The worst has not happened

Syed Mahmood Nawaz Shah
Vice President
Abadgar Board Sindh

The Rs280 billion allocation over five years, in collaboration with the provinces, is a positive aspect of the budget, but how much of it will actually find its way to the farmers, wonders Sindh Abadgar Board Vice-President Syed Mahmood Nawaz Shah. In the past, Sindh didn’t pitch in with its share when the PML-N government announced its Kissan Package.

Touching on the good points of the budget, he said that the Rs218bn allocation for water-related infrastructure is a good step, but clarity is required as to how it is to be spent. If the allocation focuses on high-efficiency drip and sprinkler irrigation systems then it would benefit the farming sector. Mr Shah also hailed the announcement of Rs2.5bn for crop insurance for small famers as well.

Not for the little guy

Tariq Mehmood
Former coordinator
Pakistan Kissan Mazdoor Tehreek KP

“The federal budget offers us nothing,” says Pakistan Kissan Mazdoor Tehreek’s former Khyber Pakhtunkhwa coordinator Tariq Mehmood. His biggest concerns are about seed development and lack of support for small and landless farmers.

Farmers’ reliance on imported seeds is increasing day-by-day as indigenous seed is not being improved, he points out.

“The government is doling out lands to multinational companies but is reluctant to distribute land among landless farmers”, he complained, saying that the federal budget focuses on subsidies on tube wells which are used by large landholders and not small farmers. “Budget offers nothing for inputs availability and their prices either”, he said.

A sceptic

Azhar Noor
General Manager
Millat Tractors

Against all fears in the days running up to the budget announcement, the GST rate was not changed, says general manager marketing of Millat Tractors Azhar Noor, with relief.

In fact, since the indigenisation of the tractor industry is over 90 per cent, the dollar-rupee parity has also not affected the pricing structure much. So, by and large, the tractor industry would stay as it was before the budget announcement. On the basis of these official policies, the industry is now exploring export options and held a preparatory meeting recently.

The only problem that the industry is facing is of tax refunds. The industry pays 17pc GST on all its input purchases and recovers five per cent from the farmers. The government is supposed to refund the remaining 12pc, which takes years in some cases, causing a liquidity crunch.

Multiplier effect

Saad Akbar
Managing Director
Ali Akbar Group Pesticide manufacturer

Saad Akbar Khan of the Ali Akbar Group, a pesticide manufacturer, is of the opinion that since the budget has changed neither the GST nor the duty regime, the current budget will not have a direct impact on pesticides prices.

However, the change in corporate income and withholding tax structures will add around 2.5pc to pesticide prices. Coupled with dollar devaluation, the pricing impact would magnify.

Another factor is the increasing pricing trend in the Chinese market. The industry was expecting to settle it down after hitting a spike, but it has not done so. Together these factors are expected to increase pesticide price by around 30pc.

Published in Dawn, The Business and Finance Weekly, June 17th, 2019