Pakistan’s armed forces have achieved major successes against terrorists in a heroic operation which in terms of its speed and effectiveness will stand as a brilliant moment in the history of counter-insurgency at a global level. It is not surprising that in doing so the Military has won the hearts of the people of Pakistan, whose security, forms of social life and the very survival of the state they inhabit were being threatened. Sustaining military victory however requires overcoming poverty and achieving equity in a new trajectory of economic growth which would deny terrorists in the future of economic and social breeding grounds in Pakistan.

Four main institutional initiatives can be undertaken to restructure Pakistan’s economy for a sustained and equitable development process that could create a more just society and a secure state. First, a policy of enabling the tiller to acquire ownership rights; second, providing access over capital and credit markets to the middle classes and poor together with an institutional framework for faster growth of small scale enterprises; third, establishing large corporations which are owned by the poor and managed by professionals; fourth, the provision to all citizens of Pakistan, basic services such as education, health and social protection (unemployment benefits and state pensions). In this article I will focus on a policy of land to the tiller and discuss the remaining three initiatives in subsequent articles.

The time has come to shift from an elite farmer agriculture growth strategy which has been in play over the last five decades to a new small farmer growth strategy. The small and medium farm sector (less than 25 acres) whose yield potential remains to be fully utilized constitutes a substantial part of the agrarian economy. Farms below 25 acres account for 94% of the total number of farms and about 60% of the total farm area. From the view point of raising the yield per acre of this sector, the critical consideration is that about 29% of its total farm acreage is operated by landless tenants or owner cum tenants. Since tenants lose half of any increase in the output to the landlord, they lack both the incentive and the ability to invest in yield increasing technologies.

A policy of enabling tenant farm households to acquire ownership rights together with unfettered access to input markets can play a vital role in making the small farm sector the leading edge of a faster and more equitable agriculture growth. Such a policy can have two main elements: (i) transferring the existing 2.6 million acres of state owned cultivable land to landless peasants together with an institutional framework for providing them with access over high quality seeds, fertilizers, water and extension services, and (ii) institutional changes to open up the land market together with the provision of credit to tenant farm households for enabling them to purchase land. Let us briefly discuss each of these policies in turn.

A substantial reduction in rural poverty could be achieved if the existing 2.6 million acres of state owned land were to be transferred to landless farm households in holdings of 5 acres each. Thus as many as 58% of the total number of tenant farmers will become owner operators. However providing ownership of land to the landless is a necessary but not a sufficient condition for alleviating poverty. Enabling the landless to make the transferred land cultivable, to actually settle on the new land, and to achieve a sustainable increase in their incomes, productivity and savings are equally important factors in making the scheme successful.

Achieving sustainable livelihoods for the landless rural poor through the provision of state owned land will involve the following steps to be undertaken by relevant departments of provincial governments in partnership with NGOs, the private sector, and international donor agencies: (1) Identifying the main physical constraints to utilizing land for the purpose of achieving sustainable livelihoods for the poor. These include saline soils, poor quality of ground water, lack of management of torrent water, or non-availability of irrigation water. (2) Identifying physical infrastructure interventions that can be made in the concerned areas, such as small scale land reclamation schemes, provision of tube-wells, check dams, water lifting devices and rain water harvesting schemes. (3) The next step would be for the provincial governments in collaboration with Pakistan Agricultural Research Council to mobilize technical expertise for implementing projects through local level organizations of the poor. The financial resources necessary for these infrastructure projects can be mobilized from the Asian Development Bank, the World Bank, Small Business Finance Corporation, Khushali Bank, and the Pakistan Poverty Alleviation Fund. (4) Formation of community based organizations at the local level for enabling landless poor households to begin using the newly acquired land for accessing skill training, credit and technical support from government departments as well as NGOs. (5) Providing technical training and credit for micro-enterprise projects to diversify the livelihood base of the small farmers.

While the transfer of state owned land can provide land to 58 percent of the existing tenant farmers, the remaining 42% can be enabled to buy land through credit and institutional changes in the land market. Financing the purchase of 5 acre packets of land by the remaining 42% of tenant households (377,000 households), can be done by establishing a credit fund for landless tenants amounting to Rs. 283 billion.

We have discussed how existing tenant households can become owner operators to provide them with both the incentive and the ability to fulfill the considerable yield potential of the small farm sector. However a key remaining constraint is the way the power of the landlords mediates both markets and the provision of public services. A substantial proportion of the potential and actual income of the poor peasantry is lost due to the pressure to sell labour at less than market wage rates or without any wages at all. For example the UNDP National Human Development report 2003, shows that 50.8% of the extremely poor peasants have taken loans from the landlords and of these 57.4% work for the landlords without wages while 14% work at a daily wage rate that was about one fifth of the market wage rate in their area. Similarly poor peasants have to pay a higher price for their inputs and get a lower price for their outputs compared to large farmers, thereby losing 20.5% of their income from major crops to such asymmetric markets.
The poor face markets and state institutions which discriminate against their access to productive assets, financial resources, public services, and governance decisions which affect their immediate existence. Overcoming asymmetric power structures will require institutional changes in the process of both elections and governance. It should be possible for the poor to get elected to various tiers of government. At the same time poor communities should be enabled institutionalized participation in governance decisions that affect their social and economic lives.

When small farmers and the rural poor are enabled to participate as active subjects in the process of equitable development and governance, they can play a strategic role in building a dynamic economy and a stronger state.