The President instructed that a special concession be provided to the farmers in the calamity hit areas of Balochistan

From Shamim Ahmed Rizvi,

June 21 - 27, 2004



A historic relief package for the farming community was announced by President Pervez Musharraf at the farmers convention held in Islamabad last week providing many incentives to the farmers and protection to the financially weaker segment of the farming community. Announcing that no farmers will be arrested for non-payment of loans, the President said that the relief package to the farming community was designed to spur growth in agriculture sector.

The landmark package which now forms the part of the 2004-05 budget is the most comprehensive looking after almost all needs and requirement of the farming community. The steps announced by the president included abolishing of customs duty on agricultural implements, establishment of new tractor plants, and allowing import of tractors below 35 HP and above 100 horse power with no GST or withholding tax. The importers of such tractors will have to pay 10 percent import duty only. The farmers, who return loans within the stipulated time, will be charged only 8 percent mark up. The rate of 9 percent will be charged for all type of new loans and ongoing tractor, tube will loans etc. will also be charged at 9 percent so that maximum number of people benefit from this change in interest rates. Under the relief package, the loans up to Rs.500,000 defaulted beyond December 31, 2000 will stand fully settled on payment of 50 percent of the amount outstanding. This concession will benefit approximately 250,000 farmers.

Keeping in view the hardships faced by the farmers of Balochistan due to prolonged drought, the President instructed that a special concession be provided to the farmers in the calamity hit areas of Balochistan. The president also announced that the loans up to Rs.200,000 in the calamity hit areas of Balochistan defaulted beyond December 31, 2000, shall stand fully settled on payment of 25 percent of the principal amount outstanding.

On the occasion, the President announced that as of today, the ZTBL shall not exercise any more the special powers, given to it under the Land Revenue Act, to use tehsildars and police to directly arrest and imprison people for not returning their loans. "From this day onwards no farmer will ever again have to suffer the humiliation of a ZTBL arrest and imprisonment for non-payment of loans."

Musharraf expressed the hope that the package and other steps taken by the government for bolstering agriculture sector, would lead to fast growth in agrarian sector. He said the entry of commercial banks in agriculture credit will also help boost the sector. In their very first year, the commercial banks will lend more than ZTBL to the farming community, he said. "Today the total agricultural credit has reached Rs 65 billion and by next year it will increase to Rs.100 billion".

President Musharraf said through adjustments in the taxes the price of DAP has been reduced by Rs.100/bag. The decreased price will be effective on all new imports and in the market as well from July onwards. The price of DAP fertilizer, the president observed, has increased greatly due to higher international prices and has reached Rs.1,000 per bag. The package also contains New Tractor Manufacturing Facility, allowing setting up of new tractor plants.

"New tractor plants have not been set up in our country because of existing policy that requires that almost 100% of the required parts be manufactured in Pakistan. "Since this was scaring away investor, I am happy to announce that the policy has been revised to 40% deletion within the first year and eventually 100% within 5 years," the President said and added this will encourage new entrants in tractor manufacturing in Pakistan. To ease the supply position of tractors, another assembly plant of tractors will begin operations shortly in the private sector, he declared. The demand for tractors is steadily rising with increased availability of agriculture credit. It, in fact, has outpaced supply and farmers have to wait for long periods for delivery. In addition, he added, the import of new tractors below 35 HP and above 100 HP has been allowed with only 10% duty and no GST and withholding tax. "This measure will not hurt the tractor industry as they do not make this range of tractors and will benefit the farmers," the President said.

The President said "I am pleased to announce that this policy has been revised and the duty structure that is being announced in the budget will make local formulation and manufacture more advantageous. (Import duty on raw materials used for formulating pesticides is being reduced from 5% to zero)." These new measures will encourage local formulation of pesticides, reduce their prices and eliminate adulteration. Pakistan is self-sufficient in the production of urea fertilizer and for this reson we have been insulated from international price escalations. "Even today urea prices in Pakistan are 25% below international prices. Unfortunately, we will run out of urea manufacturing capacity by the end of the year and will need to import." A fertilizer plant is already on its way to Pakistan. It will produce urea and phosphatic fertilizers.

He directed all concerned to revise the Fertilizer Policy by June 30,2004. "The new policy should encourage and increase urea production capacity in the country so that the farmers can get this important agricultural input easily and at realistic cost," he observed. Musharraf said the government is fully conscious of the importance of water as lifeline of agriculture. A number of projects have, therefore, been initiated to develop water resources, such as reising the crest of Mangla Dam, construction of Gomal Zam Dam, Mirani Dam, Subak Zai Dam and Sat Para Dam. Similarly, Thal, Rainee and Kachi canals are being constructed to take water to the areas where huge quantities of land remained uncultivated. "These projects would go a long way in reducing poverty in the country, not to talk of economic benefits that would accrue". He said as much as 2.88 million acres of new land will become available for cultivation once these projects are completed. "It will provide quantum jump to agricultural growth, increasing farmer's income, providing more jobs to rural work force and reduction in rural poverty."

It is perhaps for the first time that such a comprehensive package has been unfolded for the agriculture sector which must serve as a motivating factor to fully realize the growth potential of the country in this field. Provision of Rs. 100 billion for loans to the at reduced rates of interest will meet most of credil demand of the farming community. In addition, more tractor manufacturing plants are to be set up while only ten percent customs duty would be imposed on their import. The package, coupled with the support price mechanism for major crops like wheat, cotton, rice and sugarcane, the farmers will have all the motivation to go in a big way to not only help the country become self reliant in food items but also produce surplus for export. However, certain other measures not mentioned by the President in the package need to be given serious consideration to realize full potential. With vast barren land, the country needed not only construction of water reservoirs but a comprehensive programme to conserve water so as to bring more areas under cultivation. The virgin land thus brought under cultivation would help increase production. At the same time, the menace of water theft should be taken a serious note of. Farmers at the tale end even in irrigated areas are consistently complaining about non-availability of water while those at the heads were misusing this precious resource by over watering their fields. Most of these people are big landlords having political or administrative clout. Another key area is research in agriculture sector to develop high yielding and disease resistant varieties as well as checking of adulteration of insecticides and pesticides. Those trying to become millionaire overnight are playing with the economy of the country through adulteration thus causing huge losses to cash crops like cotton. Similarly, agricultural extension workers should become proactive, go to each and every village and town, hold meetings and guide the farmers about different crops and how to guard against diseases.