KARACHI: The government is planning to withdraw certain exemptions given to farm sector including reduced rates of general sales tax on seeds, fertilisers and pesticides.

An official from the fertiliser industry, who asked not to be named, said the move would be contrary to the pledge made by PTI during the elections to woo rural voters while recognising the need to maintain sustainable farm economics.

PTI, under its manifesto had promised to increase farmers’ profitability and boost growth rate primarily by enabling cheaper inputs.

Moreover, after coming into power, the government even indicated providing smart subsidies to the subsistence farmers.

The industry official said that in contrast to earlier claims, the government is weighing different options to withdraw exemptions and reduce sales tax rates on agriculture inputs including seeds, fertilisers and pesticides.

The move would lead to significant increase in farmers’ input costs and will adversely impact the agriculture sector besides fuelling food-related inflation.

According to some estimates, around 60pc of the Pakistan’s farmers are small scale — up to five acres — who operate on subsistence level.

Any change in farm economics will significantly impact their standard of living, the official claimed.

Urea sales rise 7pc

Total urea offtake jumped by seven per cent to 4.735 million tonnes in the first ten months of 2018-19, from 4.411m tonnes in same period last year, according to data from National Fertilisers Development Centre.

However, the urea sales for April witnessed a sharp fall of 22pc year-on-year as they dipped to 292,000 tonnes, from 375,000 tonnes in corresponding month last year. “The decline in offtakes primarily came on the back of dealers and farmers acquiring inventory in the previous months as a price was expected,” stated Shajar Capital. Compared to March this year, urea sales were lower by 28pc.

Meanwhile, DAP sales clocked in at 1.83m tonnes in 10MFY19, down 15pc, from 2.154m tonnes whereas their April offtake soared by 25pc year-on-year to 86,000 tonnes, from 69,000 tonnes.

Company-wise, Fauji Fertiliser noticed the largest decline in urea sales during April as they tumbled by 51pc whereas Engro Fertiliser outperformed the sector with 23pc increase in offtake and a 48pc market share.

Published in Dawn, May 29th, 2019