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September 24, 2019

Targeted urea subsidy termed viable option to support small farmers


September 24, 2019

LAHORE: Government should directly subsidise small farmers instead of using ‘blanket’ subsidy to ease impact of rising prices of urea on growers, industry officials said on Monday.

The officials said blanket subsidy in the form of reduction in gas tariff or adjustment of taxes means lowering of urea prices for every user whether a big landlord or medium-sized landholder. Across-the-board urea price cut would only help large and powerful farmers, which would definitely not be a wise decision, they added.

As much as 52 percent of agricultural lands in the country are owned and operated by a mere 10 percent of farmers who are the large ‘zamindars’ (landlords).

“Any across-the-board downward revision of urea prices benefits these landlords, who otherwise can afford using the farm nutrients through their own means,” an official said, requesting anonymity. “In fact, the government is already providing huge subsidy on urea manufacturing by importing expensive liquefied natural gas (LNG) and selling it at subsidised rates to its ‘favourite’ companies at the expense of taxpayers.”

Industry officials said Pakistan has an ample urea manufacturing capacity and ‘available’ gas. Both these assets are, however, not being used and the government imports urea and LNG simultaneously, wasting valuable dollars equivalent to Rs44 billion every year. The government then gives subsidy on LNG and imported urea to support urea manufacturing by certain companies, they said.

“If the government truly wants to help small farmers, the kissans, who are small and micro-scale landowners and represent 90 percent of all farms, it should not waste Rs44 billion per year on ‘needlessly’ importing LNG worth Rs38 billion plus import of urea having value of Rs6 billion,” the official said. “Instead, the government should use a third of the same funds for providing targeted subsidy to the poor small farmers.”

Industry officials said this would not be a new measure and in fact has successfully been implemented in the past in case of diammonium phosphate (DAP) fertiliser.

“All the government has to do is to use the same funds to offer price discount of say Rs200/bag up to a maximum 25 bags per farmer delivered by a code printed on the bags whereby the subsidy money can be directly wired via easypaisa to the farmers,” the official said. “It is a direct and transparent way of providing targeted subsidy to small farmers, who deserve the most.”

Only two bags of urea are required per acre of land and such a direct subsidy program with a maximum set of 25 bags would only benefit small farmers who own less than 12.5 acres and would be of little use to the big zamindars who own hundreds if not thousands of acres. Such a targeted farmer support program for urea and DAP would require less than a third of the Rs44 billion “currently unwisely being spent by the government,” an industry official said. “If this amount is used sensibly, the livelihood and productivity impact of the targeted use would be enormous,” the official added.

Fertiliser industry has time and again proposed this support program to the government. But, it appears special interests of the rich zamindars and sugar magnates are more important to the government rather than fulfilling its promises to the small farmers, industry officials said.

“Hence, LNG imports continue, urea imports at 25 percent higher prices than domestically produced continue, precious dollars leave the economy and special subsidies are given to two companies to serve their interests,” the official said. “Instead of such distribution of wealth, government should share burden of small farmers by stopping wasting of money and helping the small kissans and haris of the country.”

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