May 11, 2008	Sunday	Jamadi-ul-Awwal 5, 1429

ISLAMABAD: With the rising food prices having made more than 77 million Pakistanis vulnerable to economic shocks, the issue of subsidising the country’s agricultural sector has once again come to the centre stage.

As a matter of policy, international lenders and development agencies, including the World Bank and the Asian Development Bank, are normally against government subsidies, but they are reluctant to reiterate their policy in the current environment.

Despite several attempts made by Dawn over the last few weeks to elicit policy statements or viewpoints from the country heads of ADB, WB and the European Commission, no one was found willing to say anything on the record in view the sensitivity of the matter.

The ADB and WB officials here say they are not allowed or authorised to issue any statement on the critical issue or propose any guidelines at a time when food insecurity is hovering over the nation. “Our conditions are different from project to project,” is what you will hear from the officials of these institutions whenever you call them. It is up to the government to decide and set out its own priorities, they insist.

However, some officials, requesting anonymity, said that they discouraged across-the-board subsidies and only accepted target backing by the government. They said subsidies must target the chronic poor alone. Such subsidies can be in the form of ration cards or supporting the utility stores concept. Some officials of such institutions here don’t think that the lack of government support is responsible for low productivity in the agriculture sector. For them, the ills of the agricultural sector are the outcome of poor management and planning and not existing policies. They think that subsidies have nothing to do with improvement in the sector.

But there is a general perception in the country that while abiding by the conditions of international financial institutions attached to various project loans, the government has gradually pulled the cushion from the farmers and left them vulnerable to economic shocks. Several food committees, both occupied by parliamentarians and experts, have suggested strong government support in providing cheaper seeds, fertiliser, electricity and other agricultural inputs to the farmers.

Last year, the prices of agricultural inputs, led by seeds and fertilizers, got more than doubled. There was the demand for direct subsidies to bring down the prices of inputs, but, faced with pressure from international lenders, the government could not lend an open helping hand to the farmers.

Resultantly, Pakistan will fall short of this year’s wheat production target of 24 million tons by 2.2 million tons, according to the Ministry of Food, Agriculture and Livestock. The target for cotton production is 14.11 million bales, while the requirement of the local industry stands at around 14 to 15 million bales. The country is not even in a position to achieve the cotton target.

But officials in financial institutions are against any protective measures. They don’t support restrictions on the market mechanism and unbridled exports or the government’s desire to keep strategic food reserves by introducing bans of different sorts. In one instance, the government, faced with pressure from these financial institutions and proponents of free trade, did not ban the export of rice despite a worldwide shortage of the commodity.

These financial institutions even in the current crisis want the government to leave food prices to the market mechanism of supply and demand. The big question is relates to the capacity of local consumers to pay international prices. These financial institutions are dumb about the wage structure in Pakistan, but are asking the government to leave everything to the free market mechanism.

While these institutions are here to pursue their own agenda, it is quite evident that not only in the developing countries, but governments in the first world also support their agriculture sector. Pull away the subsidies from the US agriculture sector and it will fall.

Similarly, with records of farm payments public in many EU countries, the fact that some of Europe’s wealthiest people benefit from subsidies has become a growing embarrassment. A report in The Guardian last year said that the Queen and Prince Charles received more than £1 million, or $2.1 million, in EU farm subsidies over two years.

Similarly, in Japan agriculture subsidy is considered a cultural phenomenon. But the voices of these financial institutions and lenders become very weak whenever there comes the question of agriculture subsidies in the first world.

Time has come for the new political setup to find a new strategy for protecting the interests of the country’s farmers and ensuring the national food security.