TAX ON AGRICULTURE INCOME REMAINS A DREAM

AGRICULTURE SECTOR PERFORMANCE IN THE YEAR 2010 REMAINED AVERAGE.

KANWAL SALEEM
(feedback@pgeconomist.com)
Dec 27, 2010 - Jan 2, 20
11

Despite enormous potential, the country's agriculture sector performance in the year 2010 remained average, as the overall performance of agriculture sector was weaker than the target.

During the outgoing year 2009-10, the agriculture sector of the country grew by two per cent as against the target of 3.8 per cent. In the current financial year 2010-11, it looks difficult rather impossible to achieve the set target. The growth outlook for current FY in agriculture sector seems gloomy and is likely to be lower than the growth seen in FY09.

Food inflation in the year under review remained on upward side playing havoc with the lives of those subsisting or living below the poverty line. Despite being an agricultural country, soaring prices of food items particularly wheat, vegetables and rice remained a matter of concern for the people of the country. The prices of essential food items increased tremendously that led to the spiraling inflation. Despite strong demand raised by different quarters, the government remained unable to pave the ground for the imposition of taxes on income of agriculture sector.

The yield of different crops remained low when compared with the world average and bad crop management is stated to the main reason for this. The decline in yield is mainly attributed to shortfall in irrigation water in some rice growing districts during sowing time: the impact was further compounded by dry weather, particularly in Multan and Sargodha regions.

The need of the hour is to apply modern farming techniques to increase the per acre yield.

The agriculture sector employs 44 per cent of labour force while its export share is 66 per cent and 5 year's compound average growth 4.1 per cent.

Major crops, accounting for 32.8 per cent of agricultural value, registered a negative growth in the year under review. Likewise, minor crops contributing 11.1 per cent to overall agriculture posted negative growth. Production of minor crops has declined for the last few years that is a worrying trend, as it is partially contributing to food price inflation. However, the performance of livestock sector, the single largest contributor to overall agriculture (53.2 per cent) remained good. Likewise, fisheries sector expanded and performed well.

Pakistan's agricultural performance is closely linked with the supply of irrigation water. Against the normal surface water availability at canal heads of 103.5 million-acre feet (MAF), the overall (both for Kharif as well as Rabi) water availability has been less in the range of 2.5 per cent (2005-06) to 20.6 per cent (2004-05).

However, it remained less by 2.5 per cent in 2005-06 against the normal availability. Relatively speaking, Rabi season faced shortage of water during 2009-10.

During the current fiscal year (2009-10), the availability of water as an important input for Kharif 2009 (for the crops such as rice, sugarcane, and cotton) has been 0.3 per cent more than the normal supplies and 0.6 per cent more than last yearís Kharif.

The water availability during Rabi season (for major crop such as wheat), is, however, estimated at 26 MAF, which is 28.6 per cent less than the normal availability, and 4.4 per cent more than last year.

Experts told Page that agricultural production has strong bearing on overall performance of the economy, therefore, it is to devise some mechanism that can help smoothing output in the crop sector.

According to them, Pakistan has a rich and vast natural resource base, covering various ecological and climatic zones; hence, the country has great potential for producing all types of food commodities. Agriculture has an important direct and indirect role in generating economic growth. The importance of agriculture to the economy is seen in three ways: first, it provides food to consumers and fibres for domestic industry; second, it is a source of scarce foreign exchange earnings; and third, it provides a market for industrial goods.

They were of the view that huge investment is required to tap the potential existing in agriculture sector. The total geographical area of Pakistan is 79.6 million hectares. About 27 per cent of the area is currently under cultivation. Of this area, 80 per cent is irrigated. In this regard, Pakistan has one of the highest proportions of irrigated cropped area in the world. The cultivable wastelands offering good possibilities of crop production amount to 8.9 million hectares, they added.

The experts called for boosting investment in agriculture to ensure long-term food security. The food price and economic crises have had a severe impact, as prices of most agricultural commodities have increased, many of them sharply, in recent months, they said, adding: "Investment in agriculture is a must in the medium and longer term."

According to FAO, the number of hungry and malnourished people in the Near East and North Africa is currently estimated at 37 million, nearly 10 per cent of the region's population. The rapid increase in hunger and malnourishment since the food crisis of 2008 reveals the inadequacy of the present global food system and the urgent need for structural changes. These could include short-term measures such as targeted safety nets and social protection programmes as well as reliable and timely information on food commodity markets.

Small-scale farmers must be assured access to indispensable means of production and technologies such as high-quality seeds, fertilizers, feed and farming tools and equipment, said FAO.

According to Minister for Food and Agriculture Nazar Muhammad Gondal, the government is pursuing a plan to set up state-of-the-art research centers with US assistance for cotton, wheat, and livestock.

He stated that the government was implementing 59 development projects of 3-5 years duration, costing Rs143 billion under PSDP. He said that development of agricultural infrastructure including warehousing facilities, agriculture marketing, and grain storage facilities also included in these projects.

According to him, the government is introducing Bt cotton varieties/technologies and to promote mechanisation, the government has removed duties and taxes on the imported agricultural inputs and machinery for agro-based industry. He said that government has announced a Rabi Assistance Plan for flood 2010 affected areas.