Comparative Advantage of Major Crops Production in
Punjab: An Application of Policy Analysis Matrix

Quddus, Muhammad Abdul; Mustafa, Usman

doi:10.35536/lje.2011.v16.i1.a3

Cited by 9 publications

(7 citation statements)

References 8 publications

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“…Appleyard (1987) in his assessment of the comparative advantage of important crops in the 1980s also addressed the issue of protection to cotton and rice crops in Pakistan. Other recent studies relating to the topic are those by Akhtar, et al (2007), Chaudhry, et al (2009 and Quddus and Mustafa (2011). The present study has been designed to ascertain the efficiency of cultivation of cotton and rice and estimating distortions to incentives, if any, in the course of their production in the Punjab --the largest producer of these crops in the country.…”

Section: Introductionmentioning

confidence: 97%

Economic Efficiency and Distortions to Incentives in Production of Cotton and Rice Crops in Punjab

Salam¹,

Tufail²

2021

NJSSH

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The study based on crop budgets, for 2010-12 crops, was, inter alia, designed to examine economic efficiency and distortions in incentives to production of cotton and basmati rice, long grain aromatic rice, crops in Punjab. The analysis has confirmed the competitiveness of their production in Punjab as farmers’ gross revenues from these crops exceeded their total costs, enabling farmers make some profit. The competitiveness, nevertheless, is sensitive to changes in prices of the produce and those of the inputs. The analysis conducted at economic prices have indicated economic efficiency and comparative advantage of Punjab in producing both basmati rice and cotton. The domestic resource cost coefficients for basmati as well as cotton were consistently less than one, confirming Punjab’s comparative advantage and economic efficiency in their farming. The estimation and analysis of nominal projection coefficients and effective protection coefficients for basmati and cotton crops have indicated implicit taxation as well as some protection to domestic producers. The results of economic efficiency and comparative advantage, of both basmati and cotton, are quite sensitive to the fluctuations and developments in world markets with spill over to the domestic market, impacting their competitiveness.

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Section: Introductionmentioning

confidence: 97%

Economic Efficiency and Distortions to Incentives in Production of Cotton and Rice Crops in Punjab

Salam¹,

Tufail²

2021

NJSSH

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“…The results suggest that WTO accession would increase cotton imports by 670 thousand metric tons. Quddus & Mustafa (2011) reported that the nominal protection coefficient ranges from 1.33 to 1.99 under an export price parity situation. It shows that the prices received by farmers are more significant than the export parity/economic prices.…”

Section: Review Of Literaturementioning

confidence: 99%

“…The economic practicality, competitiveness of production systems, technology adaptation, cost of farm inputs, the productivity of cropping practices, degree of product differentiation, share in the market, market distortions, and government interventions in economic activity are various factors reported in the literature (Kennedy, et al 1998;Pahle, et al 2016;Williams, 2010). Several studies have been conducted in Pakistan to evaluate the economic efficiency and profitability of cotton (Abdul & Sadia, 2016;Abro & Awan, 2020;Kannapiran & Fleming, 1999a;Quddus & Mustafa, 2011;Wei, et al 2020). However, none of the studies have adopted a holistic approach to investigate the impact of agricultural policies on cotton production in Pakistan.…”

Section: Introductionmentioning

confidence: 99%

Policy Impacts on Comparative Advantage and Production Protection to Cotton and Its Competing Crops in Pakistan

