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Agrarian Economies  of the Two Punjabs
Iqbal Mustafa and Farrukh M. Khan

Before the Partition of the subcontinent, the province of Punjab was the breadbasket of the Indian subcontinent. After the Partition, the divided parts of Punjab Pakistani and Indian are still performing the same functions with many differences and some similarities. The major difference is in production efficiencies where Indian Punjab leads. For example, it produces about the same amount of wheat from half the acreage of Punjab in Pakistan. In rice, the differences are even more dramatic: Indian Punjab produces five times more with three times the yield per hectare.

Although direct comparison between the two Punjabs is not truly valid, given the difference in size geographical area of Indian Punjab is only 25 per cent of Pakistani Punjab and it has more uniformity of climate, better water resources and less uncultivable wastelands the higher production efficiency is because of many factors attributable to human effort from which Pakistani Punjab can learn many lessons.

Provincial Profiles
An outline of the land and water resources of two Punjabs is given in Table-1.

Table 1

Both provinces lie in the temperate zone within the monsoon belt. Annual rainfall in Pakistani Punjab varies from 150 mm in the south arid regions, 620 mm in central semi-arid Punjab to 1150 mm in northern sub-mountainous regions. In Indian Punjab the annual rainfall is similar to central and northern Punjab in Pakistan varying between 500 mm to 1000 mm. The seasonal distribution of rainfall is strongly influenced by monsoons, which start in June and cause 70 per cent of the rainfall till September. Winter rains occur during December to March and are more wide-spread. The quantity and distribution of rainfall is normally insufficient for crop requirements in most areas.

In both provinces there are four distinct climatic seasons:

• Winters -- moderate widespread rainfall – from December to March
• Summers -- extremely hot and dry – from April to June
• Summers -- hot and humid, scattered rainfall – from July to September.
• Autumn -- cool and dry – from October and November.

Crops are classified by season: Summer crops, grown from April to November, are called Kharif crops while winter crops, grown from October to April, are known as Rabi crops.

It may be noted from Table 1 that in Indian Punjab, 95 per cent of cultivated area is irrigated while in Pakistani Punjab only 41 per cent of cropped area is irrigated. There are large tracts of agricultural lands that are rain fed in Pakistan, called barani areas. This factor depresses overall yield per hectare in Punjab for wheat. In addition to this difference, 71 per cent of irrigation in Indian Punjab is from tube-wells and canal irrigation is 28 per cent. In Pakistani Punjab, 41 per cent areas are tube-well irrigated and canal irrigated areas are 56 per cent. However, in Pakistani Punjab the total quantum of irrigation water from tube-wells is higher as canal irrigation is mostly augmented by underground water. There are two reasons for higher use of ground water in Indian Punjab. First is the relative quality of groundwater that is better in India; many areas in Pakistan have subsoil water that is unfit for agriculture having either high salinity or high sodicity, or both. Secondly, the Indian government has provided huge subsidies on electricity for tube-wells. Until recently, electricity was provided free for tube-wells but now a flat rate of Rs. 60 per Horsepower per month is levied, which is nominal compared to the high electricity tariffs in Pakistan.

Land Distribution
A major difference in agricultural economies of two Punjabs is the land distribution patterns. The Indian Land Reforms brought about in 1960 by the Nehru government limited a family holding up to 16 standard acres (6.5 hectares). A standard acre is defined as one that is irrigated, has good subsoil water and is not affected by excessive salts. For lands that have some defects or are poor in fertility (excessively sandy) the holding limit is enhanced up to 35 acres (14 hectares). In the land holding figures for India, therefore, the category of 10 hectares and above corresponds to 14 hectares maximum.

The three land reforms in Pakistan (1979, 1972 and 1977) reduced individual holdings to 8,000 Produce Index Units (PIUs), or 100 acres irrigated and 200 acres unirrigated land. This has allowed some farmers to own large tracts of land under family holdings. Therefore, in the figures of land distribution for Pakistan 10 hectares and more may correspond to much larger holdings.
Following the 1960 Land Reforms, the land ownership patterns changed in Indian Punjab. 'Since the introduction of the green revolution technology, the agrarian structure of Punjab has witnessed interesting changes. The number of marginal and small holdings declined sharply, while those in the higher-size categories showed a modest increase. These changes occurred primarily due to three reasons. First, with the onset of the green revolution technology, crop production activities became economically attractive, which created an active land-market for leasing and selling land. Secondly, progress of agriculture under the green revolution technology created additional employment opportunities in the non-farm sector. These encouraged many marginal farmers either to sell their land or lease it, to earn higher incomes from non-farming jobs. Finally, the new technology turned out to be more attractive to the large farmers, mainly because the mechanical inputs associated with it were indivisible, and thus uneconomic for use in smaller-size farms.'

