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Development of new avenues in the agriculture

Minfal has planned a programme to increase crop yield from 5 to 10 per cent per annum till 2005

From Shamim Ahmed Rizvi, Islamabad
Jan 15 - 21, 2001

A little attention to the Agriculture Sector during last one year has proved beyond doubt that there is no business like agriculture, specially in the context of Pakistan. The country which imported about 3 million tonnes of wheat in 1998-99 ended up with a surplus of 1 million tonnes in 99-2000. Unfortunately, however, nature has been unkind this year and prolonged dry weather and consequent shortage of water for irrigation purposes has made impossible to maintain the previous tempo during the current season.

Undaunted by this temporary setback, however the government is rightly pursuing its policies of harnessing full potential of agriculture sector. It is heartening to note that the present government is fully conscious of the large potential in Agriculture sector. Chief Executive Gen Pervez Musharraf while presiding over a high level meeting directed for the constitution of a committee to prepare comprehensive proposals for the promotion of various crops, besides approving a sum of Rs. 5 billion for the development of new avenues in the agricultural sector. The attention which the government of Pervez Musharraf has given to the agriculture sector since assuming the office on October 12, 1999, reflects the new administration's resolve to achieve self-sufficiency in agriculture. The last year made it abundantly clear that if right strategies are adopted and then efficiently implemented, the agriculture sector can be revolutionised.

General Pervez Musharraf's directive for formation of committee to institutionalise agricultural marketing together with crop-wise proposals for reorientation of the entire farming sector, with due emphasis on self reliance, food security, import-substitution and export promotion is a welcome step. The Food, Agriculture and Livestock Ministry Minfal has planned a programme to increase crop yield from 5 to 10 per cent per annum till 2005 to achieve self-sufficiency in deficit crops by 2010. The target of wheat will be 23 million tonnes in the next five years and the country will achieve self-sufficiency by the year 2003 in oilseed production.

An agriculture data bank would be created, including computerised land records and crop statistics and reporting through satellite imageries to be established at the provincial levels and networking at the federal level. The number of farm machines will be increased by 20 per cent such as tractors, implements, harvesters by 2005. The agriculture polytechnic institutions at the level of districts will be established. The ministry has also planned to introduce insurance for agriculture labour and farm works. Establishment of Federal Agriculture Bank to introduce concept of working capital in the agriculture sector had also been suggested.

An extremely dynamic agriculture extension service would be created that would cater to the development of quality of human resources and provide knowledge for modern agriculture techniques and practices.

The latest policy decision in this direction is to grant status of industry to the agriculture and introduce corporate farming in the country. An incentive package to attract local and foreign investment in corporate agriculture farming is being prepared, which envisages giving farming the status of industry, a five-year tax holiday, exclusion of big land holdings from future land reforms and no tax at district level.

To finalize these incentives, the federal government has called an inter-provincial meeting next week. The meeting is being held in the backdrop of Chief Executive General Pervez Musharraf's directive to the Agriculture Ministry and Small & Medium Enterprises Authority (SMEDA) for preparing a policy package for Corporate Agriculture Farming (CAF).

According to the proposed package, the land to be used for the purpose of Corporate Agriculture Farming will not be included in any land reforms, undertaken by the government in future.

The CAF will be taxed on the pattern of industry, through a tax holiday for the first five years will be allowed. Moreover, there will be no hurdles in exporting the CAF production nor there will be any tax at the district level.

Electricity tariff for these corporate farms will be the same as applicable to agriculture tube-wells. Gas, water and phone facilities will be provided by the state. The initial lease of land will be for 50 years extendable for another 49 years. The owners will have the first right to purchase the CAF land after that period. As far as proposed interventions in the policy are concerned, officials said corporate agriculture income tax would be levied on these companies at the rate similar to commercial companies.

To avoid non-productive and upfront loading on projects, a nominal sum of Rs. 100 per acre will be charged as land transfer or release registration fee. The Agriculture Development Bank, along with other financial institutions, will announce credit lines for corporate agriculture farming. These funds will be available to viable projects as equity participation or loaning facility.

A support committee will be created in MINFAL, comprising officials from the federal and provincial ministries of agriculture, Board of Investment, provincial boards of revenue and farmers organisations to launch a campaign for attracting foreign and domestic investment in the agriculture sector. All proposals from domestic and foreign investors for the CAF will be placed before the Board of Investment, which will finalize the case in consultation with the Agriculture Ministry.

The provincial governments will identify, within 60 days to MINFAL, a complete list of potential cultivable lands in blocks greater than 2000 acres, suitable for large-scale mechanized farming along with terms and conditions.

The induction of corporate companies will bring modern production technology, access to capital, direct access to domestic and foreign markets, and professional management expertise. It will also generate rewarding opportunities for the inputs industry, as the agricultural companies will act as large consumers of farm inputs. On the marketing side, agricultural companies generally undertake their primary processing and grading at farm sites and supply raw material to agro industry.

Some Chinese and Arab investors have shown keen interest to invest in corporate farming and other Agro based industries. The Centre has asked provinces to immediately identify state lands which could be offered to Chinese investors for the development of model agricultural farms in Pakistan.

The provinces have been informed that Pakistan and China had signed an agreement on economic and technical cooperation. Which inter alia entails that the Chinese government would intitiate a project of modern farming in Pakistan. Under the agreement, the Chinese government will provide capital and expertise while Pakistan would provide land and the favoured investment policy.

Giving details of this development, the sources said that the proposal for leasing out agricultural land to a Chinese organization for development of model farms was earlier moved by the Chief Executive General Pervez Musharraf during his visit to China.

The sources said that the Chinese investors had also expressed strong desire for setting up a pesticide plant in Pakistan as pesticides worth Rs. 14 billion were sold annually to the farmers during the cotton season along. Ironically, all the pesticides were imported as Pakistan had no local to produce them in the country, sources said.