WHILE Prime Minister Nawaz Sharif is touring Punjab, doling out cheques and promises of more highways and flyovers, perhaps he should spare a few moments to consider the kind of problems farmers are facing in this time of collapsing agricultural prices.

Amongst the promises he made in Lodhran, for instance, was a motorway to connect the town to Karachi and Lahore, more flyovers, an agriculture university and a commerce college. This is very well, but still sounds far too tailored for an urban audience.

Farmers in Lodhran have seen a bad cotton crop this year. “Out of all the districts surrounding Multan, only two have had a bumper harvest of cotton this year,” says Abdurazzaq Bhutta, a fertiliser dealer in the area. “The rest, including Lodhran, Khanewal, Multan, Bahawalpur, Vehari have all seen very bad crops this year.”

The reason, according to him, is excess rainfall that impeded fertiliser application as well as poor farmer incomes which made them turn towards low-yield seed varieties.

Fayyaz Bhutta, Central Vice President of the Pakistan Kisaan Board, also agrees that climate change has made a huge dent on farmer incomes, as well as the collapse of commodity prices. “Untimely rains came this year,” he says, “at a time when the cotton plant was supposed to be flowering. This has destroyed large sections of the cotton crop.”

Growers’ bodies have been warning for a few months now that the country is likely to miss its cotton target of 14.2 million bales by as much as 3m bales. The reasons for the destruction of the cotton crop differ from region to region, with untimely rains blamed in some areas and pest attacks in others.

Farmer incomes have dropped by 15-20pc, according to Asim Butt, director of marketing at Engro fertiliser, leading many in his industry to look forward to the implementation of the subsidy announced in the Kisaan package.

Engro saw a 21pc decline in DAP sales in its third quarter ended Sept 30, which it attributed to “deferral in demand led by the delay in implementation of subsidy announced in Budget 2015”.

The company has a 25pc market share in total DAP sales.

“There has been a big surge in sales of DAP since Oct 15,” said Butt.

However, he added, much of this can be attributed to lower off take of fertiliser in the preceding days as farmers waited for the announcement of the Rs500 per bag subsidy on DAP fertiliser as part of the government’s Kisaan package.

That subsidy was announced via a notification issued by the Ministry of National Food Security and Research on Oct 15. Although the notification strictly forbade the practice of “overcharging or tying the product with other fertilisers”, dealers in southern Punjab insist that one large manufacturer is still tying its DAP sales to urea.

The problems facing the country’s farmers go far beyond what is envisaged in the prime minister’s speech during the cheque distribution ceremony in Lodhran. Highways and roads will not protect them against climate change and pest attacks, or even weaknesses in the government machinery to regulate the sale and distribution of fertiliser to ensure that the benefits of the subsidy are in fact reaching their intended beneficiaries.

FRIENDLY PACKAGE: A truly farmer-friendly package of policies would see policy measures that increase farmer access to quality seeds, improve weather forecasting abilities so farmers are not flying blind into sowing season, strengthen government oversight of fertiliser distribution and access to government procurement prices for small farmers, as well as access to quality pesticide for mealy bug and cotton leaf curl virus that has ravaged the crop this year.

All of this is a tall order for a government obsessed with high visibility projects only.

Instead the government is pursuing a short term policy of trying to depress cost of inputs for farmers through subsidies on the one hand, while trying to stabilize its revenues through measures like the Gas Infrastructure Development Cess (GIDC) on the other. In addition, gas feedstock prices for fertilizer manufacturers were also increased 18pc on September 1 of this year, as per an OGRA notification. These two measures, combined with depressed farmer incomes, led to a 30pc decline in fertilizer sales in the third quarter, according to an analyst briefing by Engro.

The contradictory directions of the government’s efforts to support farmers through the Kisaan package, couple with collapsing commodity prices and weak state machinery to ensure targeting of subsidy benefits, show that the package and its rollout just prior to the local government elections is driven more by politics than any economic considerations to support farmers.

Published in Dawn, November 8th, 2015

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