RISING COSTS OF AGRICULTURE INPUTS

KANWAL SALEEM
(feedback@pgeconomist.com)

Feb 13 - 19, 20
12

Agriculture sector, which is the backbone of national economy, is facing host of issues. On one side, imposition of general sales tax (GST) on agriculture inputs/implements and withdrawal of subsidies have multiplied cost of farming while on the other agriculture produce prices, except wheat, have dropped nearly 25 per cent causing huge losses to farmers.

Agriculturists believe that poverty is growing in villages due to indifferent attitude of the government towards the plight of agriculturists. They said the agriculture is treated like a stepchild since 1960 and the agriculture sector is not receiving any subsidy.

If the government focuses on the agriculture sector then economic growth is possible, they said.

Agriculturists and farmers have termed the year 2011 as 'black year' for agriculture.

According to Pakistan Agricultural Scientists Association (PASA) President Jamshed Iqbal Cheema, withdrawal of subsidies and levy of GST on agriculture increased the input cost by over 35 per cent.

The country witnessed negligible agriculture performance in 2011 that compromised its growth. The imposition of GST on fertilizers resulted in 30 per cent decline in DAP usage, besides drop in urea and pesticides usage.

He further stated that loans to agriculture sector also witnessed a declining trend because both the provincial and federal governments made excessive borrowings from banking channels that left hardly any amount for agriculture.

He said loaning had not only shrunk for farmers but also for those involved in the business of agricultural inputs and agricultural produce.

He pointed out that even the loan spread had been squeezed for rice sheller, flour mills, and agriculture produce distributors (arhtis). He said decrease in loaning to agriculture sector badly hit the farmers, as market forces had limited liquidity to buy agriculture produce.

He said, "No new scheme or investment was brought in for agriculture sector 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."

Other agriculturists pointed out that the country missed almost all major crop targets. Huge increase in agriculture and food products imports further disturbed the trade balance, which is a matter of great concern for an agricultural economy.

The country is 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, they said.

They urged the government to cut agriculture inputs cost, improve marketing system, and enhance loan spread for agriculture sector 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, they insisted.

Despite a sharp rise in commodity prices, which attracted an additional Rs342 in rural economy, the agriculture sector could not achieve desired growth targets. During 2010-11, agriculture sector registered limited growth of 1.2 percent against the target of 3.8 percent. Agriculture sector, which provides employment to 45 percent of the population and inputs to agro-based industries, has lost significant momentum during the last three decades. Its growth slowed down to 2.7 percent in the previous decade against 4.4 percent in 1990s and 5.4 percent in the 1980s.

During calendar year 2011, overall performance of agriculture sector exhibited a weaker growth. The country's agriculture performance is mainly dependent upon the availability of irrigation water. The availability of water as a basic input for Kharif has been less than the normal supplies.

Punjab Minister for Agriculture Malik Ahmad Ali Aulakh said that due to special interest taken by Chief Minister Punjab Muhammad Shahbaz Sharif and provision of maximum facilities to the farmers, a record production of wheat, rice, maize, potato, and sugarcane has been achieved in the province.

He said that wheat production, which was 15.6 million tons in 2007-08, rose to 18.4 million tons in 2008-09, 17.9 million tons in 2009-10, and reached the figure of 19 million tons in 2010-11. It was a record in the history of the province.

According to him, the rice production, which was 3.286 million tons in 2007-08 rose to 3.643 million tons in 2008-09 and reached the record level of 3.713 million tons in 2009-10. He said in 2010-11, 3.384 million tons rice was produced. The minister stated that a record production of 40.28 million tons sugarcane has been achieved in 2011-12. He further said that a record production of 2.959 million tons maize and 3.340 million tons potato was achieved in 2010-11.

The minister further said that provision of 20,000 tractors to small cultivators is a milestone in mechanized farming in the province. Similarly, promotion of tunnel technology, subsidy on agri implements, reduction in the rent of bulldozers, brick linings of watercourses, introduction of drip and sprinkle irrigation and other measures are reflective of farmers-friendly policy of the Punjab government.