WITH the onset of early monsoon and cotton crop under attack by different pests, farmers are increasingly complaining of the lack of pesticides availability and, even more, of the quality of the products.
None of the required products are freely available in the market. The supply pressure is constant, prices are increasing due to shortage and their effectiveness against pests is uncertain.
Conceding the supply pressure, the pesticides manufacturers say that government policies are creating an environment where it is difficult for them to manufacture these pesticides locally and meet the market demand. They list a number of reasons for the current situation and warn that it may soon lead to a crisis if the government does not take prompt corrective measures.
The government figures also explain the situation to some extent. According to the Pakistan Bureau of Statistics, pesticides imports dropped by a staggering 35 per cent between 2010 and 2012. Though the figures for 2012-13 are still being finalised, experts and importers claim that the trend continues unabated.
Explaining the domestic business environment, the manufacturers say the current general sales tax (GST) regime, cartelisation of business in non-business hands and receding writ of the government are a few factors.
To them, the GST regime is the prime culprit. The way it is being handled causes more problems, without adding any fiscal benefit to the government kitty. The GST collection, they added, has fallen from Rs13.47 billion to Rs8 billion. According to the Pesticides Manufacturers Association, their imports are now only 35 per cent of their projections.
As duties grow on import of raw chemicals, they only encourage people who know how to avoid the import duties and make money. Currently, most of the imports have gone in the hands of such investors. Most of them are already in the import business and know the nitty-gritty of the process. They import pesticides in the name of other (thinly taxed) products, ranging between six to seven per cent duties against 17 per cent on patent pesticides. This difference of 10 per cent is huge if taken in the market price perspective.
This creates double jeopardy. It discourages local manufacturing. On the other hand, there is no quality control on input imports and products manufactured with them. “It is mostly smuggling now,” says a manufacturer from Lahore. They are neither into the manufacturing business, nor are their warehouses registered. They mint money and get out of the entire chain with this one off transaction. “Slowly, the business is slipping into the hands of those who are neither interested in quality assurance mechanism nor are they answerable to the market.”
Currently, to quote their executives, even multinationals are losing on their sales. The government needs to sit with the industry and find a solution that ensures smooth supplies quality pesticides to farmers.