Posted by: Administrator | 12 January, 2005

First Pak Agri-Business Conference Address by General Pervez

28 April 2001

Assalam-o-Allaikum! Chairman, Board of Investment, Haqqi Sahib, Mr. Babar Ayaz, Excellencies, Distinguished guests, Ladies and gentlemen,

It is indeed an honor and a privilege for me to be here today in front of you and talking to you at this forum which is dealing with the most important aspect of our economic revival plan of the strategy that we are formulating in Pakistan. I was invited here on this closing session of the first Pakistan Agri-Business Conference and I readily accepted it because of the importance we are laying to this field. My felicitations to the organizers and the Chairman, Board of Investment for holding this first Agri-Business Conference and for deliberating on all important aspects of agribusiness in the context of Pakistan.

Our government has taken a number of measures to revive the economy and to create a stable macro-economic environment. We have initiated policy reforms in monetary, fiscal and exchange rate areas designed to keep inflation low and predictable, maintain a stable and sustainable fiscal balance, appropriate real interest rates and viable balance of payment. The policy initiated by our government have born fruits which is evident from the modest but continuous process of turn around staged by the economy. The recovery in economic growth is fully supported by a rebound in agriculture and pick-up in large scale manufacturing sectors.

Agriculture is the driving force of the national economy. It contributes 25.9 percent to GDP and absorbs 47 percent of the labor force and provide near about 70 percent of our foreign exchange through export of raw, semi-processed and processed products. It will not only meet the food requirements of the growing population but also provide raw 2 material to the largest industries in Pakistan i.e., the textile as well as the food processing industry. Our government is according the highest priority to agriculture.

As a result wheat production reached the record level of 21 million tons during the last year and cotton production increased from 9 million bales in 1998-99 to 11 million bales in 1999-2000. During the same period rice production increased from 4.7 million to 5.2 million tons. Apart from the crop sub-sector livestock and fisheries make an equally important contribution to the overall development of agro-based industry and farm economy. However, there are some constraints which keep us from realizing the full potential in our agriculture sector and we• are trying to over-come all those constraints. A sound agriculture policy for a country is one that expands export rather than reducing its ability to Compete. It must, therefore, respond to the rapidly changing structure of global world the wake of emerging liberalization in mistral Trading system the World Trade Organization.

To address these challenges we must undertake production of agricultural commodities on modem scientific lines including its processing, marketing and storage at one place. This involves the use of latest production technology, adequate use of inputs in the form of balance doses of fertilizers, use of quality seeds, mechanization, efficient use of water by using the latest technology in the form of pricklier or drip irrigation and integrated pest management. All these need high capital and co-operate forming structure which we are encouraging. The concerned ministry has been directed to develop a policy package which will be offered to attract domestic and foreign investment in cooperate agriculture farming. A board comprising the stake holders of the public and private sector is being set up to function independently and work for promotion of cooperate agriculture in the country.

The policy is expected o be finalized within this fiscal year. Commodity Boards for major crops are being constituted. These boards will function independently and represent all the stake holders in the private sectors. The boards will be responsible for formulation of policies and strategies for improving production, marketing, processing and experts. During the deliberations of this conference it would 3 have been noticed that there is a great scope for profitable investment in cooperate farming and different agro-based industries such as fertilizers, pesticides, cold storage facilities, dairy industry, livestock farming, vegetables and fresh and canned fish etc, etc.

I invite all the investors to take advantage of the opportunity available in this sector. Our government would welcome them and extend the fullest cooperation to facilitate them in the establishment of their industrial ventures. Having said this much I would like to focus on certain areas which our government is in the process of undertaking. First of all I would like to thank all the sponsors especially Zafar Sahib and Angro for haying sponsored this conference and also the others like Tetra pack, Mr. Norman and ICI and Millat Tractors for having made this function or this interaction possible.

We have excellent recommendations which I heard. Let me begin by saying that government does not believe on nothing recommendations and putting them in cold storage. It certainly notes and certainly discuss. We sit for how in the cabinet meeting and discuss each and every item threadbare and arrive at a conclusion. Let me assure you that the recommendations that you have given and which I heard from Mr. Larson and Zafar Sahib are sound, most encouraging and most useful and, therefore, they will be given the highest of importance and we will discuss and then execute wherever possible.

Our perceptions as have been drafted out are certainly not what the reality on ground is. We are trying to address it. First of all, the culprits are we ourselves for our performance in the past decade specially and in the past also have never been really very illuminating or any thing .Therefore, it will take time to correct the perceptions but we are trying our best. And also the perceptions are created by certain negative elements, negative forces operating against our interests who we know and that is another reason why we are finding it difficult to improve perceptions but we will Insha Allah with persistence improve the perceptions. Recommendations have been made on canal lining by Zafar Sahib frankly, we have discussed this issue of lining and let me say that lining of our canals is not an easy job and we are not really focusing on lining of canals because our canals should not be lined. It should be very clear. In many or most areas of Punjab they 4 should not be lined. It will amount to degrading the sub-soil water levels. Therefore, we are taking very deliberate steps. The step one is to line the water courses. The Khalas are water courses, I am not an agriculturist but I am going to dabble in agriculture with all my effort. The Khalas i.e. the water courses are being lined arid the provinces have been told to line their water courses. We have diverted funds from poverty alleviation, the Khusshal Pakistan Project, for lining the water courses. The maximum loss of water is in that channel. So, therefore, the priority goes towards that work.

