STEPS TAKEN IN THE BUDGET TO IMPROVE PERFORMANCE OF AGRICULTURE SECTOR

KANWAL SALEEM
June 16 - 22, 2008

LAHORE: Agriculture is the backbone of the country's economy but due to certain pressures this important sector could not grow properly resultantly its performance remained unsatisfactory.

In the budget 2008-09, numerous measures and policy directions were put in place to ensure relief and motivation to the farmers as well as incentives to the agriculture sector to contribute its due share in the national economy. The measures announced in the budget for agriculture sector include increase of support price of wheat from Rs 510 to Rs 625 per 40 KG, review of the support price for the next year's wheat crop in August-September i.e. before the next sowing season keeping in view the input cost and prevailing international prices, provision of Rs 75 billion in the PSDP to improve the availability and efficient use of water resources through construction of dams, rehabilitation of irrigation, improve drainage system, lining of canals and water courses throughout the country, to ensure that agriculture produce retains it value and quality and to facilitate its export; cold storage chains will be set up in the country.

The government has announced to more than double the subsidy on DAP from Rs. 470 per bag to Rs 1000 per bag. Further, subsidy on other fertilizers will also continue while total allocation for subsidy on fertilizers has been increased from Rs 25 billion to Rs 32 billion, officials said.

According to the budget document, complete exemption from sales tax and other duties on imported and local supply of fertilizers and pesticides has been proposed, so that the farmers can get these at much lower prices. The effect of exemption from duties in respect of both fertilizers and pesticides is Rs 6 billion, officials told PAGE.

According to analysts, availability of credit to agriculture sector has been limited compared to industry and other sectors. During the year 2007-08, an additional amount of Rs 30 billion will be made available in addition to total credit to agriculture sector amounting to Rs. 130 billion disbursed this year. In addition to these measures, agriculture sector will also be provided more incentives and facilities through fiscal measures as well, which are:

a) Exemption from 10% custom duty on import of rice seeds to ensure healthy and quality production of rice in the country.

b) Duty free import of machinery and equipment for grain handling and storage facilities to be de-linked from the conditionality of local manufacture.

The government has also proposed to waive off the levy of 5% Federal Excise Duty on premium of crop insurance policy also. These measures shall yield higher productivity and substantial raise in the income levels of the common man, they said.

According to the budget document, the government has allocated Rs. 20515.876 million for Food, Agriculture and Livestock Division in Public Sector Development Programme (PSDP) for the fiscal year 2008-09. In the PSDP 2008-09, 10 new projects have been initiated while number of the ongoing projects are 56. An amount of Rs. 1503.224 million has been allocated for new projects.

Under the new projects, Rs. 500 million each have been allocated for Prime Minister's special initiatives for White Revolution and Wheat Maximization Programme. The government has allocated Rs. 200 million for Agriculture Sector Development Loan (Phase-II), the document says.

An amount of Rs 150.224 million has been allocated for Biological Control of Major Cotton Pests in Pakistan with emphasis on Mealy Bug, Rs 50 million have been earmarked for Construction of Office building central cotton committee at Karachi, Rs 40 million reconstruction of test house in DALPMG at Karachi, Rs 20 million for National Pesticides Monitoring System, Rs 10 million for National Oil Seed Development an Commercial Production Programme and Rs 15 million for development of research facility at Olive Model Form Sungh Bhatti. For ongoing projects in the PSDP 2008-09, Rs. 9500 million have been allocated for National Programme for Improvement of Watercourses, the document adds.

Mega on-going projects including Land and Water Resources Development Project for Poverty Reduction will be allocated Rs. 1350 million for the completion of the project. Rs.1000 million has been allocated for Water Conservation and Productivity Enhancement through High Efficiency Irrigation System, Rs 350 million for Milk Collection/ processing and dairy production and development programme in the country. While an amount of Rs 300 million has been earmarked for Prime Minister's special initiatives for livestock programme and Rs 100 million for strengthening SPS facilities and quality inspection services in compliance with WTO, the document says. Similarly, Rs 600 million has been earmarked for Research for Agriculture Development Programme while Rs 600 million for Aquaculture and Shrimp programme.