KP’s neglected economic roadmaps

Planning
KP’s neglected economic roadmaps
The Comprehensive Development Strategy (CDS) is an ambitious economic growth plan
By Tahir Ali

http://jang.com.pk/thenews/jul2012-weekly/nos-08-07-2012/pol1.htm#3

The Khyber Pakhtunkhwa government has prepared quite a few documents which, if implemented, could originate unprecedented economic development in the province. However, these economic roadmaps are generally overlooked while setting development priorities for different sectors.

According to the Comprehensive Development Strategy (CDS 2010-17), the province has strong agricultural potentials, and offers a diverse climate and landscape for a variety of tourism activities. “Located at the crossroads of important international trading routes, the people of Khyber Pakhtunkhwa have long traditions of trade and travel. Hydroelectric power, forestry and minerals offer resources for a modern economy,” it states.

The Economic Growth Strategy (EGS) also envisions that acceleration of growth will be realized by concentrating on natural resource endowments of KP in hydel power, mining and minerals, Oil and Gas and agriculture value addition and agro-processing industries.

“With huge potential for development there is a necessity to focus on growth. Unfortunately, the resources’ investment strategy while following a much trodden path for decades remained captive to an antiquated thinking; to invest more and more in brick and mortar as a development solution to the problems of low and slow growth; high rates of unemployment and underemployment; a decadent infrastructure; inefficient, inadequate transportation facilities; a non-competitive industrial sector and last but not the least, stagnant human development indicators,” states the EGS.

According to the Whitepaper for this and last year, the previous ADPs were skewed towards brick and mortar projects and whereas the social sectors (education and health etc) have consumed a sizeable chunk of the development program, the socio-economic (food, agriculture, roads etc) and productive sectors (energy, minerals etc) remained low in priorities.

The growth policy will target the sectors with comparative advantages of indigenous raw materials and natural resources like minerals, tourisms and agriculture with a significant increase in total investment in productive sectors to attain higher rate of growth, states the EGS and stipulates that foreign loans would be sought for productive sectors if required and for the socio-economic and social sectors only grants would be utilised.

The EGS, the CDS and the budget whitepaper, said the KP finance minister Humayun Khan, have served as the bases of the annual development programme (ADP) this year.

But while in the Rs303bn budget, ADP, with an outlay of Rs97.4bn, including foreign component of Rs23bn, has a share of 35 per cent against 65 percent for current budget which is in line with the EGS recommendations, most of the budget targets and allocations don’t match with these official strategies.

While the EGS recommends 70 ADP funds for ongoing and 30 per cent for new schemes, they have been allocated 62.5 per cent (Rs46bn) and 37.5 per cent (Rs27.8bn) funds respectively in the core provincial ADP of Rs74.2bn.

The province has abundant potential in water, oil and gas and precious stones like marbles and other minerals. Around 6.76 per cent area of KP is under exploration for oil and gas reserves with a one billion barrel of oil and four trillion cubic feet of gas. Investment in these sectors can offer a base for developing a flourishing industry.

While the EGS says productive sectors and socio-economic sectors would be given top priority in funds allocation and the expenditure on social sectors would be capped at current level, allocations to the sectors speak otherwise.

Against the avowed 70 per cent, 30 per cent and 20 per cent share in the ADP for the productive, socio-economic and social sectors respectively as per the EGS, the 9 productive and 7 socio-economic sectors have been allocated just 12 per cent (Rs11.6bn) and 23 per cent (Rs22.6bn) respectively in the ADP while the social sectors have got 39 per cent (Rs37.9bn).

While education and roads have got over Rs22bn and over Rs14bn respectively, energy and mineral sectors got only Rs1.8bn and Rs0.5bn in that order. Allocations for minerals and minerals stand around only 0.9 per cent and at less than two per cent each for energy, power and agriculture sectors.

In the FY 2010/11 too, out of 972 projects funded through ADP, mines and minerals had only 11 projects with an allocation of Rs255mn at 0.42 percent of ADP.

By the end of 2012, the CDS stipulates an additional Rs14.6bn for the agriculture sector which obviously is far higher than the existing new ADP allocation of Rs1.4bn In the outgoing year too, the productive sectors were allocated Rs10.8billion, the socio-economic Rs21.3bn and the social sectors Rs36.8bn in the total core ADP of Rs69bn.

The CDS is a pretty ambitious economic growth roadmap. Its total seven years’ financial cost above the 2010 level expenditure is Rs960 of which Rs648bn would be for development expenditure and the rest for current expenditure. Rs516bn of these would be met through local resources and Rs444bn from external assistance.

It recognises increased insecurity, financial mismanagement, food inflation, inconsistency and duplication for increased donor funding, climatic hazards such as flooding etc as main risks to the implementation of CDS, and has suggested remedial measures.

But the CDS ironically has failed to point alternative resources in case the expectation of increased domestic revenue and foreign assistance fail to materialise while the current expenditure increases beyond the estimates.

Under the annual strategy review (ASR), a detailed analysis of the ADP 2010-11 and 2011-12 was carried out to know whether development allocations in different sectors matched the above strategies and with the short term allocations for those sectors in CDS. As per the ASR, Rs126bn out of the total ADP for 2010-12 were allocated against the CDS recommendations/allocations of 201bn.

