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| April 17, 2006 | Monday | Rabi-ul-Awwal 18, 1427 |
Pesticide prices may go up by 20pc
MULTAN, April 16: Prices of pesticides in the upcoming cotton season are likely to increase by 20 per cent if the authorities concerned succumb to the ‘fallacy’ of local manufacturing of chemicals meant to kill insects.
Sources in the federal agriculture ministry said under influence of some ‘big fish’ of the pesticide business, a proposal to enhance duties on import of technical and formulated material was under consideration in the name of encouraging local manufacturing of the pesticides.
At present, the technical material (active ingredient) for the formulation of different pesticides is being imported in the country at zero-duty while there is five per cent duty on the import of formulated products. It is said that pesticides worth Rs12 billion to Rs15 billion are marketed annually in the country. Of these, around 80 per cent (monetarily) are consumed in the cotton fields.
The country is totally dependent on exotic material to meet its demand for the pesticides. However, with the increase in demand of pesticides as an important input viz-a-viz plant protection, a need to do domestic manufacturing of the chemicals is being realised to make them available at cheap rates to the growers.
Sources said to capitalise the opportunity a couple of ‘smart’ entrepreneurs claim that they have the capability of doing ‘basic manufacturing’ of the pesticides. However, they have demanded an umbrella of the favourable duty structure to carry out the task.
They reportedly proposed no duty on the import of material for basic manufacturing, five per cent on the import of technical material and 20 to 25 per cent on the formulated material. It may be added here that most of the pesticides imported in country have come in formulated form.
Market analysts say while encouraging local manufacturing of the pesticides, the government should first get defined the term ‘basic manufacturing’ and if someone really has the capability to produce pesticide(s) locally then the government should give him some incentives which should not burden the growers in the form of indirect taxes that will ultimately increase the cost of raising crops.
They said basic manufacturing needed costly technology called Hydrocracker unit, which none of the pesticide formulators had in Pakistan. They said in the absence of Hydrocracker the process of formulating active ingredient with the help of exotic material could only be termed crude manufacturing.
They said last year the pressure of pests on cotton crop was low compared to the previous years while some of the products proved to be drug on the market. Subsequently, the importers of pesticides now have carryover stocks to the tune of Rs4 to Rs5 billion from their last year inventory.
They said the proposal to enhance import duty on technical and formulated materials was like killing two birds with one stone because if it happened, the value of carryover stock would automatically be increased while the fresh imports were likely to be diminished for becoming costly.
“This is, in fact, a recipe to get rid of the carryover stock at exorbitant profits at the cost of growers’ kitty,” they added.
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