During the 1980s, as farm profitability decreased and non-farm job opportunities became limited, the number of farms increased. The average holding has decreased from 4.07 hectares (in 1980-81) to 3.61 hectares. However, the trend has been arrested now in spite of land division by laws of inheritance. The current distribution of land holdings is given in Table 2.

Table 2: Size of Farms in Indian Punjab

In Pakistan, the range of land holdings is far wider. With higher limits on land holdings on one end, and increase in subsistence farms on the other due to Islamic laws of inheritance in the absence of land markets, land holdings have been fragmented at a faster pace than in India. The lower limit on land holdings and fast-track adoption of production-augmentation technologies in India has created uniformity in size of land holdings. The distribution of land holdings in Punjab, Pakistan is given in Table 3.

Table 3: Size of Farms in Pakistani Punjab.

If farm sizes are arbitrarily divided into small (less than 2 hectare), medium (up to 20 hectare) and large (above 20 hectare) the distribution of lands shown in Table 4 indicates that in Pakistan the distribution curve is much wider.

Table 4: Comparative Distribution Curve of Land Holdings.

India has focused its institutional support in terms of infrastructures, technology, credit, research and extension and market mechanisms for the medium sized farms in a very aggressive way. In Pakistan the proportion of small, uneconomic farms and larger farms is much higher. Larger land holdings have a profound influence on political economies of rural areas where large farmers are able to appropriate disproportionate amount of resources credit, subsidies, extension services etc.

Infrastructure
Rural infrastructure plays a critical role in the development of agriculture. Roads, electricity and communications are key components of infrastructure, apart from social sectors like health, education and sanitation etc. Indian Punjab has higher density of roads, electricity and communications network than its Pakistani counter part. Compared to Pakistan's Punjab, the Indian Punjab has twice as much density of rural roads 0.47 kilometres of roads per square kilometre of area. Pakistan has only 0.19 kilometres per square kilometre. In Indian Punjab 81 per cent of tube-wells are powered by electricity as compared to only 10 per cent in Pakistan's Punjab. This may have to do with higher electricity tariffs but more so with distribution, efficiency and reliability of rural electricity networks. Indian Punjab is ahead on other benchmarks of infrastructure development.

In comparison, effective land reforms are considered a key factor for development of agriculture in Indian Punjab by many experts. It is true that uniformity of farm size has helped in creating commercial orientation of agriculture, especially with institutional support provided by the government. It has been easier for research and extension services to focus on technology packages for medium sized farm operations. However, while land reforms laid the foundations for progress in a planned economy, many other government initiatives and policies contributed towards fast growth. The aggregate impact of the government's support to agriculture in Indian Punjab has, therefore, been very effective because of the planned synergy between many factors, which reflects in its higher productivity.

Land Utilisation, Production and Yields
Table 5 provides a profile of land utilisation in the two Punjabs as a comparison.

Table 5: Classification of Area (000 ha.)

It may be noted that Indian Punjab has one-fourth the geographical area of Pakistani Punjab but its total cropped area is about one-half. This is due to higher utilisation of lands for agriculture (85 per cent as against 52 per cent) and higher intensity of cropping (185 per cent against 145 per cent). Combined with higher per hectare yields, this translates into much higher production efficiencies.

Since both provinces share similar climate, soils and water resources, the cropping patterns are quite similar out of historical inertia; however, the share of land allocated to various commodities varies out of economic choices. Table 6 shows the allocation of cropped area to various crops.

Table 6: Percent of land allocated to crops

There are similarities in cropping patterns to a large extent, except that Indian Punjab allocates larger acreages to rice while in Pakistani Punjab cotton and fodders occupy larger shares in land allocations. The higher yields and better quality justify greater emphasis on cotton, which feeds Pakistan's large and competitive textile industry. The higher yields and guaranteed support price make rice an attractive option for Indian farmers. Livestock accounts for a larger share (over 50 per cent) of agricultural GDP in Pakistani Punjab; therefore more land is allocated for fodders. However, low yields of fodder crops and low milk production of animals also contribute to disproportionately large allocations of land to fodder crops.

