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DE RUEHLH #0179/01 2460302
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FM AMCONSUL LAHORE
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INFO RHEHAAA/NSC WASHINGTON DC
RUEKJCS/SECDEF WASHDC
RUMICEA/USCENTCOM INTEL CEN MACDILL AFB FL
RUEHLH/AMCONSUL LAHORE 5320
RUEHIL/AMEMBASSY ISLAMABAD 4868
RUEHKP/AMCONSUL KARACHI 2144
RUEHPW/AMCONSUL PESHAWAR 1824
RUEHBUL/AMEMBASSY KABUL 0487
RUEHLO/AMEMBASSY LONDON 0195
RUEHNE/AMEMBASSY NEW DELHI 0867
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHC/USAID WASHDC
RUEAIIA/CIA WASHDC
RHMFISS/JOINT STAFF WASHINGTON DC

UNCLAS SECTION 01 OF 02 LAHORE 000179 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EAGR EAID ECIN EINV ETRD PGOV PREL PK
SUBJECT: AGRICULTURE IN PUNJAB: MODERN AGRI-BUSINESS CAN LEAD 
DEVELOPMENT 
 
¶1.  (SBU) Summary: A key strategy for enhancing agricultural 
production in Punjab is to leverage private sector connections 
to export markets, and to use supply chain development to drive 
broader improvements in agricultural practices, according to 
many researchers in the field.  Ten years of small farm oriented 
yield improvement interventions by the government have failed to 
produce meaningful change in farming practices or productivity. 
Projects to support more sophisticated Pakistani agri-businesses 
that connect to large buyers in the global market and who work 
with smaller farmers in their supply chain should be continued 
as an effective use of international assistance to improve farm 
productivity, and Pakistan's food security.  End Summary. 
 
- - - 
DECLINING EFFICIENCY OF FARM LABOR 
- - - 
 
¶2.  (SBU) The overwhelming driver of improvements in small farm 
output in Pakistan over the last 30 years was labor input, but 
that increased labor was inefficient and hindered the adoption 
of better farming practices.  Independent academic research and 
studies by the World Bank, Asian Development Bank, and the 
Government of Punjab have all noted the failure of Punjab's 
non-farm sector employment to keep up with the growing labor 
supply since at least 1990.  This resulted in a dramatic rise in 
rural poverty, a decline in real rural wages, and increasingly 
labor-intensive cropping.  Although extra labor did enhance 
total agricultural output, the volume of additional farm labor 
significantly outweighed yield improvements, marking a prolonged 
decline in farm labor productivity in spite of a decade long 
agriculture development program by the Government of Pakistan in 
partnership with the United Nations.  Labor intensive cropping 
has become part of a debilitating cycle of poverty in rural 
Punjab. 
 
- - - 
"GROW FOR EXPORT... THERE IS NO OTHER WAY" 
- - - 
 
¶3.  (SBU) Several agricultural development experts made the same 
recommendations for improving agriculture in Punjab: focus on 
private sector rather than government delivery of farming 
knowledge; use international export standards to determine 
appropriate practices; and allow market-driven supply chain 
development to improve techniques employed by individual small 
farmers, rather than using model farms in a passive 
demonstration of better methods.  The government should be a 
facilitator, not the primary supplier of techniques, seed, 
machinery, and marketing. 
 
¶4.  (SBU) Main Shoukat Ali, CEO of the Punjab AgriMarketing 
Company (PAMCO), is among the most progressive horticulturalists 
in the country.  In a meeting with Econoff, he said he tells 
farmers to "grow for export if you want to raise your economic 
level.  There is no other way."  He added that the connection to 
export markets must start with a more advanced farmer.  Adnan 
Ali, Manager of Dairy and Livestock Sector Development at the 
Small & Medium Enterprise Development Authority (SMEDA) likewise 
said he focuses on partnerships with agri-businesses looking to 
expand their own market or their supply chains.  On the other 
end of this relationship must be a reasonably well-educated 
farmer or producer organization willing and able to adopt new 
techniques, Adnan said, not your typical village farmer. 
 
¶5.  (SBU) SMEDA recently joined PAMCO, the Pakistan 
Horticultural Development and Export Board (PHDEB), and the two 
largest mango producers' associations to develop a four-year 
mango strategy with technical assistance from USAID's Empower 
Pakistan: Firms project. Other growers are providing matching 
funds to the USAID/GOP joint Competitiveness Support Fund for 
the construction of a mango processing facility. 
 
¶6.  (SBU) Dr. David Picha of the USAID Pakistan Firms project 
and Louisiana State University told Econoff that high value 
horticulture holds tremendous potential for Pakistan, especially 
in Punjab, but it needs to be driven by export-oriented, 
sophisticated agri-businesses, not an inherently patchy 
 
LAHORE 00000179  002 OF 002 
 
 
government effort to introduce horticulture to your average 
small farmer.  Common horticulture practices in Pakistan 
frequently result in 30 to 40 percent post-harvest loss.  The 
solutions, he said, have "got to be market-driven."  Picha 
argued that exporting producers would not only have higher 
production standards, but they would also need to comply with 
international operating standards like GLOBALGAP, which requires 
larger, more progressive agricultural producers to bring 
smaller, less sophisticated neighbors into their supply chain. 
Profit-oriented, market-driven links would spread faster and 
more effectively, Picha said, than any government program of 
farm by farm interventions. 
 
- - - 
COMMENT: USE THE PRIVATE SECTOR TO PROPAGATE BETTER PRACTICES 
- - - 
 
¶7.  (SBU) Comment: U.S. assistance to the targeted districts in 
Pakistan must include a foundation of bottom up, rural community 
development programs, but the infusion of substantial additional 
funding offers a unique opportunity to expand existing top down 
efforts as well.  Many experts and policy makers suggest 
focusing supplemental agricultural aid on better educated and 
more ambitious farmers, and providing them with sophisticated 
private sector partners for technical assistance and marketing 
support, developing infrastructure projects related to shipping 
and handling, and sponsoring supply chain development 
activities.  Public-private partnerships like USAID's mango 
export project point the way forward and should be continued and 
expanded.  This approach would require significant USG effort to 
bring American agri-businesses to the Pakistan market, but in 
the end, the impact could boost the economies of both Pakistan 
and the United States. 
CONROY