“The province is far from eradicating poverty by 2015, and is unlikely to be able to effect a reduction in poverty incidence to 20 percent, as articulated in the CDS,” states the CDS paper. The white paper and EGS eye reduction in throw forward liability — the money required to complete all the ADP projects-by allocating more resources to ongoing project i.e. 70 percent of ADP.

But as the government usually misses the development targets for several departments come up with attractive projects that they could not execute, the throw forward liability is on the rise and is expected to be Rs343bn by end of this fiscal.

The government could utilise Rs79bn off Rs85bn last fiscal, Rs61bn off Rs69bn in 2010 and Rs46bn off Rs51 in 2009. If it cannot ensure full utilization of funds, what is the justification of increasing development outlays that results in throw forward liability for the
coming governments?

And if this government which, besides phenomenal increase in its federal receipts, has been getting Rs25bn in net hydro profit arrears could not bring down the number of in-complete development projects, how would the incoming governments do when the money would cease to come from 2013-14 onwards.

The foreign component projections at Rs23bn also seems unrealistic as the revised estimates for this head in last year stood at just Rs7.5 against Rs16bn of budget estimates.

KP has given top priority to energy and power sector. In this regard substantial amount of net hydel profit arrears has been transferred to Hydel Development Fund (with assets of Rs24bn) and various schemes are under pre-feasibility, feasibility and implementation stages in the province.

The KP government has prepared a 10-year hydro power generation action plan worth Rs330 billion according to which 24 projects would be initiated in KP to generate 2100 megawatts of electricity. But there is a perception that had this government started these projects when it was installed, the province would have no problem of loadshedding now.

According to a 2004 survey, industrialists and traders in KP identified policy uncertainty, tax administration, access to electricity supply, corruption, access to finance, insecurity and transportation as major hindrances to growth.

There is some good news in the budget too. While the foreign project assistance was just Rs4.61bn in 2008 with 83 per cent of it comprising loan component, it has increased to Rs23bn this year with 84 per cent of it to be in shape of grants and only 16 per cent as loans.

Numerous pro-poor schemes have been allocated Rs5.7bn against Rs4.5bn in last fiscal. Ranging from students’ related scholarship scheme to laptop distribution schemes to schemes in health, IT and agriculture sector etc, these also have a scheme for long term financing schemes for industrialists.

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Setting priorities for new KP budget

Setting priorities
Expansion in non-productive sectors is creating liabilities for the government and is ultimately leaving little space for other activities
By Tahir Ali

As the drafting of the 2012-13 budget is in final stages in Khyber Pakhtunkhwa, the provincial government has spelled out its budget priorities.

Chief Minister KP, Ameer Haider Khan Hoti, says investment in productive sectors (industries, water and energy, etc,) completion of ongoing schemes, and need-based one-time allocation of funds for new projects would be top priorities in the Annual Development Programme (ADP) for the coming budget.

Chief Economist of Khyber Pakhtunkhwa, planning and development department, Usman Gul, says there would be more emphasis on the improvement of service delivery in both the socio-economic sectors (agriculture, food, R&D, etc,) and social sectors (education and health, etc,).

According to him, most of the ADP projects would boost regional economy, spur economic activities, and bring marginalised districts to the mainstream of development.  In line with the ongoing ADP, he says, ADP would be 35 per cent and the current expenditure 65 per cent of the total budget.

Following landmark increase in KP’s income from 14.78 percent to 16.42 percent under the 7th NFC award and other federal heads that saw provincial income from the sources jumping to Rs223bn last year from Rs133bn in 2009-10, which is projected at over Rs252bn for the ongoing year, the provincial government more than doubled the ADP outlay from Rs39bn in 2009-10 to Rs85bn this year.

But the increase in current expenditure for high pay and pension bill, soaring cost of security and flawed development priorities have left the people mostly deprived of its benefits.

The ADP tries to address as much problems as possible in the limited space and money available. The result is, the people are only made to wait for the trickle-down effect rather than full-blown development initiatives.

According to an official document, the previous ADPs were skewed towards brick and mortar projects, which created public assets, but deprived soft drivers of growth in productive and socio-economic sectors.

Social sectors have consumed a sizeable chunk of the development programme whereas the socio-economic and productive sectors remained low in priorities. Rapid expansion in non-economic sectors is creating massive liabilities for the government and is ultimately leaving little space for other activities,” it reads.

The size of ADP for the current year, for example, was Rs85bn, including foreign assistance of Rs16bn with the share of ADP in budget standing at 35 percent against 65 percent for the current revenue expenditure.

But the productive sectors were allocated only Rs10.8billion, socio-economic Rs21.3bn and the social sectors Rs36.8bn. The allocations for the socio-economic sectors like agriculture don’t match the assertions. For example, even though allocation for the agriculture and its related sectors was increased from Rs1.175bn in the last fiscal to Rs1.355bn this year, its share decreased from 1.70 per cent to 1.59 per cent as percentage to the total ADP outlay.

Increasing current expenditure is the major worry. KP’s salary budget alone has increased from Rs40bn in 2008 to Rs76bn in 2010, mainly for the creation of new posts, increase in salaries and rising rate of retirement. The strength of government employees has risen from 0.3mn to 0.37mn posts between 2006-07 and 2011-12. This leaves little room for investment in productive and socio-economic sectors.

Low utilisation of allocated funds is another problem. For example, by March- this year, an overall 50 percentage utilisation ratio was recorded with productive sectors registering 32 per cent, the socio-economic sectors 62 percent and the social sectors 38 per cent utilisation ratio.

