Does Diversification towards Oilseeds Production reduce the Import burden in Pakistan?

Abstract

Agriculture, constitutes a large segment of Pakistan’s economy, is facing problems in the production of oilseed crops. The situation is getting bad to worse due to increase in population and demand of oilseeds has increased from 1.298 million tons to 3.069 million tons during the last thirty three years with the same local production capacity. During 2013-14, the local oilseed production comprised of 17.9 percent of the total consumption, while the remaining 82.1 percent of the demand was fulfilled through import. The Ordinary Least Square (OLS) technique is applied to examine the impact of different factors on the IHVC in Pakistan. The regression coefficient of import of oilseeds showed a negative and highly significant impact which indicated that huge import of oilseeds badly affects the public exchequer. The regression coefficient of number of tube wells, availability of credit and farm machinery (tractor) showed a positive and significant impact on IHVC. The regression coefficient of local production of oilseed crops showed a positive and significant impact, it showed that increasing the area for production of oilseeds enhanced the contribution of high value crops in GDP resultantly reduce the import burden.