Competitiveness and policy analysis of potato production in different agro-ecological zones of northern areas: Implications for food security and poverty alleviation

Abstract

The study applies Policy Analysis Matrix (PAM) to determine competitiveness and policy effects of potato production in the three agro-ecological zones of Gilgit district. Another major objective is to determine whether Northern Areas of Pakistan qualify for the export of potato or should produce potato as an import substitution strategy to ensure food security and alleviation of poverty. The PAM analysis shows that the Domestic Resource Cost (DRC) values are less than unity (0.27-0.28) for the import substitution regime in all three agro-ecological zones, which shows the region's comparative advantage in producing potato as import substitution; that its values higher than unity (1.02-1.11) for export promotion regime show the region's comparative disadvantage in producing the potato for export purpose. The Social Benefit Cost (SBC) ratios for import substitution regime are greater than unity (2.79 - 3.00), and its value less than unity (0.93 - 0.99) for export promotion regime also confirms the region's comparative advantage in import substitution and disadvantage in export promotion, respectively. It is also found that the single cropping zone in the research area is more competitive than the marginal double cropping and double cropping zones for import substitution. The values of Nominal Protection Coefficient (NPC) for import substitution regime in all three agro-ecological zones are less than unity (0.54 - 0.59), which means that the farmers are receiving less than the world prices. The NPC values for export promotion are greater than unity (1.61-1.78), which means that the farmers are receiving more than world reference prices. Similarly, the values of Effective Protection Coefficient (EPC), Producer Subsidy Equivalent (PSE), and Subsidy Ratio to Producer (SRP) show that for an import substitution regime, potatoes farmers were taxed, and for an export promotion regime the prices are protected and are a positive incentive to farmers. This implies that the current sets of agricultural and macro-economic policies are not for both import substitution and export promotion. The analysis further reveals that marketing and transportation, fertiliser, land preparation, and land rent are the major items of cost in potato production. The study recommends that we strengthen our competitiveness in potato production by improving potato yield and ensuring world-level prices to potato growers. Finally, the government should launch an awareness programme about improved farm technologies, crop management through strengthening of agriculture extension services, and trade liberalisation process in Northern Areas.