Govt dragging feet on markup relief for farmers

ISLAMABAD: The government has yet to make the markup subsidy relief implemented despite more than two months of announcing the financial support to agriculture sector in the face of coronavirus crisis, it was learnt on Thursday.

Secretary Food Security and Research Omar Hamid Khan emphasised immediate disbursal of agriculture loans as announced by the Prime Minister Imran Khan and later approved by the Economic Coordination Committee (ECC) of the cabinet in May.

“The agriculture loans shall be provided to farmers at the earliest,” secretary Khan said at a meeting with Zarai Taraqiati Bank President Shahbaz Jameel. “The disbursal mechanism of agriculture loan shall be transparent.”

Khan said there must be effective transfer of subsidy. Loans will be provided on sustainable land holding. During the meeting modalities of disbursement of loan was widely discussed, according to a statement.

The government announced a fiscal package of over Rs1.2 trillion in the wake of Covid-19 pandemic. ECC approved the proposals on 13th May. Out of the package, an amount of Rs6.7 billion was approved for provision of financial relief in terms of markup subsidy on bank’s loans to the most deserving sub segment of farming community – farmers with land holding up to 12.5 acres, throughout the country. Over 70 percent of the growers in Pakistan own land up to 12.5 acres.

A mark-up subsidy of 10 percent on the loans extended or to be extended during the fiscal year 2020/21 to the farmers of 12.5 acres of land has been approved. All the loans with passbook as collateral are eligible to avail the subsidy under the scheme.

Agriculture credit disbursements were higher by Rs20 billion and Rs107.2 billion both during Q3 as well as for July-March of FY2020, respectively, according to the State Bank of Pakistan (SBP). In the farm sector, corporate farming accounted for the uptick in production loans compared to crops. The rise in this trend shows that the tendency of cultivating and harvesting collectively is gaining momentum, which is further supported by increasing trend in credit for farm development as it includes expenditure on agriculture machinery.

Meanwhile, loans availed for acquisition of tractors were relatively lower during the ongoing fiscal year compared to FY2019, somewhat highlighting a usual slowdown after few years of high growth, especially in absence of subsidy. For the non-farm sector, the most encouraging development was the rising fixed investment in poultry. On the flip side though, credit disbursement to the livestock/dairy segment witnessed a slowdown.

“While setting the target for agriculture growth in FY20, the government had pinned its hopes on an improved showing of important crops,” said the SBP in a quarterly report. “While the important crops are not expected to achieve the FY20 target, they were nonetheless able to post a turnaround compared to last year.”