Officials, however, are optimistic that ADP utilisation ratio would be between 80-100 per cent at the year end. Usman Gul claims all the ongoing projects are moving according to plan, adding that almost all the major sectors, especially social and economic ones, have achieved their targets.

KP has prepared a 10-year hydro power generation action plan worth Rs330 billion according to which 24 projects would be initiated in KP to generate 2100 megawatts of electricity. “Chief Minister Ameer Haider Khan Hoti recently inaugurated the Dral Khawar Power Project in Bahrain, having a capacity of generating 36.6 megawatts. It would be completed within three years at a cost of Rs7 billion”, he says adding, “Work on numerous other energy projects forming part of the present ADP also continues. These will help meet our energy requirement. All these projects are predominantly foreign funded with only 10-20 per cent local component,” he says.

About foreign investment in KP, Mr Gul says donor’s intervention in KP has increased by about 4 times in FY 2011-12 as compared to FY 2008-09. Also, major share -79 per cent- in the foreign aid in 2011-12 is that of grant.

“Likewise, through Foreign aided project ‘Livelihood Development’ the government is trying to reach out to the poor population to create livelihood activity, and work on social safety nets. Livestock, dairy development, seed quality assurance, water for all, maximise food production, and above all mitigate climate change impact on all the sectors remains focus of this project,” he adds.

“Besides, work on the three special area development schemes for the backward districts of Torghar, KalaDhak and Kohistan worth Rs4bn, Rs1.3bn and Rs0.9bn respectively also continues. Along with several other urban development projects, such as construction and remodelling of Southern Bypass at Hayatabad worth Rs3bn and flyover on Rehman Baba and Bacha Khan Chowk Peshawar worth Rs1.8, the Bacha Khan Poverty Alleviation Programme worth Rs1.5bn also continues in full swing,” he informs.

ADP utilisation ratio has been low due to corruption, terrorism, financial constraints or lack of capacity of the implementing agencies/departments. To a question about whether these and other factors affected the ADP utilisation this year and to what extent, Gul says the aggregate utilisation ratio of previous ADPs usually remained at 50 percent at the end of the 3rd quarter but it increased in the last quarter. “Local ADP utilisation remained very good, except for donor funding and federal pledging for its vertical programmes, which sometime causes delay and, resultantly, ADP utilisation suffers. But we do not anticipate any such issue for the current ADP,” he adds.

However, the economic growth strategy paper prepared by KP, poor infrastructure, low human resource base and skills levels, high insecurity, unreliable supply of utilities — electricity, communication and water — and weak public-private collaboration are hampering the development and entrepreneurial activity of industrial and value added sectors of the economy.

The completion of Chakdara Bridge, connecting Dir with the rest of the country via Malakand in a record time of four months with the help of Pakistan Army shows delay in development projects can be minimised provided coordination with relevant development agencies is improved.

The province needs to focus on sectors like energy and power, water, minerals, industries, labour, transport, agriculture and tourism sectors that could mobilise resources and generate employment.

Against the present practice where non-productive sectors are preferred, 70 per cent additional funds should be provided to productive sectors and 30 per cent to socio-economic sectors. The government should utilise loans only for the productive sectors. It should seek grants from donors for the social sectors and if need be, soft loans for the socio-economic sectors.

 

devolution of agriculture: impact on KP

http://jang.com.pk/thenews/mar2012-weekly/nos-04-03-2012/pol1.htm#9

In the process
More steps need to be taken to complete the process of agricultural devolution to Khyber Pakhtunkhwa
By Tahir Ali

As ordained by the 18th Constitutional Amendment, the longstanding highly centralised agriculture sector was last year devolved to provinces. It goes without saying that this devolution has increased the responsibilities of the provinces, including Khyber Pakhtunkhwa. They must come to grips with their financial and capacity constraints to deliver on this front as agriculture accounts for livelihood of around 70 percent of people in the country.

Increased powers require capacity enhancement and efficiency on the part of provinces but apparently facing budgetary and capacity constraints, shortage of personnel, lack of sufficient technology, the new beneficiaries seem ill-prepared to look after the devolved subjects.

What are the financial implications and how the province is coping with them? What has it done to increase the capacity of its employees to cope with the new responsibilities?

While acknowledging that problems of capacity constraints are there, officials, nevertheless, claim that KP’s agriculture department is fully capable to cope with the increased responsibilities and functions following the devolution of agriculture ministry to the province.

Additional Secretary, Ministry of Agriculture, Israr Muhammad, says the province has sufficient resources and personnel to perform the new roles. “We have made elaborate arrangements for the purpose. By fulfilling the longstanding demand of the employees for service structure, we have promulgated the 4-tier formula for the officials serving in the agriculture extension, research and livestock sub-sectors. Again, different sections of the department have been allocated sufficient budgets to train their officials so that they could better perform the devolved functions. The department has correlated its targets with the outcomes of provincial agriculture policy and provincial horticulture policy.”

“While the provincial soil conservation directorate can fully address the devolved functions regarding soil survey of Pakistan, another post of director marketing has been created to look after the devolved agriculture products’ grading and marketing responsibilities,” he adds.

