and meat. Bangladesh and Maldives are net importers in almost all food commodities, while Sri Lanka has small positive net trade in fruits and Nepal in meat.

According to the estimates, almost all South Asian countries have the potential to increase their agriculture exports to the region, with India having the maximum potential, followed Pakistan.

The maximum potential for trade is found between India and Pakistan, which can increase from around $200 million per annum to around $600 million.

Out of the identified 112 potential agriculture export products, in 74 products there is no other competitive producer in the region. These products can be potential exportable products to the region. Pakistan has 102 potential exports, while Sri Lanka has 83.

By: Amin Ahmed

Source: Dawn

Check Also

Climate change Scientists for planting more trees

Scientists at an international conference said that the climate change being a global phenomenon can …

'