AS the Ministry of National Food, Security and Research comes up with its almost final assessment of damages to the national economy, the farmers’ community has started looking for compensation.

While growers want a fair compensation package, the financially squeezed government, however, is trying to sew a package, which costs it as less as possible, but still remains acceptable to the farmers.

According to the latest estimates, the floods have affected around 2.5m acres of cropped area, which include paddy on 300,000 acres, cotton on 320,000 acres, sugarcane on 70,000 acres, fodders on 30,000 acres, vegetables on 25,000 acres and other crops on 100,000 acres. An estimated 15,000 cattle-heads perished and 250 poultry farms were destroyed. All this put together translates into Rs240bn losses to the country’s farm economy.

Due to these damages, the country may miss paddy target by 300,000 tonnes — 6.2m tonnes against target of 6.5m tonnes. Cotton target may suffer by two million bales; 13m against targeted 15m bales. Sugarcane, being a water crop, might escape any major damages and stay at 65m tonnes.

Even if the individual crops are not taken as a criterion, farmers argue that the officially estimated cumulative loss of Rs240bn should serve as a benchmark for compensation. At the proposed rate, the government might end up covering hardly 10pc of the total loss

Only time would tell the impact on citrus (still at fruiting stage) and the mango crop.

But the compensation issue is now heating up. The government package has put two ceilings — monetary and land limit — for compensation, which farmers oppose. The package is restricted to Rs4,000 per acre for farmers holding up to 10 acres of land. The growers, however, insist that even routine crops like wheat need Rs25,000 investment per acre, whereas the current flooding has hit all expensive cash crops — cotton, cane and rice.

According to government’s own estimates, cotton costs over Rs3,200 per 40Kg. A compensation of Rs4,000 per acre to cotton farmers means a price of 50kg per acre. Does that make sense, they wonder? The farmers want the government to revise the package on its own calculated cost of production and leave some margin of investment on the next crop.

Even if the individual crops are not taken as a criterion, it is argued that officially estimated cumulative loss of Rs240bn should serve as a benchmark for the compensation. At the proposed rate, the government might end up covering hardly 10pc of the total loss.

Secondly, the officials have announced to restrict the compensation to farmers owning up to 10 acres. What is the fault of a farmer owning 11 acres, wonder growers? Why link the package to the land ceiling at all? It is not to suggest that farmers with hundreds of acres should be compensated because they have the capacity to absorb the financial shock; though it is still difficult to exclude them if the principle of compensation is linked to farming losses; however, there may be some social and financial justification given their financial strength.

But keeping out farmers up to 50 acres hardly makes sense. They suffered much more in investment and losses, and have very fragile fiscal balance that keeps them floating in the middle income class. If they are kept out, they will fail to have enough money to invest in next crop.

The government needs to announce a baseline compensation, but can keep it flexible, especially for those who fell right in the middle of water flow — more so for those who suffered because of deliberate breaches in the river banks — and their crops were completely wiped out. The compensation should also be linked to the crop losses. Those suffering losses, say on fodder crops, might have taken a far less fiscal hit than those who saw their standing cotton or rice crop totally destroyed.

Published in Dawn, Economic & Business, October 6th, 2014