To a question as to what were the financial implications of the devolution for the province, Mr Muhammad says, “We have had to own only a few personnel of the soil survey of Pakistan (SSoP), which was handed over to Punjab but it decided to take only the employees and assets within its territory. Accordingly, we have sent the case of these officials to the inter-provincial coordination (IPC) division Islamabad through the provincial IPC department and the decision is awaited. They will be adjusted as and when the decision is conveyed,” he says.

“There is no shortage of money. The ANP-led government has increased the agriculture budget and it has promised to look after all our financial needs in the wake of ongoing and new projects,” he informs.

He says of the three PSDP projects that were left to the provinces to look after them — the national programme for improvement of water courses, programme for high efficiency irrigation and the crop maximisation project — KP has allocated Rs355million, Rs120mn and Rs170mn for them respectively from its own resources for the current fiscal. The money is sufficient for the year and the provincial government has assured us of financial allocation if need be.”

But the problems remain to be addressed. The PODB has been wound up and its functions devolved to provinces. “If any province or donor agency and foreign country wish to sign a Memorandum of Understanding (MoU) for developing oilseeds or olive or any other agriculture crop, it will still have to seek approval of federal entities like PARC or ministries like economic affairs division and ministry of commerce,” says an official on the condition of anonymity.

“Had the provinces been fully empowered in this respect, agriculture would have greatly benefited. The provinces also need improved seeds and other services from foreign countries. They either need to be empowered or a facilitation centre needs to be setup for the purpose at provincial or federal level,” he says adding, “The resourceful tea/tobacco research institutes and PARC, etc, have been retained at the centre and only the financially weaker attached departments with only liabilities and no incomes have been handed over to provinces.”

The landmark 18th          amendment had devolved 12 functions and attached departments of the now defunct federal ministry of food, agriculture and livestock (MINFAL) to provinces or other federal ministries.

The devolved functions include those of plant protection; economic studies for framing agriculture policies; farm management/ research for planning; project formulation and evaluation; crops forecast and crop insurance; marketing intelligence; agriculture commodity, market and laboratory research; soil survey and preparing comprehensive inventory of soil resources; production of special crops like UT olive; standardisation of agriculture machinery; economic planning and coordination with regard to cooperatives; socio-economic studies for framing agriculture research policies; and high level manpower training for agriculture research.

As for the attached departments of MINFAL, the agriculture grading and marketing department, agriculture policy institute, department of plant protection, directorate general of food and agriculture, federal seeds certification and registration department, SSoP, Pakistan agriculture research council (PARC) and national agriculture research council, Pakistan central cotton committee, Pakistan oilseeds development boards (PODB) were devolved to provinces, adjusted in other federal ministries or wound up. For example SSoP was handed almost entirely to Punjab.”

The above devolution of functions and attached departments was affected according to the notification of June, 2011. But recently, another entity with the name of federal food security and research division (FFSRD) has been formed which will cater to all the functions of the former MINFAL to ensure food security and coordinate research in the country. The FFSRD is gradually obtaining back all the attached departments that had been handed over to other federal ministries. The export of agriculture items that had been handed over to the ministry of commerce will be reverted back to the new ministry.

   

sluggish development spending in KP

Constrained development spending

By Tahir Ali

THE Khyber Pakhtunkhwa government eyes financial utilisation between 80-100 per cent of the stipulated annual development spending by the end of the current fiscal year.

According to officials in the provincial planning and development department, an overall 50 per cent utilisation ratio was ascertained by the end of the third quarter with industries, water and energy etc. recording 32 per cent, socio-economic sectors (agriculture, food, R&D etc.) 62 per cent and the social sectors (education and health etc.) 38 per cent by March-end.

An official claimed that the ongoing projects are moving according to schedule, adding that almost the major areas, especially the social and economic sector, have achieved their stipulated targets. “It is envisaged that the utilisation ratio of the
development budget will remain satisfactory by the end of financial year,” claimed Mr Usman Gul, chief economist of the P&DD.

The ADP size for the current year is Rs85 billion including foreign assistance of Rs16bn, up by 23 per cent from the preceding year. There are 1035 projects with 632 ongoing and 403 new. The share of ADP in the KP budget is 35 per cent.

According to the budget documents, budgetary allocations reflect enhanced priority to income-generating sectors of economy (hydropower generation, oil and gas exploration, tourism, mineral development, agriculture and water). The development of potential growth sectors are being complemented with sizeable allocation of resources to social sectors.

“Productive sectors were allocated Rs10.8 billion, socio-economic 21.3 billion and the social sector 36.8 billion from the total ADP size of 69bn excluding foreign assistance of Rs15bn which comes to 84bn for the year,” he added.

But the allocations for the socio-economic sectors like agriculture don’t match with the official assertions. For example, even though the allocation for agriculture and its related sectors has been increased from Rs1.175bn in last fiscal to Rs1.355bn this year, its share has decreased from 1.70 per cent to 1.59 per cent as percentage to the total ADP outlay.

Most ADP projects are intended to boost regional economy, spur economic activities and bring marginalised districts to the mainstream of development.

The provincial government has prepared a 10-year hydropower generation action plan costing Rs330 billion, according to which, 24 projects would be initiated in KP to generate 2100 megawatts of electricity.

“On April 30, Chief Minister Ameer Haider Khan Hoti inaugurated the Dral Khawar Power Project in Bahrain having a capacity of generating 36.6 megawatts to be completed within three years at a cost of Rs7 billion.

