2013年-世界发展银行全球_Agriculture_Trade_and_Price_Policy_in_Pakistan_42页_2mb

Summary of Agriculture Trade and Price Policy in Pakistan

Core Content

This policy paper examines the incentive framework for the agriculture sector in Pakistan, with a focus on trade and price policies. It highlights the complexity, opacity, and variability of Pakistan's trade regime and its impact on agricultural incentives and productivity. The paper emphasizes the need for policy reforms to improve the efficiency and sustainability of agricultural trade and price interventions.

Main Trends in Agriculture Performance

• Agriculture's Role: Agriculture remains central to Pakistan's development, contributing about 21% of national GDP and employing 45% of the labor force.
• Population Dependency: Two-thirds of Pakistan's population live in rural areas, and agriculture is the primary source of livelihood for rural households.
• Sectoral Composition:
  • The crop sub-sector has declined from 65% of agricultural value added in 1990-91 to 42% in 2010-11.
  • The livestock sub-sector has increased from 30% to 55.1%.
  • Fishing and forestry remain at 2.9%.
• Economic Contribution:
  • Crops like wheat, cotton, sugarcane, and rice are the backbone of the rural economy.
  • These crops contribute 2.7% (wheat), 1.4% (cotton), 0.8% (rice), and 0.9% (sugarcane) to GDP.
  • Agricultural exports account for ~50% of total agricultural exports, with rice being the largest export item.
  • Agricultural imports are concentrated in sugar and palm oil, which account for ~43% of total agricultural imports.

Trade and Price Policies

• Complexity: Pakistan's trade regime is complex, opaque, and discretionary, with numerous tariffs, para-tariffs, and exemptions.
• Tariff Structure:
  • Customs Duty (CD), Regulatory Duty (RD), Federal Excise Duty (FED), Provincial Excise Duty (PED), Sales Tax (ST), and Withholding Tax (WHT) are the main taxes affecting agricultural trade.
  • Special Regulatory Orders (SROs) are used to exempt specific products and firms from standard tariffs and taxes.
• Trade Liberalization: By 2003, trade liberalization had simplified the tariff structure and eliminated most quantitative restrictions, but reversals began in 2006, especially for wheat, sugar, and fertilizer.
• Export Policy: Pakistan has few export restrictions, with no export taxes (except for some regulatory duties). However, export bans on certain "essential" products are in place to ensure local availability.

Incentive Distortions and Effective Rates of Protection (ERPs)

• Nominal Rate of Protection (NRP): Reflects the price received by producers relative to the price in the absence of policy.
• Effective Rate of Protection (ERP): Measures the net returns to farmers relative to the non-interventionist case.
• Key Findings:
  • ERPs for wheat, rice, sugar, and cotton are negative, indicating implicit taxes on farm income.
  • Fertilizer subsidies significantly drive ERPs by reducing input costs.
  • World price volatility affects domestic prices, but government interventions (e.g., procurement targets) stabilize domestic prices.
  • Price band policies with floors and ceilings could help reduce price volatility, especially for wheat and sugar.
  • Options contracts may be a viable tool to protect small farmers from price fluctuations.

Policy Recommendations

• Tariff Reform:
  • Move toward uniform and low tariffs as the only border measure, eliminating quantitative restrictions and discretionary exceptions.
  • Ensure transparency and predictability in the tariff system.
• Fertilizer Subsidy Reform:
  • Gradually eliminate the fertilizer subsidy due to its significant fiscal cost and impact on ERPs.
  • Evaluate the cost-effectiveness of current fertilizer programs and their impact on input use, yields, and farmer income.
• Export Policy:
  • Maintain low or no export taxes and eliminate quantitative export restrictions.
  • Consider political economy justifications for export restrictions, such as supporting downstream industries (e.g., textiles).
• Volatility Management:
  • Introduce variable tariffs based on moving averages of world prices to cushion domestic buyers and producers.
  • Implement price band policies for wheat and sugar to manage price fluctuations.
  • Explore options contracts to provide price floors for small farmers, with targeted support based on farm size.

Conclusion

The paper concludes that reforms in trade and price policies are essential to improve agricultural productivity and resource allocation. The current complex and discretionary trade regime leads to distorted incentives, inefficient resource use, and higher volatility in agricultural markets. A revised, transparent, and uniform tariff system along with targeted support for small farmers could help align agricultural incentives with market realities and promote sustainable growth.