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COMPARATIVE ADVANTAGE AND COMPETITIVENESS OF MAJOR AGRICULTURAL CROPS IN INDUS BASIN: PRICE RISK ANALYSIS

Anwar, Sofia (2004) COMPARATIVE ADVANTAGE AND COMPETITIVENESS OF MAJOR AGRICULTURAL CROPS IN INDUS BASIN: PRICE RISK ANALYSIS. PhD thesis, University of Agriculture, Faisalabad.

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Abstract

The world economic scenario is set for change under free trade regime, increasing competition and relative competitiveness of different countries. A significant change in economic policies of Pakistan has profound implications for national economy, the study of comparative advantage is of major importance to know the extent and potential for comparative advantage and competition of agricultural commodities. This is also important to identify the priorities for resource allocation among competing crops. This study is aimed at analyzing the changing agricultural comparative advantage over time and its implications for trade development. The extent of policy distortion and agricultural protection is also determined by the study. Four major corps i.e wheat, rice cotton and sugarcane are analyzed by taking the data of two main provinces for three harvesting years i.e 2001-01 to 2002-03. The data were analyzed to smooth out variations over time. Initially crop budgets were considered to analyzed the crop performance, in financial terms. Later on the import and export parity estimates were obtained to evaluate comparative advantage, in economic prices. The policy analysis matrix (PAM) was developed for four major crops that nearly consume 90 percent of the domestic resources and have high economic importance. The static analysis showed that Pakistan has comparative advantage at export parity prices for cotton and rice. The wheat and sugarcane have comparative advantage but at import parity prices. They have no comparative advantage at export parity prices. The DRC is fairly high for wheat and sugarcane. The analysis was further subjected to Risk analysis. The price of commodities and prices of DAP and Potash were taken as risk variables to evaluate comparative advantage and competitiveness of crops in the changing scenario. The risk analysis showed that rice and cotton in Pakistan have comparative advantage at export parity prices. Both maintained comparative edge even under price risk situation in wake of trade liberalization and export trade regimes in the next five years. The wheat and sugarcane showed a significant comparative advantage as import substitution crops but showed marginal competitiveness in the risk situation in the next five years, at national level. The analysis showed that Pakistan has to maintain competitive edge in rice and cotton through quality produce and value addition. The productivity of wheat and sugarcane should be enhanced along with reduction in cost of production. The subsidy on urea (given on gas) and irrigation water should be reviewed. Sugarcane is highly water consumptives crop. Its area may be reduced and the production loss thus created can be covered through manifold increase in yield.

Item Type:Thesis (PhD)
Uncontrolled Keywords:agricultural crops, indus basin, price risk analysis, agricultural commodities, wheat, rice cotton, sugarcane
Subjects:Social Sciences(g) > Economics (g5)
ID Code:649
Deposited By:Mr. Muhammad Asif
Deposited On:14 Sep 2006
Last Modified:04 Oct 2007 21:02

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