THERE is a growing opposition to subsidy and minimum support price to farmers on certain agricultural commodities on grounds that it is not reaching the targeted small growers and is mostly pocketed by big landowners and millers.

Last month, the National Assembly standing committee on ministry of industries and production also took a serious notice of an inland subsidy given on export of 1.2m tonnes of sugar worth Rs8bn to sugar tycoons, not farmers, by the previous government, which the committee said, was a ‘gross misuse’ of taxpayers’ money and insisted on NAB inquiry into the matter.

This month, Pakistan Institute of Development Economics (PIDE) in its quarterly ‘Economy Watch’ report says wheat support price has lost its utility as it mostly benefits large farmers and millers, not the small farmers. And despite considerable increase in wheat support price in recent years, the total area under wheat crop has not increased but rather decreased, thus, defeating the objectives it is paid for. The objectives are to guide the farmers’ production decisions, stabilise price and take care of both small farmers and urban consumers. Since subsistence farmers do not produce surplus wheat, they remain unable to benefit from the government procurement centres because of their limited reach and delays in payments against supplies.

Federal Minister for National Food Security and Research Sikandar Hayat Bosan has not formally reacted to the PIDE report, nor taken notice of its critical message. Soon after the report’s release, he said he will raise the issue of wheat support price in the next meeting of the Council of Common Interests. The government, he had said earlier, would increase wheat support price next year, and would purchase all quantity of wheat produced this year.

Referring to an increase in wheat support price by Sindh government at this stage of harvest season, contrary to past practice, he pointed out that there was a difference in how wheat support price is fixed in Sindh and Punjab. Sindh has raised the procurement price by Rs1.25 to Rs31.25 per kilogram to discourage movement of wheat to Punjab and other provinces and also prevent smuggling to Afghanistan.

In Pakistan, farmers are provided a notional type of minimum support price for wheat and sugarcane. Crops such as gram, onion, potato, and non-traditional oilseeds such as sunflower, canola, soybean and safflower are not covered by the subsidy programme and are traded exclusively in the private sector.

Meanwhile, subsidies on imported fertiliser constitute a significant share of the government’s total support to agriculture. In India, fertiliser subsidies have increased by about 560pc in five years. In Pakistan, the fertiliser industry is provided gas at a lower price which is another form of subsidy. In a nutshell, the government in 2012 contributed Rs250 per bag through gas-price differential ( though fertiliser prices often sell higher than the officially set prices). So, it is claimed that the farmer is also benefiting from the current system of fertiliser subsidies, in addition to, of course, subsidy on imported fertiliser. The total cost of subsidies Pakistan paid in 2012 came to $897 million, which was 0.4pc of the GDP.

In March, the Economic Coordination Committee of the Cabinet decided to keep wheat support prices unchanged at Rs1,200 per 40 kilos. It was a rare case in recent years that the support prices in 2013 were not raised during sowing season although landed elite in the parliament had already raised their voice in support of an increase in a November 2013 meeting of the NA standing committee on ministry of food security with a warning that any delay or denial could create a ‘crisis’ in the food sector. This they did despite the fact that decision on support price in matters of agriculture rests with the provinces.