AS Pakistan gets closer to giving India the status of ‘Most Favoured Nation’,  fearing the worst, farmers are worried. However, no one knows what it would mean for them.

The only fact which causes fear, they know, is that Indian agriculture is highly subsidised while it is heavily taxed in Pakistan. In any situation of open competition, which the MFN would create by bringing down trade barriers, they think they don’t stand a chance.

The government, on its part, is not ready to assuage those fears. It has neither consulted the farmers’ bodies nor provinces, which, after the 18th Amendment, own the sector. Punjab, with its proximity to Indian trade corridor, does not know what harm and benefits the MFN would bring for it. How should it prepare for the new situation?

All agriculture planners in the province have vague, and sometimes, conflicting views on the post-MFN scenario. There is no provincial or federal study on the subject. Punjab claims that the federal decision came out of blue for it. So, it did not have time to study the impact. Nor it has been able to consult farmers on the issue because it did not have time.

The federal explanation, which has so far been shared with a selected few, is that given the changing regional politics and diplomacy, the decision has become necessary. There may be some truth in the official assertion, but is it wise to a decision with huge economic and social implications purely on political and diplomatic grounds? The government needs to explain.

After all, the Indians had granted Pakistan MFN status way back in the 1960s, why is there a sudden hurry to reciprocate it right now: especially, without studying economic and social impact of the decision. No one is opposing the reciprocation. The only point that is being underlined here is that it needs to be studied properly, making a few necessary adjustments in domestic realities before opening up borders.

No one fears that India would over-run Pakistan and its agriculture. On a consolation note, Pakistan has already opened its borders to China – much cheaper producer than India – that is already testing Indian entrepreneurship to its limits. If Pakistan can withstand Chinese trade onslaught, there is no reason why it cannot Indian one. But, such factors should not become a deterrent for studying the impact of new venture.

The Indians have an edge in vegetables and perishable items over Pakistan due to population spread. The Indian population mainly lives in its south and south-eastern areas, where the Keralite, Tamil and Bengali races dominate, giving India major chunk of its population. It is really hard for northern and western agriculture produces to reach these areas given time and transportation cost.

On the other hand, Pakistan has the heaviest chunk of its population in Punjab – closer to the Indian centre of agriculture production. The proximity makes it easier and cheaper to export goods to Pakistan, especially Punjab. That is precisely where the Indians would enjoy an edge over Pakistani farmers. Huge quantities of vegetables that flow through Wagha border every time Pakistan allows import, is a testimony to the fact. It needs to be studied further to see where Pakistani farmers can have comparative advantage and compliment each other.

The fact that Indians, especially the Sikh community, have proven to be more enterprising and innovative when it comes to agriculture, should come as an opportunity for Pakistani colleagues not as a threat. The Indians have made huge strides in local, and much cheaper, manufacturing of tunnels, drills and other technologies. Pakistani farmers need to learn all these farming practices if they want to compete in the world and keep their agriculture financially relevant to the world. Once borders are opened up, Pakistani farmers would certainly have easy access to much cheaper farm machinery. A tractor in India costs almost half the price in Pakistan. All these possibilities need further study.

The worst fear of Pakistani farmers is the tax regime on both sides of the border. That must be studied and adjusted because Pakistani farmers remained handicapped, all other perceived advantages would evaporate very quickly because of social cost attached to this economic practice.

In Pakistan, inputs are grossly taxed. Two additional factors, weak governances and crude cartelisation of commodity trade, make them exceptionally expensive, add to the cost of production and do so almost on yearly basis. In the last one year alone, cost of production in Pakistan has gone up by almost 25 per cent because of imposition of general sales tax (GST) and farmers are demanding corresponding increase in support prices. Fertilisers, pesticides, electricity and diesel carry very heavy taxes.

Exactly opposite to it, all inputs are cheap in India when compared to Pakistan. Electricity, which costs fortune to Pakistani farmers, is almost free in India. Urea, which costs Pakistani farmer, Rs2,000 per bag is only Indian Rs300 per bag in India. If Pakistan plans to continue with this kind of tax regime in agriculture, it is better to postpone the MFN decision, regardless of regional political and diplomatic compulsions. If it plans to open trade with India, the Indian tax regime should also form a benchmark for Pakistani politicians so that its farming community gets a level playing field.

If it does not happen, Pakistan would be in for a big trouble. Agriculture in Pakistan is also the last employer; people thrown out of other industries land in agriculture, which is now grossly over-employed. If agriculture starts throwing people out, where would they go? Pakistanis, as a nation, need to find an answer before tinkering with sector like this.