The agriculture sector is not only important at national level but also at international level. About fifty years back, the agriculture sector was neglected both in the developed and underdeveloped countries of the world. It was regarded as residual reservoir particularly of labour for employment in industries. In 1960’s the importance of agriculture was realized and adequate attention was given to this sector. The importance of balanced growth of agriculture and industrial sectors was stressed by the development economists. In 1970’s and since the beginning of 1980’s, agriculture in the process of development, has gained increased significance.
Importance of Agriculture in Economic Development:
Pakistan is basically a farming community. About 70% of its population is living in rural areas and nearly 50% of them engaged in farming, livestock and agro-based industries. However, Agriculture sector plays a vital role in the economic development of a country. It is confirmed and supported by the following facts.
1. Determination of GDP growth rate: The GDP growth rate in Pakistan is mainly dependent upon the growth rate in agriculture sector. For example, the GDP growth rate increased from 4.5% in 1993-94 to 5.2% in 1995-96 mainly due to increase in the production of cotton, rice and wheat in the year 1995-96. It came down to 3.1% in 1996-7 due to fail in the production of cotton, wheat and sugarcane.
2. Agricultural Development essential to curtail inflation: If the rate of growth in agriculture sector is low, it brings shortage of food, vegetable, and other essential raw materials in the country. The prices of the essential goods go up. The slow rate or fall in the production of agriculture sector generates inflationary pressure and creates bottlenecks in the economic development of the country.
3. Major component of GDP: Agriculture sector is the single largest component of GDP in Pakistan. Its contribution is 25% to Pakistan’s GDP. The progress of agriculture sector provides a sound base for economic development and is considered one of the preconditions for take off or self sustained growth.
4. Providing labour force to industry: In most of the developing countries (including Pakistan) agriculture is the main source of providing manpower of various sectors of economy. In Pakistan, 50% of labour force is employed in agriculture sector. With the improved growth in the agriculture sector due to mechanization, the surplus labour force can be easily absorbed in the small and large scale industries. The provision of new employment both in the agriculture industrial and other sectors can increase the income of the workers and help them to get out of low income equilibrium.
5. Foreign exchange earner: The agriculture sector is the main source of foreign exchange earnings in Pakistan. The export of cotton, cotton based products, rice etc fetch about 65% of our total export earnings. This helps in the import of capital machinery, equipment, technical know how etc which are essential inputs for development. The availability for foreign exchange not only helps in the industrialization programme but also improves the balance of payments.
6. Meets food requirements: Pakistan’s population is growing at an alarming rate of 2.77% annually. The agriculture sector is successfully meeting the food requirements of over 13 crore persons in Pakistan. Had there been no green revolution in agriculture sector during sixties and seventies, we would have spent the major portion of foreign exchange earned on the food import. The economic development would have also been retarded due to low capital formation.
7. Support of industries: The improved growth in the agriculture sector provides raw material to manufacturing industries. The production of cotton, jute, sugarcane, fruits etc enable the cotton, jute, sugarcane fruit processing and other agro based industries to get material from within the country and expand production. The industries not only meet the domestic requirements of cloth, sugar, jute bags etc but also earn foreign exchange by exporting them.
8. Expanded industrial market: The expanding and progressive sector brings prosperity to the agriculturists. The increase in the income of formers is spent on the purchase of industrial output such as clothes, motorcycles, cars, fans etc. The improvement in the agriculture sector thus provides on outlet for the products of the expanding industries.
9. Marketable surplus: When the agriculture sector is expanded on scientific lines, it yields handsome marketable surplus. The surplus which may be cotton, jute, wheat, sugar, silk, fish, timber etc can help to pay the import of industrial raw materials, capital equipments and technology. This helps in bringing about rapid economic development.