The key difference between the two provinces lies in yields. In wheat and rice yields differences are dramatic while in other crops Indian Punjab has significantly higher yields. Cotton is the only exception to this. Table 7 provides production and yield data for main crops in the two Punjabs.

Table 7: Production & Yield of Main Crops (2002-2003)

Detailed analysis of yield differences is discussed later in this article but in case of rice and wheat the main factors are research and extension support in technology, subsidised inputs, structured markets, guaranteed prices and reliability of water resources. In case of wheat, following factors contribute towards high yields:-

• Timely sowing: In the rice-wheat rotation, zero tillage technology enables farmers to sow wheat within the month of November. Later sowing (as in Pakistan) reduces yields as much as 40 kgs. per day of delay.
• Mechanical Harvesting: Wheat crop in Indian Punjab is harvested with locally manufactured and affordable combine harvesters which reduces losses. Manual harvesting causes harvesting losses up to around 15 per cent.
• Subsidised inputs, especially electricity for tube-wells and reliability of supply for timely irrigations.
• Guaranteed minimum support price for wheat, purchased by the government.
• For rice higher yields are primarily due to coarse grain varieties of higher yield potential in place of Basmati that is grown in Pakistan, stable water supplies required for rice cultivation and minimum support price guaranteed to the growers.

Dairy Sectors
Traditionally, livestock has been an integral part of agriculture in both Punjabs. In fact, small farmers have used livestock production and breeding as an auxiliary source of income and subsistence.

In Indian Punjab due to the commercialisation of agriculture and heavy pressure of growing wheat and rice, the area under fodder has been decreasing and so has the livestock population. In twenty years the population of cattle has decreased by 20 per cent while the population of buffaloes has increased by 50 per cent. This change has been driven by development of commercial dairy farming where buffalo milk is a marketable commodity supported by a relatively structured milk market. Punjab produces about 10 per cent of milk in India. Livestock enterprises account for one-third of the share of total agriculture production in the province.
In Pakistani Punjab the livestock production remains largely in the non-commercial, subsistence level sector because of unstructured milk markets, availability of marginal lands for grazing and lack of progress in the development of dairy industry. The province produces about 60 per cent of Pakistan's total milk. Pakistani Punjab has a much larger number of sheep and goats because of ample grazing land and meat market. Milk alone accounts for one-third of total agricultural production of the Province. With meat and other livestock products the sector contributes about 56 per cent of the total agricultural produce of the province. Ironically, livestock sector that has sustained the small farmer and landless tenants in the rural areas has received the least amount of development effort and funds from the government over the past five decades. Yet the growth in livestock sector has been steady and exceeds crop sector growth levels during most periods. The animal population of two Punjabs is given in Table 8.

Table 8: Livestock population (000 heads) 1996-97

India is the largest producer of milk in the world, Pakistan is fifth. Between the two countries, there are more milch animals than the rest of the world put together. Pakistan has the lowest cost of milk production in the world after New Zealand. This immense natural potential is grossly under-utilised because of poor technology in animal husbandry, social prejudices and dearth of investment. Although India is a couple of notches above Pakistan, it shares many weaknesses in livestock sector. These are listed as under:-

• Preference of buffaloes for milk, since consumers prefer the white, high fat milk over cow milk which is yellowish and low fat. Buffaloes are low converters of feed to milk compared to cows. Average yield of buffaloes is 1300 litre of milk in a lactation period of 210 days as compared to 3500 litres of milk from crossbreed cows. Buffaloes have a calving interval of 14 18 months compared to 12 to 14 months for cows.
• Local breeds have not been improved and are genetically low yielders compared to international standards. In developed countries (Europe, New Zealand and U.S) specially bred cows (Fresians and New Jerseys) yield around 10,000 litres of milk per lactation.
• Improper feed: Green fodder production does not meet feed requirements and is augmented by crop residues (straws) which are good fillers in fibre but low in nutrition.
• Lack of advanced and adequate veterinary services to reduce diseases.
• Buffaloes are sensitive to summer heat; the production drops drastically during summer months. Cows are less sensitive to heat.
• Silage (stored fodder) is not used; therefore there are periods in spring and autumn when fodder supplies dry up.
• In Pakistani Punjab, milk collection systems are poor. Evening milking is not collected and the milk is wasted.
• A general lack of good animal husbandry management practices.

