NEW EFFORTS TO BOOST AGRICULTURE
The policy of Corporate Agriculture Farming will be announced shortly
From Shamim Ahmed Rizvi,
May 14 - 20, 2001
Although the agriculture sector has received a serious setback during the current year because of drought and scarcity of irrigation water, its potential to promote the national economy cannot be over- emphasised. A little attention paid to this sector during the last one year has proved beyond doubt that there is no business like agriculture specially in the context of Pakistan. The country which imported 3 million tonnes of wheat in 1988-99 had on exportable surplus of over 1.5 million tonnes in 1999-2000.
It is heartening to note that the present government, headed by a professional soldier, is fully conscious of the large potential in the agriculture sector. The government has recently taken a number of decisions to develop and modrenise agriculture. Under corporate farming it will have the status of industry with irrigated areas enjoying tax holidays for 5 years, barani areas for 7 years and culturable waste for 10 years. The government will provide land on nominal rent. Foreign investors have been invited to invest in this sector including live stock development and Agro-based industry in partnership with local investors and offered many attractive incentives. Farmers credit allocation for the current year has been increased to 100 billion as from 45 billion last year.
The first-ever agri-business conference was held in Islamabad last week. Speaking at the concluding session of the 3-day conference Chief Executive Gen Pervez Musharraf said that a comprehensive agricultural strategy has been worked out for import substitution in this sector and to raise per acre yield of crops with maximum water economy. He enumerated the basic features of the strategy such as construction of new water reservoirs and canals, raise in the height of the Mangla Dam, increase in the cultivated area by about a million acres with additional water resources, import substitution without affecting the country's cash crops like cotton and rice and increase in sowing area of the two crops in Sindh and Balochistan provinces.
The Chief Executive invited the investors to avail the opportunities as the government would introduce several incentives for ventures in agro-industries. He also identified areas of import substitution strategy in agriculture sector to buttress government's economic revival strategy.
Later talking to the newsmen the Minister for Food, Agriculture & Livestock, Kharo Mohammad Junejo disclosed that Chief Executive has approved the policy of Corporate Agriculture Farming which will be announced shortly. The Chief Executive Secretariat has also issued the directive to all the relevant ministries to speed up their efforts in implementing the proposed incentives for the introduction of the corporate farming.
He said under the incentive package for the introduction of the Corporate Agricultural Farming, it will have a status of industry and will enjoy all the facilities including the credit availability as admissible to industry. He said under the package a tax holiday for five years for the irrigated areas, 7 years for barani areas and 10 years for the cultivable areas will be provided. However, he said such tax exemption would be given to only those companies listed on the stock exchanges.
Besides providing tax holidays, the minister said exemption on duties on transfer of land would also be allowed for the corporate agricultural farming, the corporate agricultural companies will be required to observe the relevant sections of the workmen's compensation Act 1923, payment of wages Act 1936 and bonded labour system abolition Act (111 of 1992).
Under the present investment policy of Board of Investment (BOI) there is no upper ceiling on land holding for corporate agricultural companies so the legal cover will be provided in this regard to avoid any complications in future. The Federal Agriculture Ministry has also urged the federal government that determination of size of corporate farm may be left to the prospective investors.
For the availability of credit for the Corporate Agricultural Farming, it has been proposed that investing or lending to corporate agricultural farming projects may be considered as part of the agricultural lending targets fixed by the State Bank for financial institutions. The BOI has also agreed to reduce the foreign equity from $ 0.5 million in the present investment policy to $ 0.1 million.
The state land may either be sold or leased out to the investors for 50 years and extendable for another 49 years under the corporate farming. The preference in this regard will be given to cultivable wasteland.
The primary idea for the introduction of the Corporate Agricultural Farming was to organise farmers, particularly the small and medium size farmers, and to invite domestic as well as foreign investors and attract them to corporate agricultural farming. Currently the main concern of the government is the low productivity per unit of crops, which is comparatively low as in the case of wheat the average yield for 1999-2000 was 2.5 tonne per hectare whereas the world average yield is 2.7 tonnes, China 4 tonnes, India 2.6 tonnes and Egypt 6.4 tonnes per hectare.
A short term multibillion fiscal package for the revival of farm sector has been approved by the Finance Ministry which envisages new measures in the agriculture sector to offset the expected $ 1.5 billion losses due to drought and water shortage.