I would request you to go around and see whether water courses are being lined. And the Commerce Minister tells me that you have got some methods of lining the canals. Wherever canal lining ought to take place we would like to identify and see whatever you are recommending certainly.

You said about the R&D finds i.e. Research and Development. Let me tell this house that in the past research and development was not taking place at all. There was no research going in Pakistan and if at all there were hundred research organizations everywhere and they were not at all coordinated or they did not have any funding.

We have, first of all, taken a decision that all research in Pakistan will be done under Dr. Atta-ur-Rehman. In research everything will be coordinated by Dr. Atta-ur-Rehman and secondly, funds will be allocated for research because now it will be directed research. We will direct our research. We understand research in the agriculture field. Dr. Atta-ur-Rehman is very conscious of this. Funds will be allocated and research will be done in this field. Give us some time. All these things take time to change the culture, to change the research organizations which were I mean one can talk for hours – on these subjects. People there are not involved; they are not suitable for research. They have nothing to do with research, may be in many places. Therefore we have to, may be, and change the entire environment. I am afraid this is the back-log, of 50 years which needs to be corrected. We are trying our best. So that much for research it will be done. Certainly we understand it should be done in an organized manner.

At present the allocation go into pay and pension only. Nothing is left for research. We are trying to change that. Because we will down size. Those people who are not required should not be there. So let us not pay and pension. Let us 5 save on pay and pension. So the pay, and pension committee really is coming out with revolutionary ideas. So that we can save on pay and pension. Let me tell this house if we don’t save on pensions, bout 5iILaceat. We will drown in pensions. Pakistan will drown in pensions that infect yon may not much for research and development. Ladies and gentleman, certainly we have worked out• our economic revival strategy. The agricultural strategy that we are talking about or the agro-based industry that we are talking about, giving a boost to agriculture is based on overall economic strategy of Pakistan, if I may take a few minutes for the economic revival strategy of Pakistan.

What is the economic revival strategy of Pakistan? As I have been saying everywhere, we are in debt trap, where are we after meeting our essential requirements. As we have no money for development so we have to borrow for debt servicing and development. Therefore our dilemma is that we must not borrow because our debt serving increase. Nevertheless we want to borrow because we want to develop. This is our true economic situation, therefore what is strategy? We have to get a breathing pace of 3 to 5 years by reducing, restructuring or rescheduling our debts which we have found and we are very hopeful because our economic policies are on track and we have • good record. This government has an excellent record with international donor agencies. Therefore, we feel very confident that the rescheduling is to take place. And also to reduce the high interest on short term debts through privatization and paying off.

And once this window of opportunity of 3 to 5 years is available to us the trick lies in borrowing from wherever but borrowing on minimum interest or may be half to one percent. We will not borrow on high interest. The World Bank is giving us loans on 0.75 percent interest over 30 years. So this is almost free money. We must take this money and utilize it in a manner that within this window of opportunity we earn from it or we grow our GDP.

The economy of Pakistan will grow faster than the debt servicing liability that we will impose on ourselves. That is the main trick. 6 Therefore, our focus is how to make the economy grow in this period that will be available to us. How should this economy grow faster than our debt servicing liability that will we incur on ourselves. That is the basic strategy. And when we analyze this and information technology. This is where the fastest return. I will come and we will beat the debt servicing liability we will incur.

So once this breathing space or window of opportunity is got and when we after 3 to 5 years get back to servicing our debts, our foreign exchange reserves, our GDP ought to be at a level that we can easily pay our debts on our own and have money for development.

This is the strategy and I would like to lay focus on what is the agriculture strategy then, where everyone ought to be noted, where this forum would be interested in. We have really worked out an agriculture strategy. Now we have to go for import substitution to as much extent as possible.

We import a lot of tea. We must grow our own tea which is possible. And growing of tea is being concentrated in Mansebra area and let me say that this is most encouraging. We are encouraging tea growth and expanding the area under tea cultivation. So this is one area where import substitution certainly is possible and is going with full steam.

Now the area in import substitution is edible oil. Again we import about 5 to 6 hundred million dollars, if not more, on edible oil. We need to substitute it with canola or sunflower but certainly not at the cost of our own wheat, cotton or rice crops. Therefore, we are also looking at an alternative which is olive. Olive in the Frontier has been very successful and we are encouraging olive growth. Therefore, we would like to grow olive and that is from health point of view, better. Therefore olive oil production is being encouraged in Pakistan in the Frontier and a lot of work is being done in this sector and to a greater success also. So tea and olive are import substitution, other than canola and sunflower, but not at the cost of our cash crops. Then is the export earning. We need to earn more through exports, and which is the area, obviously cotton and rice. We have to encourage cotton. We are trying to encourage contamination free cotton growth. And in cotton we have seen the lot of area can be brought under its cultivation, especially in Sindh and Baluchistan.

