Govt policies hurting growers, agriculture potential

ISLAMABAD: Pakistan’s agriculture sector, especially small farmers, is facing the brunt of falling commodity prices and high taxes on the farms inputs, a senior economist said on Saturday.

“60 percent of our industry and domestic trade is agro-based but… the sector has been neglected, and if it is not shouldered, our trade, businesses, industry, exports and services can be hit hard,” said Dr Hafeez Pasha, former deputy chairman of the Planning Commission.

Dr Pasha, addressing a Pre-Budget Conference organised by The Jang Group, said the government’s negligence “has been making farmers’ conditions miserable.”

He added that the fertiliser inputs were heavily taxed in the country. “But in India, farmers are being given Rs50 billion subsidy on it.”

Comparing fertiliser prices with India, Dr Pasha said urea prices were 25 percent and DAP rates 40 percent less in neighbouring India.

“Save the small farmers, give them such support and concessions on policy level in the next budget to help them and boost the sector,” he added.

Dr Pasha said there were around eight million small farmers, holding less than 12.5 acres of land in the country.

“Agriculture sector has been devolved among provinces, but still key areas are in the centre’s control, which can either bring up the sector or take it down,” he said. “Especially, taxation, seed certification, import of inputs and export of agriculture produce are in the control of the federation.”

Dr Pasha said monetary policy was also another factor, which has “a great influence on the farm sector.”

“Since the sector provides livelihood for almost two out of five Pakistanis, and contributes more than one-fifth in the country’s GDP, its low growth cannot mitigate the poverty situation in the country.”

Dr Pasha criticised the Prime Minister’s Rs341 billion Kisan Package. Only Rs30 billion have been disbursed and the government has conveyed it to the International Monetary Fund (IMF) too, he said. “Ironically, the government is solely focused on Punjab province and ignores others, though the package was for entire Pakistan.”

Dr Pasha said the government had also announced to increase credit to the agriculture sector to Rs600 billion from last year’s Rs500 billion. He lamented, “Unfortunately by the end of March, only Rs336 billion have been disbursed, whereas the mark up rate has also not been reduced.”

He suggested to the government to also give a support price for both rice and cotton. “India at the moment is providing support price on 25 agriculture items,” Dr Pasha said.

Commodities prices have fallen 40 to 50 percent at the international market, which has affected the prices in the domestic market as well, he concluded.

Abid Niaz Hasan, former operations advisor of the World Bank said the falling growth is a challenge for Pakistan, “as the global outlook is not favorable.”

“Middle East turmoil and GCC reducing development budgets would also bring a downward impact on our remittances. Growth in China and Latin America also may be dampened in future,” Hasan said.

He added that Pakistan has been losing global competitiveness due to some policy and administrative bottlenecks. “Over the last 20 years, Pakistan’s exports have been growing by only three percent, while in the same period Bangladesh exports went up by 10 percent, Vietnam 30 percent and Turkey nine percent,” he said

He advised the government to provide an enabling environment to businesses. “The FBR should be a customer driven institute, and not merely a collecting institute,” Hasan said. “It should re-write the tax laws and bring ethical standards in it. There is should be better use of tax money, as the country is already borrowing excessively.”