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October 17, 2019

Punjab to provide targeted subsidy on farm inputs

Business

October 17, 2019

LAHORE: The Punjab government has decided to provide targeted subsidy to small farmers to financially help them in purchasing farm inputs, including fertiliser, for the next two years, officials said.

Small farmers having up to five acres would get direct subsidy on purchase of fertiliser and other inputs through National Rural Support Programme under the government’s plan. As many as five million farmers are expected to benefit from this government intervention in the next two years. In the later stage, the scope to the subsidy scheme will be extended to farmers having up to 12 acres of lands.

Provincial Minister for Agriculture Nauman Langrial confirmed the proposed subsidy scheme, while talking to a select group of journalists.

Langrial said the provincial government plans to unleash revolution in agriculture through launching Kissan card in the next couple of months. The move is aimed at disbursing targeted subsidy to small farmers. Farm loans will be also disbursed under the scheme.

A mechanism is being evolved to disburse crop insurance through Kissan card. Food Department will procure wheat from farmers through Kissan card, the minister said. “With this initiative, the provincial government will ensure provision of timely payments to farmers for buying various agriculture inputs,” he said.

Agriculture minister said the provincial plan of smart subsidy on agriculture inputs, including urea fertilizer, would greatly help farmers who actually deserve the most.

In Pakistan, 90 percent of growers have very small landholdings, which highlight the significance of small and subsistence farmers in overall agriculture sector employment. On the other hand, over 50 percent of the farmland is owned by less than 10 percent of farmers as land holding is mostly concentrated in the hands of rich landlords.

Similar scheme was introduced by Punjab government in February 2017 on phosphorus and potassic fertilisers in order to promote the balanced use of fertilisers and ensure that the subsidy actually trickles down to small and subsistence farmers. The scheme proved successful and resulted in improved usage of balanced fertilisers.

The subsidy being given by the government on urea produced with imported LNG is directly and disproportionately benefitting the large farm owners whose agricultural income largely remains untaxed. Currently, the government is bearing Rs38 billion per annum on account of subsidised RLNG to fertiliser plants. The government is also in the process of importing 200,000 tons of urea worth approximately Rs9.8 billion. An estimated cost of all the subsidy decisions would be Rs48 billion or $320 million. The subsidy to sell imported re-gasified liquefied natural gas at cheaper rate stands at Rs21 billion per annum.

Had the efforts been rendered to provide much bigger smart subsidies earlier, the subsistence farmers would have benefited significantly at much reduced cost to the country. An estimated Rs200 reduction in the price of urea bag for the small farmers could have been achieved by just spending less than nine percent of the total annual cost of Rs44 billion to run RLNG-based plants and import urea, whereas a similar objective could have been achieved on diammonium phosphate by just spending two percent of total such cost. The smart way of spending subsidy would have benefitted the small farmers who need the support in inputs amid high inflation.

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