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Farmers divided over impact of mini-budget on agriculture

January 02, 2022
Farmers divided over impact of mini-budget on agriculture

LAHORE: Representatives of farmer organisations are divided over the impact of the proposed mini-budget on the agriculture sector.

Pakistan Kissan Ittehad (PKI) said the imposition of tax on import of seeds might impact the production of maize and vegetables negatively.

However, Agri-Forum Pakistan (AFP) hailed the proposed levying of tax on imported seeds, terming it a step in the right direction that might ensure food security of the country.

PKI President Khalid Mahmood Khokhar expressed satisfaction as the proposal kept GST on fertiliser, tractors and agrochemical at previous levels, protecting the interest of the farming community. However, he lamented the imposition of 17 percent GST on imported seed and agriculture implements. This step would make these inputs about 21 percent more expensive for the farmers, he feared. Seeds were a necessity for any crop.

Pakistan has seen an increase in crop yields due to imported hybrid seeds in all horticulture crops, including vegetables as well as rice and maize, where hybrid varieties yielded about 20-45 percent more than conventional seeds previously used, he said.

A case in example might be the tomato crop, which saw massive shortages and price hikes during the last few years despite increasing yields due to hybrid seeds.

If only 5-10 percent of farmers shift away from these hybrids and move to conventional seeds, the yield loss would cause tomato price to jump, and the consumer would be the ultimate loser.

This was applicable to almost all horticulture crops, as imported hybrid seeds were a necessity to maintain crop yields and to ensure food security of the country.

In case of shift away from imported maize seed, livestock and poultry feed rates would jump, and cause a spike in the prices of meat, milk, poultry and eggs, he added.

At the same time, grain shortage for feed would put pressure on wheat and rice as alternate feed grains, causing shortages for human consumption. If this increase in price forces the farmer to shift to cheaper conventional seeds, the yield impact of any single crop might surpass the total tax collected, while at the same time causing shortages and price hikes, the PKI leader warned.

This decrease in yield might also result in export revenue loss and would require import of food commodities to cover the shortfall.

He regretted that Finance Minister Shaukat Tarin had assured the farmer representatives that there would be no tax on agriculture inputs in this mini-budget. The government should take immediate action and revert the 17 percent GST back to zero to rectify this issue.

On the other hand, AFP Chairman Ibrahim Mughal was of the view that proposed levying of tax on imported seeds would be a step in the right direction that might ensure food security of the country.

Unfortunately, certain seed companies, including multinationals were merely acting as traders and were selling imported seeds at exorbitant rates.

In sheer contrast to the price of the same seed in India and Thailand, Pakistani farmers have to pay 60 percent more, which was an injustice to them.

If these multinational companies set up seed multiplication in the country, the cost of seed would be reduced significantly plus quality of seed would also improve due to acclimatisation and other factors, he said. He asked the government to take concerted steps for local production of seeds.

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