Ahmed Baig,

Ullah,

Nasir

2023

pdr

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Agriculture, particularly cotton cultivation, holds paramount significance for the economy of Pakistan. The cotton crop shares 0.6 percent of the gross domestic product and contributes 70 percent to the country’s export earnings. Nonetheless, during the last two decades, cotton area and production in the country have declined. Therefore, this study aims to evaluate the economic benefits and competitiveness of cotton and its competitive crops under the current set of relevant policies. We have employed a Policy Analysis Matrix to assess the impact of agricultural policies on cotton and its competing crops. The results show that cotton producers across Pakistan are implicitly taxed, while sugarcane and rice producers are protected under the current policy measures. It has also become evident that large cotton growers are more likely to get a comparative advantage of prevailing policy incentives than medium and small growers. Thus, crop-specific and scale-specific policy interventions are suggested to enhance cotton production. Similarly, exploring and converging on new potential areas for cotton production, especially in Balochistan, can improve the country’s overall cotton production. 1. INTRODUCTION State institutions worldwide protect and support the agricultural sector through various policy measures. This support keeps the agriculture sector productive and competitive to ensure food security for the masses, livelihoods for farming entities, and to meet the requirements of agro-based industries (GOP, 2019). These policies broadly deal with farm inputs and outputs, trade facilitation/restrictions, mechanisation of cropping systems, and investment in rural and agricultural infrastructure, including R&D and irrigation. Government interventions have resulted in various advantages for specific crops while creating social and economic externalities for others. Pakistan has also adopted several policy measures to cater to the needs of farming communities in the changing global scenario. These policies are sometimes crop-specific but, most of the time, are designed to increase total crop productivity (MPDS, 2013). Agriculture contributes around 22.9 percent of the GDP and almost 34.7 percent of employment in Pakistan (GOP, 2023a). The share of major crops in GDP is nearly 4.32 percent, of which cotton accounts for 0.6 percent of GDP and 3.1 percent of total value addition in agriculture. In the case of cotton, Pakistan is the fifth largest producer globally. Its share is around 0.6 percent of GDP and contributes 2.4 percent of the value added in agriculture (GOP, 2023a). Similarly, cotton has the longest value chain among all crops, contributing significantly to Pakistan’s foreign exchange earnings. Pakistan exports $836 million (4.7 percent) of raw cotton and yarn, while cotton-based exports account for $9.5 billion, comprising more than half of the country’s total exports (GOP, 2021b). Though cotton is considered the main cash crop in the country with its strong backward and forward linkages, the past couple of decades have observed a dismal cotton performance in many instances. At the same time, the last five years can be considered devastating in terms of cotton area, production, and profitability. Table 1 below reflects the reduction in the cotton area in Punjab (which contributes around 70 percent of the total cotton acreage) and the decline in cotton production and yield. It has been observed that since 2000, cotton has lost 12 percent of its area, while its competing crops have gained the area under cultivation, mainly sugarcane, which followed a 17 percent increase in its area. The area replacement of cotton crop with its competitive Kharif crops, i.e., sugarcane, maize, and rice, has many interesting insights from a policy perspective. There are diverging opinions at the policy level, whether the downfall of the cotton crop is due to adverse climatic conditions, the development of pest pressure in cotton growing areas, or the frequent distortions in output and input markets. It has been observed that output prices, among all other factors, remain the primary cause of reducing the profitability of the cotton crop.

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“…They found that export performance is positively correlated with ISO 9000 certiﬁcation. Quddus and Mustafa (2011) examined the relative efficiency and comparative advantage of major crops, i.e. wheat, rice, sugarcane and cotton of Punjab (Pakistan), from 2000 to 2005.…”

Section: Literature Reviewmentioning

confidence: 99%

Export competitiveness with border-sharing countries: an assessment of Pakistan

Munir

Sultan

2019

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Purpose The purpose of this study is to analyze the export competitiveness of Pakistan with border-sharing countries, i.e. Afghanistan, China, India and Iran for the year 2014. Design/methodology/approach The study uses revealed symmetric comparative advantage (RSCA) index to measure export competitiveness with border-sharing countries. The study has split the results into highest and marginal comparative advantage and disadvantage according to the rank. Findings Pakistan is exporting 160, 155, 133 and 60 commodities at three-digit level of Standard International Trade Code (Rev 3) classification to Afghanistan, China, India and Iran, respectively. The results suggest that Pakistan has highest and marginal comparative disadvantage in more than half of these commodities exported to border-sharing countries. Pakistan can improve its market share for rice in Afghanistan, China and Iran. Special measures and productive efforts are required to improve the export competitiveness of cotton, textile yarn and cotton fabric in border-sharing countries. Practical implications Pakistan has to adopt special strategies to improve the competitiveness of those commodities that fall in marginal comparative advantage and disadvantage. To increase the volume of cross-border trading, political and diplomatic channels are required among the countries especially the border-sharing countries. Originality/value Export competitiveness of Pakistan is analyzed for all the commodities exported to border-sharing countries and categorized into highest and marginal comparative advantage and disadvantage. To avoid the problem of asymmetry in Balassa index revealed comparative advantage, RSCA index is used.

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Comparative Advantage of Major Crops Production in Punjab: An Application of Policy Analysis Matrix

Cited by 9 publications

References 8 publications

Economic Efficiency and Distortions to Incentives in Production of Cotton and Rice Crops in Punjab

Economic Efficiency and Distortions to Incentives in Production of Cotton and Rice Crops in Punjab

Policy Impacts on Comparative Advantage and Production Protection to Cotton and Its Competing Crops in Pakistan

Export competitiveness with border-sharing countries: an assessment of Pakistan

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