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Why agricultural subsidies don’t always work

Updated November 05, 2018

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Many farmers stop adhering to good practices as soon as subsidies run their course.— APP/File
Many farmers stop adhering to good practices as soon as subsidies run their course.— APP/File

Bringing change to the agriculture sector is not easy. Farmers tend to stick to their age-old practices, which are less profitable and eco-friendly than new ones.

Successive governments have been offering various incentives to the farming community to promote good agricultural practices (GAP). But many beneficiaries adopt new techniques and technologies as long as subsidies or incentives remain available. Many of them stop adhering to GAP after the scheme or project is over.

Punjab Agriculture Minister Malik Nauman Langrial announced recently that the provincial government would offer seeds of sunflower and other oil crops to farmers on subsidised rates next season onwards.

Many farmers stop adhering to good practices as soon as subsidies run their course

A senior official of the department, who earlier undertook various fruit and vegetable cultivation promotion projects, is critical of such subsidy schemes. Funds mostly go wasted as a majority of farmers stops implementing GAP and does away with the recommended technologies soon after the subsidy ends, he says.

Referring to a recently concluded anti–fruit fly project, he claims that the use of pheromone traps to curb the fruit fly–menace dropped substantially a year after the provision of subsidised material to mango, guava and citrus growers ended. The same was observed at the completion of the plan for enhancing vegetable production, he added, calling for categorising subsidy recipients before launching any such programme.

Agriculture Department Director General (Extension) Zafaryab Haider admits that the level of GAP adoption drops with the end of a project, but says that it doesn’t disappear altogether. “Although GAP adoption slows down after a subsidy scheme matures, all the changes in cropping patterns and other farming practices so far came through subsidy programmes. The same lands that fed just 30 million people are now providing 210m people with food,” he says.

Former Punjab agriculture secretary Arif Nadeem’s experience is different though. He points out that the farmers are doing laser land levelling, although the provision of subsidised machinery discontinued long ago. “There are around 19,200 laser levellers in the province. Machine owners are now purchasing tractors and hiring drivers on their own while the government has stopped paying a Rs250,000 subsidy per machine.”

He blames ‘confusing’ communication in cases that show a drop in GAP adoption. “When you say the government has deferred the subsidy payment to next year because of a lack of financial resources, you make farmers wait for a year for the equipment/technology that they hope to get at a reduced cost.”

He argues that no subsidy scheme should be wrapped up abruptly for the sake of certainty in the sector. He asserts that a subsidy scheme must have a proper exit strategy.

Endorsing the view that beneficiaries of subsidy schemes for GAP adoption should be categorised, sociologist Dr Izharul Haq says some farmers are easier to convince than others and that strategies must be tailored accordingly.

Quoting research studies, he categorises Punjab’s farming community in three segments — indigenous people, settlers and migrants — and argues that the incentives should be tailor-made for each group.

He says the settlers who spread into central and south Punjab districts from Sialkot and Gujranwala with the advent of the canal system in the pre-Partition era are early adopters of technology. “They are visionary people who will go after every new idea whether you offer them any incentive or not.”

The migrants who came after Partition are late adopters, he says. They are a bit hesitant to test new initiatives and wait for results of the technology adopted by others and then embrace it, he adds.

Indigenous people are the most rigid ones, Dr Haq says. They don’t adopt new ideas and technologies easily, he adds. He classifies them as ‘money-motivated’ and ‘hands-off’ people who resist new technologies until these are offered with monetary benefits and have already been adopted by others.

“Subsidies to farmers are offered globally, including in India, particularly when a new technology is introduced or the government wants to promote a certain crop or practice. Sometimes, subsidies are offered in view of the weak financial position of the farming community. They should be designed in accordance with the habits and needs of the targeted group.”

Published in Dawn, The Business and Finance Weekly, November 5th, 2018

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