THE farmers’ pursuit of cheaper inputs, for which they threw potatoes and splashed milk on the streets, is unlikely to be fully realised as the budget proposals by the Ministry of National Food Security and Research are more focussed on seeking benefits for the agro-based industry rather than addressing the agriculture problems.

The only serious proposal which may benefit the farmers is the reduction in the urea prices, if approved by Finance Minister Ishaq Dar.

The urea price is high due to a number of taxes including 17pc sales tax and gas infrastructure development cess. According to one estimate if these taxes are removed, the 50kg urea bag will become cheaper by Rs700.

The ministries of finance and national food security are believed to have jointly worked out a strategy to reduce the urea price. The current subsidy on phosphate fertiliser to the tune of Rs20bn, shared on a 50-50 basis, by the federal and provincial governments is likely to continue in the next fiscal year.

The current subsidy on phosphate fertiliser to the tune of Rs20bn shared on a 50-50 basis by the federal and provincial governments is likely to continue in the next fiscal year

The food ministry has proposed that the GST on di-ammonia phosphate (DAP) and other fertilisers with the estimated impact of Rs14.4bn and Rs6.80bn, respectively, be removed.

Other proposals are: The existing import duty on poultry parent stock for broilers, day-old chicks and hatching eggs to produce broiler chicks be enhanced from 5-10pc in order to protect the local poultry industry.

• A 15pc freight duty on export of livestock products including meat, poultry, egg, dairy products be levied or the maximum duty as permissible under FTA on chicken meat and its products.

• Old customs duty and sales tax amounting to 5pc on the import of soybean meal and ‘zero rating’ status for the value-added (frozen and packed poultry products falling under PCT 0207, 1601 and 1602) be restored.

• The poultry machinery should be treated on a par with agricultural machinery for tax concession at the rate of 2pc import duty and 7pc sales tax.

• The duty on skimmed milk and ‘whey powder’ is 15pc on imports from SAARC member- countries and 20pc from other countries. These rates should be enhanced up to 50pc in order to discourage the import of skimmed milk powder and whey powder.

• Extend the five-year tax exemption on the import of trout and shrimp feed with a view to promote commercial aquaculture.

• Water quality test kits and meters be exempted from the import duty to promote commercial aquaculture. For small production area, water aerators being an essential source, should be exempted from taxes for the benefit of fish farmers.

• The duties and taxes levied on import of farm machinery and equipment and the GST levied on locally-manufactured tractors be reduced from 10pc to 7pc to ensure supply of prime mover at affordable prices to the growers.

• To ensure supply of quality tractors, duty-free import of Euro-II and Euro-III compliant tractors should be allowed irrespective of the horsepower.

• The duties levied on import of tractors should be cut from 34pc to 20pc and the current 7pc GST on pesticides should be removed.

Published in Dawn, Business & Finance weekly, May 23rd, 2016