ON June 14, a ruling party senator took his party to task in the Senate for ignoring the agriculture sector in the federal budget, saying it seems this sector is not the government’s priority despite its 21pc contribution to the GDP.

What Senator M. Hamza said in the budget debate in the upper house of parliament enjoys consensus among stakeholders in the farm sector in the country. At least two ministers almost subscribed to this view and showed willingness to restore priority status to the sector. In 2013-14 the agricultural growth decelerated to 2.1pc from 2.9pc the year before against the target of 3.6pc.

The dismal performance of the sector was disturbing for the government and Finance Minister Ishaq Dar, while presenting the Economic Survey, felt committed to look into why the growth in agriculture sector had remained low. Low agricultural growth also means less supply of raw materials to agro-based industry such as cotton textile industry which is the largest subsector of manufacturing sector. It also results in lower output of industrial goods.

Federal minister for food security and research Sikandar Hayat Bosan says he used his ‘influence’ to convince a farmers group, Pakistan Kisan Ittehad, on June 10 to put off its sit-in (dharna), in protest against step-motherly treatment to agriculture sector, in Islamabad till July 16 by assuring it that the prime minister has agreed to consider their demands sympathetically.

He assured them that the government was trying to devise an effective agriculture policy, which could benefit both farmers and consumers. But it seemed more like rhetoric. The problem is that farming has become entirely a different field if compared to its past position because now 97pc of growers are small landholders possessing only about five acre of land. Efforts are being made, according to Bosan, to make farming a profitable pursuit.

A package of incentives announced in the budget by the federal government included the credit guarantee scheme, reimbursement of crop loan insurance, livestock insurance schemes in addition to reducing sales tax on tractors,more liberal agriculture credit, and establishment of commodity warehouses. These schemes mostly exclude the small farmers and unless their miseries are addressed, the farm sector cannot see better days.

The credit guarantee scheme will cover for farmers having up to five acres irrigated and 10 acres non-irrigated land.. It will benefit 300,000 farmer households and families with a loan size up to Rs100,000. The scope of already launched reimbursement of crop loan insurance scheme premium is being enhanced up to 25 acres. Previously the scheme covered farmers with landholdings of 12.5 acres. The extended scheme will benefit 700,000 farmer households and families but the majority of small farmers are out of the loop.

The government is introducing the livestock insurance scheme for all farmers getting financing for up to 10 cattle. The scheme will cover livestock insurance in case of calamity and disease. With an allocation of Rs300m the scheme will benefit 100,000 livestock farmers.

To develop a regulatory mechanism for establishment of quality warehouses, silos, cold storages and cold chain, to be financed through warehouse receipt system, the government will establish a warehousing clearing system and provide special incentives for potential investors.

Many farmer NGOs have described most of these insurance schemes of no immediate impact and the overall allocations for different sub-sectors as mere peanuts compared to the sector’s high contribution to the national GDP. These include Farmers Associate Pakistan (FAP), a rich farmers’ body, Agri Forum Pakistan (AFP), Sindh Abadgar Board (SAB).

The ‘so-called’ incentives for promotion of the farm sector, says the Agri Forum, are too inadequate to achieve the required rate of agricultural growth. Since the country’s population is growing by approximately 3.5pc per year, the growth rate of 2.1pc in the sector was too dismal to meet the growing demand of farm produce in the country. The NGO, however, welcomed the scheme of providing insurance cover to agricultural produces and livestock. This would help farmers survive the loss in case their crops are ruined by natural disasters.

What is urgently needed is the availability of all agricultural inputs at subsidised rates at the right time. The cost of these inputs have reportedly increased by 100pc in the last two years. Therefore, the rise in agriculture credit of Rs180bn to Rs500bn was insufficient and would not address the perennial problem of lack of financing in the sector, particularly to purchase inputs. Had it been increased to Rs1,000bn for the year, it would have been satisfactory. Additionally, the allocation of Rs30 billion as loans for small farmers under another head is also inadequate.

A week before the budget presentation, the ministry of commerce had constituted 35 committees across the country to promote the agricultural sector which, it said, was neglected in the past and to avert any incidence of food insecurity. The committees, which had been assigned vague objectives and may turn out to be non-starters, are supposed to boost regional trade and monitor agriculture trade patterns, including import pricing, and give recommendations in regard to trade facilitation.

Published in Dawn, Economic & Business, June 30th, 2014