Those who are growing rice and that too irrigate. And the last item that I would like to talk about is 7 tobacco. Although smoking is bad for health, the tobacco growth is very good, Very profitable. We arc encouraging so sorry to those who don’t smoke, but we will go for tobacco: Now having said that what we are doing to increase our agriculture produce.

We have to go labor intensification of yield. And that is the domain of the experts how to increase the yield. Our yield is not good. I am conscious of this. We have to improve the yield. We have to improve the yield with maximum economy oil water. So sprinklers or drip irrigation or whatever you have and micro-leveling land and all that should economize on the water but so sprinklers irrigation and whatever you have at micro leveling and all that should economize on the water but improve yield per acre that we have large tracts of land without water just dying or thirsting for water. We have in Baluchistan and in Frontier.

Therefore, water issue is the problem and we are going to bring more land under irrigation through water reservoirs. And for information of this house, we have decided that we are going to make some dams. They are all small dams, these are not large dams. These are in the areas of They will cost 20 to 25 billion rupees and they will have about one to five million acre feet of water and will irrigate about 200 to 300 thousand acres of land. So, Gomal in Frontier, Hingole and Mirani in Baluchistan. Thal reservoirs in Punjab, Kachi canal and Rabbi canal in Baluchistan. Kachi canal will give us 500 thousand acres of land. Then in Sindh the Rainy canal and Thar canal. So these are the water canals and water reservoirs. With this we hope to bring over one million acre of land under irrigation. Mangla Dam rising is certainly high on the cards.

This will give us 3.5 million acre feet of additional water. It will cover the depletion in the Mangla and Terbala Dams. And also we have decided to sink ten thousand tube wells in the areas obviously noting that water level does not go down i.e. in selected areas. Five thousand in Sindh, three thousand in Punjab, one thousand in Frontier and one thousand in Baluchistan i.e. ten thousand. We have allocated money already and this will be done immediately. So this is what we are doing. So what I am trying to say is, we will bring water. We will improve the water situation. We will utilize water. Increase the land under irrigation. 8 Increase the yield. Concentrate on strategies which we need to go far and remove the areas which have been bringing our agriculture down, creating a bad name for us and focus on wherever is our strength.

So this is what we are doing. That is the agriculture strategy. I wanted to go into these details because I thought I need to be with these aids myself so that one is satisfied with what we are doing. So that one gets encouraged that agriculture, agro-based industry fray is certainly the area which will give us this window of opportunity that we are talking about. This is what we will get. I will just as a rough guide say that about 505 lac acres of land just one canal, this Kachi canal, will give and translate it into cotton and we have very good cotton in that area. This will give us about four to five hundred million dollars, just this one canal. And if you make this canal, the first crop of cotton will give us this return. So this is the kind of economic strategy and within the economic strategy, the agriculture strategy, which fetch into it. I seek assistance from everyone sitting here.

We seek your help in helping out, in contributing, in participating in all that we are trying to do to remove or to get out of the debt trap through use of areas that I have consternated on. Any contribution in this area will certainly assist us in getting out of the debt trap is very important thing. Therefore, certainly I have no doubt in coming here and talking to you on my ideas and getting gaining from your ideas. I will look forward certainly to all the recommendations that you made are most useful. I do understand.

When I go to the Middle East we don’t export any fruit. We have the best fruit baskets lying in my room and unfortunately none of them is from Pakistan. That is a misfortune. So we need to improve our system. We need to be export oriented certainly with all your assistance in developing this chain.

The entire chain, where it is, in fisheries. We have the best tuna in our waters. I am told it is the best tuna but we are catching it in a way that 75 to 80 percent is going waste. We are catching with the net and it all goes waste. It has to be caught with some tackle, which is totally a different bargain. I saw it when I went to Gwadar and thereafter we started presenting those tackles to the people, to the fishermen. We are trying to improve their boats. The Sultan of Oman was here. He is going to assist us in developing and in getting better boats so that we could save our fish catches, 75 9 percent of which are going waste, because we dump them into the hive on those boats and when we come back after seven days all of it is gone which is obviously not exportable. We are trying to change the construction of the boats. Look at the effort involved.

We have to develop the cold storage in places like the Baluchistan Coast line. And very gladly there is a cold storage which has come up as an excellent cold storage in Gwadar. More need to be brought up because all our fish is being pouched. We are not getting it. Others are catching and are earning money. We are trying to address this issue.

Ladies and gentlemen There is a tremendous scope in whatever you are thinking, whatever your fields are, in the agricultural field, in the livestock in the dairy produce. Our dairy, probably the milk production is seventh in the world if I am not wrong and what do we export? Nothing- What are we doing? We are sleeping. Let’s wake up. I am sorry to take that much time but I thought I must give out my view. I would conclude by pointing out that the present agribusiness conference is a clear manifestation of our commitment and which I have reinforced with my own ideas to develop appropriate strategy to address the challenges facing our agricultural sector.

I thank you all ladies and gentlemen. Pakistan Paindabad

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