PAKISTAN’S CROP SECTOR: AN ECONOMIC EVALUATION

An evaluation of Pakistan crop sector was carried out to check whether the sector was technically productive, financially viable and economically efficient and optimal over the 1990-2005 periods. In the first instant, the yields of Pakistan’s crops were evaluated relative to the world average yields. The results imply that Pakistan’s crop yields are, in general, not comparable to world average yields; the yields of tomato, barley and sorghum are more than 50 percent less while that of lentils, millets, rapeseed and maize are 35 – 50 percent lower and that of IRRI rice, onion, wheat, sugarcane and gram are 13 – 23% lower than the world averages. The financial viability of cropping enterprises, measured in terms of the ratio of net return-on-investment to banking sector interest rate (NIRR), helped categorized Pakistan’s crops in to five major groups, namely Basmati rice, IRRI rice, onion and tomato, having the highest NIRR values (NIRR 10); gram, berseem, millet fodder, potato and rapeseed, having NIRRs ranged between 5 10; wheat, barley and sorghum fodder, having NIRR values ranged between 2 5; mung, seed cotton, maize fodder and sugarcane, having NIRRs valued between 1 2; and maize, millet and sorghum crops, which carry NIRR 1. When crops were tested using optimization technique, only two crop producers (Basmati rice and potato) were found optimizing their outputs; in 13 other cases, crop producers were not optimizing. In three cases (IRRI rice, maize fodder and millet fodder), the estimated optimal output falls beyond the upper limit of confidence interval of existing output level, suggesting that efforts to increase output per hectare would help optimize. In 10 other sub-optimal cases (seed cotton, sugarcane, maize, onion, mung, sorghum fodder, wheat, gram, berseem and rapeseed), the estimated optimal output falls below the lower limit of confidence interval, theoretically suggesting that decrease in existing level of output per hectare would optimize, which is not a reasonably good option as the yields per hectare of these crops are already very low. Hence, efforts should be made to decrease cost of production and increase yield per hectare of these crops simultaneously. Another way to reduce sub-optimality is that farmers use productive factors in optimal proportions which are cost efficient on one hand and output maximizing on the other