India is self-sufficient in milk, the Punjab province being a net exporter. While Pakistani Punjab is self-sufficient, Pakistan as a country imports milk and milk products on a regular basis. The immense potential of dairy farming is not fully exploited in the region, much more so in Pakistani Punjab than in Indian Punjab.

High Value Agriculture
The diversity of physiographic, climatic and soil characteristics of both Punjabs is very conducive for cultivation of a variety of fruits, vegetables and flowers. Horticulture, along with commercial dairy production, offer a much higher return per unit of land, water and labour than conventional grain and fibre crops. In spite of the far better comparative advantage of resources that dairy and horticulture products offer, the region is more focussed on conventional field crops. Dairy and horticulture production exists traditionally to meet limited local demand. Hence the per capita availability of dairy and horticulture products is much higher in the region compared to neighbouring provinces and countries. Citrus, mango and guava are the leading fruit products. Traditional vegetables grown are potatoes, onions, tomatoes, peas, cauliflower, cabbage, brinjal, ladyfingers, sweet potato, lettuce and other seasonal vegetables. The ecology of the region is, however, well suited for production on non-traditional vegetables that are a part of western cuisine with large markets in EU countries. These include green beans of all types, brussel sprouts, asparagus, celery, broccoli etc. Since these vegetables are not a part of local cuisine their cultivation is limited to kitchen gardens. Table 9 provides data of fruit production in the regions.

Table 9: Fruit Production of Two Punjabs

The main reasons for poor performance of horticulture produce, in spite of tremendous potential appear to be:-

• Import substitution policies of the governments have placed greater focus on grain and fibre crops in the past.
• Orchards were not planted with commercial export orientation. Trees have become old and are not replanted frequently enough for optimum production.
• High yielding, certified and quick maturing plant materials are scarce. There is a dearth of scientific plant breeding laboratories and nurseries providing certified materials.
• Disease and pest control is inadequate taking a toll on yields and quality.
• There are no international market connects. Local markets are unstable with large price fluctuations.
• Lack of intermediary technology of value addition through grading, processing, storage and transport.
• Support of research and extension is inadequate. Orchard management and vegetable production technologies are primitive.

Governments on both sides of the border are becoming cognizant of the need for diversification of agriculture production towards high value crops and some elementary efforts are being directed towards this end.

Other Non-Traditional Crops
Cultivation of flowers has attracted the attention of farmers and demand is increasing in domestic and international markets. Production of gladioli, roses, tube-roses, chrysanthemum, carnations, marigold etc. is increasing. However, marketing avenues, cold storages and transport systems are the key bottlenecks.
Other activities like mushroom production, bee-keeping, sericulture (silk worms), medicinal and aromatic plants have existed for some time but their large scale commercial adoption is not in sight.

Key Factors of Development
Marketing
Agriculture production systems are driven by markets, technology and credit. A recent report by D.G. Agriculture Punjab (Pakistan) covering the findings of a delegation of the Agriculture Marketing, Department of Agriculture, headed by the Minister for Agriculture Marketing who visited India from 8th to 20th October 2004, states, 'The Agriculture Marketing System of India is based upon two principles emanating from a strong commitment of the government to support and patronise the farming communities. The first principle is timely supply of agricultural inputs at affordable prices e.g. fertiliser, pesticides, electricity for small pumping units, canal water, agricultural machinery and equipment. The second one is an effective commitment of the government to purchase every grain of marketable surplus at a rewarding price acceptable to the growers at no risk or cost to the farming community.'

In the state of Punjab (India), there are 145 market committees regulating sale and purchase of agricultural produce through over 2175 markets (145 Principal Yards, 533 Sub-Yards and 1516 Purchase Centres). A Principal Yard is a permanent market for grains where office of the Market Committee is also located while a Sub-Yard is also a permanent market in the notified area where business of either grains or fruits and vegetables is conducted. The Purchase Centre is a temporary installation for the procurement of grains on seasonal basis.