Work on other energy/power projects forming part of the present ADP ( Sharmai hydropower project of 115MW, Matiltan of 84MW, Shushai-Zhendoli 144 MW ) also continues or is shortly to start. All these projects are predominantly foreign funded
with only 10-20 per cent local component,” he said.

Mr Gul said the donor’s interest in KP has increased. Also, the major share in foreign aid in 2011-12 is that of grant (79 per cent).

“Through foreign-aided project ‘Livelihood Development’ the government is trying provide on social safety nets. Livestock,
dairy development, seed quality assurance, water for all, maximisation of food products/production, and mitigation of climate change impact on all the sectors remain focus of this project,” he added.

“Work on the three other special area development schemes for the backward districts of Torghar, Kala Dhak and Kohistan, estimated to cost Rs4bn, Rs1.3bn and Rs0.9bn respectively, is also progressing smoothly. Several other urban development projects such as construction and remodelling of Southern Bypass at Hayatabad and flyover on Rehman Baba and Bacha Khan Chowk in Peshawar, the Bacha Khan Poverty Alleviation Programme are also continuing in full swing,” he said.

To a question whether the ADP utilisation ratio has been historically low due to corruption, terrorism, financial constraints or lack of capacity of the implementing agencies/departments and whether these and other factors had affected the ADP utilisation this year and to what extent, he said the aggregate utilisation ratio of previous ADPs usually remained at 50 per cent at the end of the third quarter but it increased in the last quarter with an aggregate utilisation ratio of 80-100 per cent at the year end.

“Local ADP utilisation remained very good, except for donor funding and federal pledging for its vertical programmes, which sometime causes delay and resultantly ADP utilisation suffers. But we do not anticipate any such issue for the current ADP,” he
added.

However, the economic growth strategy paper prepared by KP says, poor infrastructure, low human resource base and skills levels, high insecurity, unreliable supply of utilities i.e electricity, communication and water and weak public-private collaboration are hampering development and entrepreneurial activity in the industrial and value added sectors of the economy.

According to the cost of conflict report 2009, the total fiscal impact of terrorism amounted to Rs142.2bn. KP’s current expenditure is eating up over 65 per cent of total budget and the salary budget alone has increased from Rs40bn in 2008 to Rs76bn in 2010 mainly for creation of new posts, increase in salaries and intensified rate of retirement.

The strength of government employees has risen from 0.3mn to 0.37mn between 2006-07 and 2011-12, according to official data, squeezing the room for investment in productive and socio-economic sectors.

The provincial ADP, says an official paper, has been skewed towards brick and mortar projects, but deprived soft drivers of
growth in productive and socio-economic sectors.

The ADP spending, experts say, is too thinly spread and the concerned departments try to address as much problems as possible in the limited space and money available to it. As such projects are delayed with cost over-runs.

The government should allocate sufficient money to prioritised schemes to ensure their efficient implementation and timely completion.

The completion of Chakdara Bridge, connecting Dir with rest of the country via Malakand, in record time of four months with the help of Pakistan Army shows that delay in development projects can be minimised provided coordination with relevant development agencies is improved for quick implementation.

Agriculture in budget of Khyber Pakhtunkhwa

Bakau agriculture 1

Image via Wikipedia

When it comes down to food

The budget of Khyber Pakhtunkhwa does not hold much for the agriculture sector

By Tahir Ali

http://www.jang.com.pk/thenews/jul2011-weekly/nos-10-07-2011/pol1.htm#3

Agriculture sector in Khyber Pakhtunkhwa has once again failed to elicit enough funds and attention from the provincial government in the budget.

Contrary to official claims that the new budget would be innovative in its outlook, an analysis of the annual strategy shows that it is yet another exercise characterised by meagre funding, phased allocation of funds that delays completion of projects for years and with overstretched plan of action that has no or negligible results.

Agriculture sector, which accounts to 25 percent of provincial gross domestic product and on which the livelihood of around 70 percent of its population depends directly or indirectly, requires an out of box solution, sufficient funds and their en-bloc release, and most of all commitment of provincial authorities whose indifference could be devastating for the sector after the 18th amendment.

The Chief Planning Officer of ministry of agriculture, Ahmad Said, informs agriculture Annual Development Programme (ADP) for 2011-12 has been prepared in the light of provincial agriculture policy 2005, horticulture policy 2009, and reconstruction priorities.

The total outlay of ADP has been increased by 15 percent from Rs69bn to Rs85bn. Allocation to agriculture and its related sectors has been increased from Rs1.175bn in the outgoing fiscal to Rs1.355bn for new fiscal but its share has decreased from 1.70 percent to 1.59 percent as percentage to the ADP. The ADP has 71 projects, including Rs0.849bn for 47 on-going and Rs0.505bn for 24 new schemes.

The whitepaper 2011-12, issued by the provincial finance department recently, says this year’s provincial ADP reflects higher priority to income generating sectors of economy, including agriculture. “Agriculture can easily attain the status of big industry in the province if proper care and patronage is given to it,” it argues.

For example, for five old and new schemes of agriculture mechanisation requiring Rs855mn, only Rs164mn are allocated. And for 37 old and new schemes in agriculture research that required Rs1040mn, only Rs243 have been earmarked for the coming year. Similarly, agriculture planning schemes have been provided only Rs21mn out of the total required Rs640mn.

