2011 PROVED BLEAK YEAR FOR AGRICULTURE

KANWAL SALEEM
(feedback@pgeconomist.com)

Jan 2 - 8, 20
12

Because of the withdrawal of subsidy on agri inputs and levy of general sales tax (GST) on electricity, agri-inputs and agricultural implements, the year 2011 proved a 'black year' for the agriculture sector as the growers had to face manifold economic problems.

These factors hit the growers hard, as not only input cost rose to 35 per cent but at the same time prices of some of the major crops such as cotton, rice and sugarcane dropped by 25 per cent.

According to Pakistan Agricultural Scientists Association (PASA) Chairman MrJamshed Iqbal Cheema, the year 2011 was a year of loss for the farming sector and would be remembered by the farming community for long.

He said that the government not only withdrew subsidy from the agricultural inputs and electricity but also imposed GST on them due to which prices of input increased too much, hampering the performance of the agriculture sector.

He claimed that imposition of GST on fertilizer sector had witnessed 30 per cent decrease in DAP usage besides decrease in usage of urea and pesticides. Similarly, he said, both federal and provincial governments had become heavy borrowers due to which loan spread for agricultural sector squeezed. 'Agricultural sector which has 23-percent share in the GDP should have at least same amount of share in the loan spread from the commercial branches to keep it going,' he argued.

Mr. Cheema said that loaning had not only squeezed for the farmers but also for those involved in the business of agricultural inputs and agricultural produce.

"Loan spread has even squeezed for those sheller owners, flour millers and arhtis,' he said, adding: 'Price of any crop is stabilized and leave profit for the grower when market is ready to buy at least 70 per cent of the produce in one go. But, with the decrease in funds (by virtue of decrease in financing), market would not be able to buy the produce with that ratio rather would hardly buy 40-50 per cent of the produce."

He claimed agriculture sector does not have that much funds to buy 70 per cent produce in cash. Giving example, he said the government announced Rs1050 as support rate for 40 kilograms of wheat, but it could be ensured only when the market has funds to buy this produce and maximum buyers are in competition to buy wheat.

He said absence of food processing industries, storage and other value-addition industries was another issue, which could not be tackled by any government despite tall claims during the present year. 'No new scheme or investment was brought in this sector', he regretted, saying 'which could not only overcome waste of perishable and non-perishable agricultural commodities but could also help both producer and consumer in shape of sustained prices.'

To a question, he said that the government should decrease the prices of agricultural inputs, improve marketing system for this sector, and enhance loan spread besides investing in research to increase per acre yield. These steps are essential to overcome food shortage and avoid any threat to food security in the future.

Other farmers' representatives and agriculturists have also termed the current year as the worst-ever period for the agricultural sector.

According to Farmers Associates Pakistan (FAP) President Dr. Tariq Bucha, the levy of GST put an additional burden of Rs84 billion on the growers.

He termed GST as a step aimed at killing this sector besides damaging the allied industries.

'Tractors sales have reduced sharply as the growers have no more buying power for tractors and other agricultural implements,' remarked Bucha.

FAP President also claimed that the Zarai Tarqiati Bank Limited (ZTBL) issued no new loans during the current year thus denying access to 'financial resources' to the small growers.

He said besides many wrong decisions, which hurt the agriculture, the government also imported potato and maize at a juncture when these commodities were also in abundance in the country.

'As a result of which prices fell and there is no buyer of Pakistani potato in the market,' he alleged.

He also criticized the government decision of stopping supply of gas to fertilizer manufacturing units and said this step was equal to endangering the food security of the country.

Urea fertilizer bag, which had registered an increase of Rs150 in eight years, added Rs850 in just one year (2011) due to wrong steps of the government, he added.

Agri Forum Pakistan Chairman Muhammad Ibrahim Mughal also termed the year 2011 as the worst year for agriculture sector.

He claimed that the country missed almost all major crop targets. The government had fixed the cotton crop target of 14.5 million bales, while it was expected that the country would miss it. Similarly, the government fixed wheat sowing target of 22 million acre, whereas it would be missed by over 2.1 million acres due to high input cost and shortage of much needed inputs, he added.

He pointed out that huge increase in agriculture and food products imports further disturbed the trade balance, which was a matter of great concern for an agricultural economy. He underscored that it was a worst year for the farmers as fertilizer prices ran amok because of the suspension of natural gas supply to fertilizer plants.

The country was already short of urea fertilizer and absence of price control further aggravated the situation by offering an opportunity to profiteers and hoarders.

Conservative estimates indicated that profiteers fleeced some Rs10 billion from poor farmers by exploiting the situation, he maintained.

Kisan Board Pakistan (KBP) Central Secretary Information Haji Muhammad Ramzan was also critical of the government policies, which according to him, ruined the growth prospects for farmers and agriculture sector this year. He claimed that the growers received record low prices of their produce this year.

Prices of major crops including cotton, rice, and sugarcane virtually halved. 'Farmers who got Rs5000 per maund for cotton could hardly manage Rs2000 for it. Similarly, sugarcane was sold at Rs200 in 2010 but growers were practically getting only Rs100 in 2011,' he said.

He said sharp increase in agricultural input prices, which were doubled during the current year, added to the worries of the growers as they were finding it very difficult to continue, he added.