The basic objective of Agricultural Marketing Act is to protect grower's interest by ensuring fair return of his produce. Government of India has launched several schemes to safeguard the interest of the growers including Minimum Support Price (MSP), subsidised inputs, reduced electric tariff for agricultural tubewells, provision of agricultural machinery and equipment and construction of rural godowns etc. In India, MSP is applicable for 23 agricultural commodities (7 cereals, 4 pulses, 8 oil seeds, copra (coconut shell), seed cotton, raw jute and tobacco). The government's procurement agencies are asked to intervene and purchase even 10 per cent of a particular commodity if the price falls below MSP so as to save farmers from distress selling. The food subsidy involved was IRs 280 billion during the year 2003-04. (Total for India)

In Pakistan, agriculture markets are in a state of transition from state-controlled support price system, similar to India but with far less effectiveness of implementing mechanisms, to a private sector free market driven system. In the absence of intermediary agencies for a free market system warehousing laws, commodity exchanges, negotiable document status of warehousing receipts etc agricultural markets are in a state of shambles. Middlemen exploit the growers and the consumers in the absence of clear rules of conducting business. There are 132 Market Committees in Pakistani Punjab managing 325 markets for grains, fruits and vegetables. The archaic laws and politicisation of these Committees reduce their effectiveness. Grain markets hardly trade 10 per cent of marketable commodities and are basically retail stores of agricultural inputs, which is not permitted under Market Committee laws.

The following initiatives by the incumbent Punjab government are in the pipeline to address shortcomings in agricultural marketing systems.

1. New Ministry for Agricultural Marketing has been setup.
2. Punjab Agricultural Produce Marketing Company PAMCO is being established.
3. Task Force for restructuring of Agriculture Marketing has been setup and is looking at a wide range of marketing issues and will propose a new strategy to synchronise agricultural marketing mechanisms with a private sector driven, open-market system.

It is too early to review the results of these new initiatives.

Dairy marketing
Indian Punjab is far advanced in the dairy sector as well. There are 49 milk plants in the cooperative and private sectors with a handling capacity of 50 lac litres of milk per day. Of these, 11 milk plants belong to Milkfed Punjab, which handles over 15 lakh litres milk per day. Nine of these plants manufacture milk powder, ghee and pasteurised milk in pouches. The 28 milk plants in the private sector, with a capacity of 35 lakhs litres per day, manufacture milk powder and ghee. Some multinational companies, such as Smith Kline & Beecham, Wockhardt Limited, etc., do not make pasteurised milk but manufacture special value-added milk products for sale in India and abroad.

In Pakistani Punjab hardly 6 per cent of milk is processed and marketed through the formal sector. The balance is with the informal 'milkmen' mafia, which is unregulated and indulges is spurious adulteration of milk causing serious health hazards for urban consumers. Two large (one multinational), four small companies and one cooperative company process milk and produce milk products like cheese and yoghurt. They purchase milk largely from small, subsistence level farmers, which has provided additional incomes to the rural poor and advanced the concept of commercial dairy farming in Punjab. Lack of regulations remains the main impediment to the growth of a vibrant dairy marketing system in the province.

Technology
Technology is driven by research and extension. In Indian Punjab, the research system is accordingly integrated with Agriculture Universities as the nucleus of the setup. The universities were established on the pattern of Land Grants Colleges of USA integrating the functions of teaching, research and extension. The main institutions are:-

1. Punjab Agricultural University, Ludhiana;
2. Chudhary Charan Singh (CCS) Hariana Agricultural University, Hisar;
3. Indian Agricultural Research Council, New Delhi; and
4. Indian Agricultural Research Institute, Pusa, New Delhi.

Agricultural universities have been pace setters in quick transfer of technology as their recommendations matched the farmers' expectations in their own fields. Their Directorates of Extension Education undertake to disseminate new knowledge and farming technologies through:

• Farm Advisory Services,
• Extension Training and
• Communication / Information Services.

Pakistani Punjab has a very elaborate system of research, training and extension but the lack of coordination between the three wings neutralises most efforts and the aggregate results are poor. Research is under Ayub Agriculture Research Institute, Faisalabad with 21 sub-institutes that are crop specific and regional in nature. These are managed by Agriculture Department, Punjab. University of Agriculture, Faisalabad and Rawalpindi (Arid zone) are purely teaching institutions and are run by Higher Education Commission (HEC), a federal agency. Extension has now been devolved to District Governments and an Executive District Officer (EDO), Agriculture, heads extension services in his respective district. His areas include general extension, water management, soil conservation forestry, livestock etc. It is quite visible that critical linkages between Research, Training and Extension are missing in Pakistani Punjab. A comparison of the status of agricultural machinery in Indian and Pakistani Punjab is given in Table 10.

Table 10: Mechanisation in two Punjabs

This table indicates that agriculture in Indian Punjab is in a higher technological orbit due to the efficient coordination between research and extension. Despite being 25 per cent in size the number of farm machines is greater than Pakistani Punjab and this difference also extends to crop management practices.