For project distribution of cultivable land amongst landless farmers and agriculture graduates, which has a total outlay of Rs200mn, only Rs10mn have been allotted to the year, which means it will take years for the project to complete and benefit the farmers.

Again, only Rs1mn have been set aside for rehabilitation of germ-plasma units in Hazara division that involves Rs10mn in all. And for the establishment of the olive orchards in wasteland, another good intervention, only Rs10mn out of the total Rs60mn have been approved for the year.

Similarly, for a 2008 project of strengthening of planning and monitoring capacity of the agriculture department involving Rs15, only Rs3mn have been allotted while Rs5mn had been spent on the project. Can there be any better proof for half-hearted measures on the part of the government?

According to an official document, in the outgoing year, out of the total core ADP estimates of Rs69 billion, Rs45bn were released but actual expenditure stood at only Rs26bn. For the agriculture sector, over Rs1.22bn were released against the budget estimates of Rs1.175bn but only Rs0.67bn of these could be spent till 20th May, 2011.

Viewed in this backdrop, the amount to be spent on agriculture may be much less than allocated in the ADP. In the new ADP, there are 39 foreign-funded projects worth over Rs16bn but the agriculture sector has no projects in it like the outgoing fiscal. The government should have arranged research and development projects with the help of foreign donors to give a fillip to the under-performing sector.

Last year, the KP government had announced revival of cooperative bank and promised to provide Rs1 billion seed money for easy farm and non-farm loans to small farmers and rural women from the bank but actually onlyRs200mn were released. This year too, Rs400mn will be released. How can credit ratio be improved in this situation?

“The main problem confronting farmers is their poverty and costliness of agricultural inputs but there is no scheme to address the problem. The government should have announced an agriculture subsidy regime on its own or with the help of foreign donors,” says Haji Niamat Shah, a farmer. Despite these shortcomings, the annual agriculture roadmap of Khyber Pakhtunkhwa is comprehensive and has something for each sub-sector.

According to Ahmad Said, lands that were washed away by floods would be rehabilitated and orchards would be established anew through free plants provision. “Another project for improving quality and increasing production of fruit plants through tissue culture technology has also been proposed. A public-private joint scheme for olive cultivation in areas where ordinary crops cannot be grown is being launched,” he adds. Subsidized inputs availability, weak coordination between farmers and government and wastage of on farm produce have gone unaddressed.

KP’s agriculture budget: Business as usual

Agriculture

Image by thegreenpages via Flickr

KP budget glued to traditional approach

By Tahir Ali Khan

Dawn 20-06-11

http://www.dawn.com/2011/06/20/kp-budget-glued-to-traditional-approach.html

Officials had claimed that next year`s agriculture budget of the Khyber Pakhtunkhwa would be innovative, allocate sufficient funds and offer out-of-box solutions. But an analysis of the annual development programme shows it to be `business as usual`.

The overall meagre size of the ADP for the sector coupled with small apportionment of funds for various schemes shows it is a new budget with the old approach. It is characterised by meagre funding and staggered allocation of funds that delays completion of the projects for years. It is an overstretched plan of action that has negligible results at the end of the day.

The sector needs strong commitment of the authorities because the livelihood of around 70 per cent population of the province depends on it directly or indirectly.

The annual strategy aims at doing much with the little amount made available. With en bloc allocation to projects becoming impossible, delays in completion of projects become inevitable.

For example, for the project for distribution of cultivable land amongst landless farmers and agriculture graduates, which has a total outlay of Rs200 million, only Rs10 million has been earmarked for the next year. It will take years for the project to complete.

Again, only Rs1 million have been set aside for the Rs10 million rehabilitation of germ-plasma unit in Hazara division. And for development of olive orchards in wasteland, another good intervention, only Rs10m out of the total outlay of Rs60m have been approved for the year. For new schemes worth Rs716m in the agriculture research, only Rs109m have been provided.

Achai conservation and development programme estimated to cost Rs222m gets a meagre Rs42m. While Rs141 had been spent on it in the last fiscal, why the remaining amount is not allocated to complete the vital project?

The ADP addresses only marginally most of the serious problems like outdated farming techniques, inefficient extension and research outfits, low per hectare yield, lack of value addition, wastage of produce, shortage of irrigation water and the like.

The annual roadmap for agriculture for 2011-12 has been prepared in the light of provincial agriculture policy 2005, horticulture policy 2009 and the floods reconstruction priorities, a senior official said.

The agriculture budget has 71 projects including Rs849m for 47 ongoing and Rs505m for 24 new schemes.

The allocation to agriculture and its allied sectors has been increased from Rs1.175bn in the outgoing year to Rs1.355bn for new fiscal but its share has fallen from 1.70 per cent to 1.59 per cent of the overall ADP.

The livestock sector, for the first time, has been allocated Rs0.60bn or 44 per cent of the agriculture budget.

According to the province`s white paper 2011-12, this year`s budgetary allocations reflect higher priority to income generating sectors of the economy, including agriculture.

Agriculture can easily attain the status of big industry in the province if proper care and patronage is given to it, says the white paper.

To ensure efficient implementation and timely completion of the schemes the present strategy of spreading out resources too thin delays projects with cost over-runs.

In the agriculture sector, only six of the 84 projects were completed in 2010-11. And the problem of low utilisation of funds is another pressing problem that hinders timely completion of projects.

