Dysfunctional farm input market

Published February 10, 2014
- File Photo
- File Photo

A comprehensive farming policy needs to be put in place to cover all aspects of agricultural growth and development and improve productivity. Adhoc government decisions taken from time to time to address a particular issue should be replaced by focusing on an enabling environment for farmers to boost productivity.

Growers have also been persistently calling for subsidy to ensure food security and make agricultural produce more competitive in the international market. They argue that the subsidy is required to compensate them for the huge transfer of resources from rural to urban centres owing to over-priced farm inputs, whether it be seeds, fertiliser or agricultural implements, and unfair prices for their crops.

Over the last several years, farmers complain they have faced serious financial situation because of under- pricing of major crops. Middlemen also join the fray to deny them a fair price as in the case of the sugarcane. This is something which affects the rural economy.

Farmers also criticise the levy of 17pc GST on agriculture implements and machinery. Similarly, they lament that prices of farm inputs like fertiliser remain high. Despite the subsidy announced by the government, this vital input is generally hoarded by the market forces to inflate prices.

“Our position is quite known. The farm sector lacks direction in government policy. Enabling environment for growers is completely missing”, claims Sindh Abadgar Board (SAB) Vice President Mehmood Nawaz Shah.

. He argues that the agriculture sector is more subsidised than any other sector across the world in multiple ways. “But here we are not allowed to export goods. Roughly, we can take wheat’s production to 26 million tonnes from 25 million tonnes through right policy initiatives”, he observes.

It is because of the preference given in policymaking to industrial and financial sectors that farmers are denied fair earnings and adequate savings for investment in raising agricultural productvity, says another farm representative.

“That is why one can see the share of agriculture, which supports directly 44 per cent of the country’s population, in national income going down gradually, over the decades, to 21-22 per cent from a range 50-55 per cent”.

Some farmers believe that the government could subsidise loans for farmers and introduce crop insurance while subsidy on fertiliser should be given directly to farmers instead of through dealers. These decisions could lead to a significant increase per acre yield. With rising cost of inputs, farmers say, they are not getting adequate returns on crops like wheat, sugarcane and rice.

Indicative prices of wheat and sugarcane remained unchanged this year. For farmers, gone are the days when government used to intervene for lifting crops like rice to stabilise prices. It was last done in 2008 when market had crashed. The Trading Corporation of Pakistan (TCP) had intervened in the past and bought rice from millers to provide support to farmers.

The government has announced recently a subsidy of Rs200 per bag on imported urea but growers are not getting any benefit of it. Market prices are higher than the fixed price.

According to Nabi Bux Sathio, the general secretary of Sindh Chamber of Agriculture (SCA), the imposition of 17 per cent GST has pushed up the price of a tractor that used to be sold at Rs560,000 in 2008 to Rs14,35,000. GST has rendered the government’s subsidy of Rs200,000 to Rs300,000 for two different categories of tractors ineffective. “We are paying 17 per cent GST on all farm implements and equipments”, he says.

The GST on farm implements will retard modernisation of agriculture, says a farmer..

“Our Indian counterparts get regular urea supply at Rs400 while we pay Rs2000, and for DAP an even heftier Rs4000, while in Indian DAP is available at Rs1200”, he laments. How could Pakistani Basmati get a fair price in the international market in presence of Indian products?,

he asks.

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