THE Punjab agriculture budget for the remaining eight months of the current fiscal is believed by some to have created unnecessary confusion for the sector.

The budgetary document speaks of two block allocations — Rs15 billion for concessional loans to farmers and Rs7bn spending from the Annual Development Plan (ADP).

As far as the Rs15bn allocation is concerned, the budget says 250,000 farmers will be provided interest frees loans, continuing the previous government’s practice.

No one knows for sure how the Rs7bn ADP will be spent … Critics argue that such block allocations are meant for later diversion to other politically preferred areas

No one knows for sure how the Rs7bn ADP will be spent. This unexplained part has generated an interesting debate in the province.

Critics, including farmers, citing previous such experiences, argue that such block allocations are not meant for spending on the sector. They are, rather, meant for later diversion to other politically preferred areas. If the amount was going to be spent on agriculture, a detailed list of projects and allocations — as has been previous practice — should have been attached.

Advocates, who include agriculture officials and authors of the documents, say that all previous schemes (some 30 in number stressing olive production, horticulture and high value crops) will be carried forward with this money.

The budgetary document is silent on details because the department has still not received approvals on individual projects. Once these approvals have been granted, which will happen in a matter of days, the department will be able to share details. But the officials do concede that there will be no new schemes for development.

But traders are not convinced. They question that if the government has nothing to hide, why did it not produce any details in the budgetary documents as has always been the practice in the province.

“It is only because it may have been politically risky to concede axing all schemes which farmers have started thinking as beneficial. Once the dust settles and farmers’ expectations are lowered, these allocations will be diverted. Punjab has a history of such allocations where money has been diverted from health and education to metro bus or train projects,” says Hamid Malhi, a farmer and president of Basmati growers association.

However, missing allocations for important areas like research (where the budget paper shows zero allocation against Rs4bn last year) and the potential abolition of subsidy on solar tubewells and fertiliser breeds frustration among farmers in the province.

“It has been the most pathetic budget the province has ever produced,” says Ibrahim Mughal, an agriculturist and head of a farmers’ body.

Out of a total outlay of Rs2,026bn, only Rs238bn has been set aside for development, which is around 12 per cent of the total budget. Out of these Rs238bn, only Rs7bn has been given to agriculture, which is less than three per cent of the total development allocation. Such an allocation clarifies the priority attached to the sector and its development by the present government.

This is lamentable, to say the least, he says and adds that “the budget is also silent on the next Rabi crop. The government seems to have withdrawn subsidy on all kinds of fertilisers (urea, phosphatic and potash) that are essential for crops like wheat, maize, sunflower and canola.

“With subsidy on fertiliser gone, past experience shows, usage could drop by 50pc. In such circumstances, one can rightfully wonder how the government wants to improve these crops and the sector.”

Farmers fear that this withdrawal of subsidies will only add to the cost of production, making Pakistan further uncompetitive in the international market.

“The Punjab government seems to have blindly withdrawn subsidies without assessing the impact on the sector and national economic health. It has rather taken provincial agriculture out of the national context,” claims Nabi Ahmad — a farmer and an exporter.

“If the country has to improve exports, as the federal government claims and the current economic crunch necessitates, it needs to work on two vital crops: cotton and rice. Both of them faced varying levels of uncertainties and production has dropped.

“The country used to produce 14 million bales of cotton which have now gone down to 10m, whereas the industry needs around 16m bales. The Basmati variety of rice faces an uncertain future as hybrid seeds replace them quickly. Under these circumstances, how will the national economy improve? The province, in its preferences to reduce expenditure, has axed the most vital production areas,” he laments.

However, continuation of interest-free loans has its adherer. “With farmers andfarming being squeezed from all sides, these loans could help bring the cost of production down,” says Muhammad Naeem, a farmer from central Punjab.

“The situation is certainly not ideal as cost of production is set to rise, but imagine where farmers could have ended up if even these interest-free loans had not been there. One can also give a margin to the PTI government for being new to governance and pray that it does its homework and consults farmers before deciding upon anything regarding the sector — an idea which did not occur to them this year.”

Published in Dawn, The Business and Finance Weekly, October 22nd, 2018