According to the white paper, in the preceding year, out of the total budget ADP estimates of Rs69 billion, Rs45bn were released but actual expenditure stood at only Rs26bn. For the agriculture sector, over Rs1.22bn were released against the budget estimates of Rs1.175bn but only Rs0.67bn could be spent till May 2011.

Viewed in this backdrop, the amount to be spent on agriculture may be much less than allocated in the ADP.

The size of foreign assistance in the new ADP is over Rs16bn for 39 projects but there is no project for the agriculture sector in it like the previous year. Only six per cent farmers in the province have access to agriculture credit.

Last year, the government had announced revival of cooperative bank which was to provide Rs1 billion seed money for easy farm and non-farm loans to small farmers and rural women but actually only Rs200m was released.

Notwithstanding these drawbacks, the annual roadmap of Khyber Pakhtunkhwa has something for each agriculture sub-sector: agriculture extension schemes (Rs0.11bn), agriculture mechanisation (Rs0.16bn), on farm water management (Rs0.15bn) agriculture research (Rs0.24bn), livestock extension (Rs0.24bn), agriculture planning (Rs0.02bn), livestock research (Rs0.27bn) and soil conservation schemes Rs0.05bn.

Besides these, projects for backyard farming and livestock rearing, value addition of fruits and vegetables, rehabilitation of flood disaster lands with plantation of new fruit orchards, olive cultivation initiative, poverty alleviation through improved rural poultry production and conservation of the Achai cattle breeds have been proposed.

Furthermore, a project on micro-propagation/tissue culture has also been proposed to produce millions of plants sooner than routinely possible.

Low priority to farm modernization

Farmer plowing in Fahrenwalde, Mecklenburg-Vor...

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KP’s low priority to farm modernisation

By Tahir Ali Khan

http://www.dawn.com/2011/06/13/kp%E2%80%99s-low-priority-to-farm-modernisation.html

THE majority of farmers in Khyber Paktunkhwa is using the age-old technique — a pair of bullocks — for ploughing its fields, instead of tractors.

Only about 20 per cent farmers use modern agriculture technology in the province. This is because either most of them have no resources to buy the services or have no knowledge or inclination to use the modern farming techniques.

Agriculture worldwide has undergone tremendous transformation and latest technologies are used for ploughing fields and sowing, harvesting and crop packing but KP farmers, especially the majority poor/small ones, still continue with outdated ways, resulting in low crop yields, and wastage of agriculture assets like water and low incomes.

Farmers usually don’t benefit from provincial government’s research endeavours and innovative technology for lack of coordination between the line departments, and the growers and the line departments.

A senior official in the Agriculture Department agrees that problems such as lack of mechanised farming, low per acre yield, inputs availability constraints etc., are also suffering from weak agriculture extension for lack of coordination between farmers and the government.

“Our researchers need to develop seeds varieties for the different climatic zones in the province that could increase both under-cultivation land and production. But there are two challenges in this connection. One is for the research scientists to develop new varieties and techniques and the second is how that is to be made available to farmers so that they could use them,” he said.

“Even if researchers fulfil their responsibilities but their products are not available to farmers or they are not inclined to use them, the problem will remain unresolved. Extension department needs to make latest research and development products and farming techniques available to farmers as soon as possible,” he added.

“It is strange the farmers still prefer outdating farming techniques that result in poor per acre yield and therefore the incidence of poverty is increasing amongst small farmers,” he said.

Mechanised farming is urgently needed to increase per acre yield but the small landholding is the hurdle. The research directorate in collaboration with local industry could solve this problem by evolving miniature engineering machinery and technology. To facilitate the directorates of agricultural research and agricultural extension in their endeavours to benefit the farmers and to bridge the gap between farmers and research, the government should revive the erstwhile outreach directorate in the ministry of agriculture.

The outreach directorate will surely reach out to the farmers with new technologies. It had done pretty good job till 1995 when it was wrapped up. Its revival is necessary to address the critical problem of coordination between farmers and agriculture researchers.

The next provincial Annual Development Programme has a new project for strengthening of outreach activities, but meagre allocation is a cause of concern.

The project was allocated Rs50 million but only Rs15 would be spent under the ADP. It means there cannot be any meaningful practical changes at least for some years to come.

Agriculture cannot be developed in the province by taking half-hearted routine measures. It, instead, requires some innovative, out of box, targeted and emergency plans to develop the sector on which around 70 per cent of provincial population depends.

An official informed that the provincial government intended to revive the outreach directorate. “The terms of reference of the directorate have been prepared and necessary allocations have been made in the next budget for this purpose,” he informed.

“This would surely expedite services, improve coordination between the stakeholders and bridge the gap between farmers and research thereby facilitating and benefiting the farmers enormously. It will regularly update the policy makers on the requirements of the farmers and will also inform the latter on any invented/imported technology or technique sooner rather than later,” he hoped.

Besides the above shortcomings, some other problems are also hampering agriculture development in the province.

In the recent past the agriculture extension directorate was being run without a full-time head.

Also, there is an acute shortage of research personnel in the directorate. The shortage of senior research officers is particularly serious.

“Many researchers are performing their duties under compulsion but waste no time when they get an offer from private companies which pay them hefty amounts. The lack of service structure and chances for promotion is discouraging new talent to join the directorate and the existing ones are also leaving their services.”