Credit
Credit is a critical input in agriculture production systems. On both sides of the border, farmers have relied heavily on informal sector credit through Arhtees and middlemen because although they charge higher interest rates the convenience of service provided by them far exceeds what formal sector institutions have to offer. According to an estimate 64 per cent of agriculture credit requirements in Indian Punjab are met by the informal sector, 51.25 per cent from co-operative institutions and 8.85 per cent from regional rural banks (RRBs). About 55 per cent farmers borrow money from more than one source. In Pakistani Punjab the percentage of credit from informal sources is higher, perhaps up to 80 per cent. The relative efficiency, spread and transparency of Indian agricultural credit mechanism accounts for its wider market penetration.

Punjab State Cooperative Bank (PSCB) and Punjab State Cooperative Agricultural Development Bank Ltd. (PSCADB) provide bulk of agriculture credit in Indian Punjab. Total loan advanced during the year 2003-04 was IRs. 33 billion out of which 16.4 billion (about 50 %) was for agricultural purpose. Recovery rate of short and medium term agricultural loan is over 90 %. The Kisan Credit Card Scheme of the PSCB has sanctioned IRs. 34.6 billion to its 0.75 million card holders. This scheme also provides accidental insurance upto IRs. 50,000/- for credit card holders.

In Pakistani Punjab, the major source of agriculture credit is Agriculture Development Bank of Pakistan (ADBP). Commercial banks and Punjab Provincial Cooperative Bank also provide agriculture credit. In 2002-03 ADBP advanced Rs 22.4 billion, commercial banks Rs. 11.3 billion and PPBP around Rs 7 billion. In commercial banks, five large banks (NBP, HBL, UBL, MCB & ABL) are the lead agriculture credit banks while some private commercial banks, like Punjab Bank, are aggressively trying to capture a share of the market. ADBP remains infected with institutional problems of collusive lending and has lost its lead position in 2004 to commercial banks on the national level.

The rising competition and the general decline in interest rates in the economy in recent years, has helped reduce the rates on agri-loans as well. However, when compared with the overall decline in the structure of interest rates, this decline appears smaller. The higher interest rates on agricultural loans are understandable because the agri-lending incorporate risk factor peculiar to the sector, which include higher administrative cost to extend smaller loans for shorter periods and lack of collateral.

Future Prospects
Liberalisation and globalisation of agriculture under WTO is creating new challenges for both the Punjabs. It will not be possible for either one of the Punjabs to continue with an agricultural structure designed to meet domestic foodgrain and fibre mandates. Both the Punjabs need concrete programmes of diversification and shifting to value addition in respective agro-climatic regions.

Indian Punjab has moved rapidly towards globalisation by setting up agencies like Agriculture and Processed Food Export Development Authority (APEDA), Agricultural Marketing Information Network (AGMARKNET) and Agmark certification. So far quality standards for 181 agricultural and allied commodities have been formulated. During the year 2003-04, agricultural commodities worth IRs. 47.213 billion were marketed under Agmark certification. India needs to protect its agricultural subsidies under 'Green Box' exemption in WTO for a transition to global agricultural economy.

Agriculture in Pakistani Punjab is threatened by water shortage, immature markets and lack of quality standards. The fragmented efforts of establishing Horticulture Development and Export Board, Punjab Agriculture Marketing Company and such agencies need to be harmonised. Directorate of Agriculture & Livestock Marketing and Grading (DALMAG) under MINFAL has the sole responsibility of developing quality standards of grading for marketing but it is lying dormant till hence.

Since both Punjabs face more or less similar challenges, cooperation between the two will be mutually beneficial. Indian Punjab has an advanced development infrastructure for making a transition towards value-added, globally integrated agricultural economy. Pakistani Punjab could benefit from its neighbor's experience and institutional management and governance systems. Economies of scale in developing new agricultural production systems like 'Contract Farming' or 'Corporate Farming' would benefit from a synergy between the two Provinces. All these prospects remain contingent upon progress on the political front between India and Pakistan, especially in the realm of economic cooperation.

(Iqbal Mustafa has been a member of the Central Board of the State Bank of Pakistan from1997 to 2001. He was the CEO of Small and Medium Enterprises Development Authority (SMEDA) from March 2001 to May 2003. He may be reached at Mustafa@hujra.com)

(Farrukh Mehboob Khan is a marketing professional with an academic background of Development Economics currently associated with the Business Development Division of SMEDA, Lahore)

Sout Asian Journal:8:April-June  2005