“Most of the officers are performing their duties in the same scales for 30 years despite being qualified. In a situation when the officers and officials retire in the same scale they were inducted in and they are paid comparatively far less than their research counterparts in the private sector, it is not strange if most of the existing officials too are opting for retirement, ex-Pakistan leave or leaving their service in search of better future,” conceded the official.

The government should offer incentives to attract competent people to the sector and should also announce a service structure and comprehensive relief package for the existing ones to arrest the trend of flight of human capital from the directorate.

Innovative farm schemes needed

Investing in innovative farm schemes

By Tahir Ali Khan

Dawn, 06-06-2011

http://www.dawn.com/2011/06/06/investing-in-innovative-farm-schemes.html

THE Khyber Pakhtunkhwa government will present its first budget this week after the devolution of the federal agricultural departments to the provinces. The question arises: what difference will it make?

Though officials of the provincial agriculture department are confident that their development strategy reflects out of the box thinking, farmers have very little hope that it would be any different from the past. Thy say the traditional approach will prevail.

Minister for Agriculture Khyber Pakhtunkhwa Arbab Ayub Jan declined to share any details about the allocations and targets for the next year’s ADP for agriculture but said the budget would be non-conventional in its priorities and plans.

“Several new interventions have been proposed. Allocations have been approved for all of the schemes we had suggested. This has been done for the first time and we hope it would help develop farming in the province,” he said.

Ahmad Said, Chief Planning Officer of the agriculture department, said “We have suggested various innovative schemes, the details of which, I cannot share as yet. I am hopeful this year’s comprehensive ADP with several innovative steps would ensure expansion and development of agriculture. The special focus is on revival of farming in the 12 flood-hit districts,” he said.

Farmers have their own concerns. “The problems are so huge that only a revolutionary ADP, with innovative steps and enormous investments can tackle them. But there is little likelihood that any such plan will be included in the annual agriculture roadmap,” opines Naimat Shah Roghani, a farmers’ leader from Mardan.

High prices of various farm inputs have increased cost of production manifold.

“The government should extend direct subsidies on the farm inputs like seeds, fertiliser, tractors, power, diesel and tube-wells,” he said.

The agriculture sector has received meagre funds in successive ADPs despite its huge significance as the primary source of livelihood for around 70 per cent provincial population.

While the allocation for agriculture sector was increased by about 45 per cent this fiscal year over the preceding year, it came down from 2.4 per cent of last year’s core ADP to 1.9 per cent of this year’s total core ADP of Rs58bn.

Irrigation budget was 4.3 per cent of the core provincial ADP last year. Though its allocation went up by about 70 per cent, it decreased to about 4.1 per cent of the ADP this fiscal year.

Roghani said at least five per cent of the ADP should be allocated for agricultural development, which should be gradually increased to 10 per cent in the coming years.

Only about 20 per cent farmers use quality seeds and modern agriculture technology, for which agricultural research, engineering and extension directorates should be strengthened.

“For better coordination between the farmers and government and to facilitate the directorates of agricultural research and agricultural extension and to bridge the gap between farmers and research, the government should revive the erstwhile outreach directorate in the department of agriculture,” said Muhammad Khalid, an agronomist from Mardan.

“The outreach directorate reached out to the farmers at their doorstep with new farming technologies and improved seed varieties, but became dormant in 1995. Its revival is necessary to address the critical problem of coordination between farmers and agriculture researchers,” he said.

“Soil testing laboratories should be opened in all the districts and tehsils. If modern farming technology and techniques are provided to farmers, it will change their farming from subsistence to commercial/modernised one,” he added.

KP needs to bring under cultivation about 1.6 million acres of cultivable wasteland. If possible, it should distribute the state-lands at nominal rates amongst landless farmers.

This requires water for irrigation which can be met by building small dams for conserving floods/rain water for future use. Wastage of water can be minimised by lining the water-courses and canals and its efficiency increased by adopting the sprinkle and drip irrigation.

And fruit orchards could be set up in areas not suitable for food or cash crops.

Backyard or household farming can also increase people’s incomes. The government, however, will have to provide seeds of vegetable, fruit plants and animal progeny to the poor households.

Tunnel farming technique needs to be extended. For this, the government should provide the technology along with guidance and financial support to the poor farmers.

As prices of chemical fertiliser are gradually becoming unaffordable, the government can support the use of green-manure or other organic fertiliser.

According to Roghani, access to market and improved marketing is vital for increasing the incomes of farmers. At present these markets function only in two districts. More markets should be set up across the province.

Livestock sector continues to be provided with meagre budget. There should be some special programme for the livestock farmers, especially women, who should be given free animal offsprings and poultry initially.

Around 60 per cent area of Khyber Pakhtunkhwa is suitable for olive cultivation. If an olive plantation project is launched and farmers get plants and technical support from the government, oil import bill could be reduced.

Modern laser technology could be used for land levelling. Mechanised farming is vital to increase per acre yield; for small landholdings, common facilities need to be provided.

Khyber Pakhtunkhwa needs more farm credit facilities. It accounted for only 3.4 per cent of the country’s agriculture credit of Rs233bn in 2009. Only six per cent farmers here have access to farm credit against 21 per cent in rest of the country.

“Interest on agriculture loans needs to be decreased and its process simplified,” Roghani said.

The government and private sector should establish agricultural machinery pools and input centres at villages where farmers could get these things on subsidy and deferred payment, apart from guidance.

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