AN objective analysis of the recently announced agriculture relief package reveals that the government has overlooked the real demands of the farmers, even though it claims that the package was revealed after consultations with the growers’ representatives.

The announcement of a suitable support price was the main demand of the farmers. They said they are unable to recover their high production costs at current market prices. They requested the government to fix the price of major crops such as cotton, rice (basmati), sugarcane and maize.

After a careful analysis of the support package, the Institute of Policy Reforms (IPR) also recommended the addition of support prices in the package. The government’s reluctance to announce an acceptable support price could be attributed to pressure by influential millers and exporters.

A cash subsidy of Rs5,000 per acre to rice and cotton farmers with 12.5 acres of land or less to address the issue of high production costs is insufficient and may hardly materialise. Given the rampant corruption in the system, many unintended persons would take the benefit.

It is also ambiguous that how the cash payments would be disbursed. Moreover, many farmers who are bearing the brunt of the high input costs are excluded from the scheme.

The second major demand of the farmers was a substantial subsidy on agricultural inputs, particularly fertiliser. The current prices of di-ammonium phosphate (DAP) and urea are quite high, limiting their usage by the marginalised growers. The package doesn’t offer any considerable subsidy on fertilisers.

The president of the All Pakistan Kissan Ittehad, Major (retd) Muhammad Tariq, said due to weak market regulatory mechanisms, these benefits would go to the industrialists and dealers rather than to farmers.

The president of the All Pakistan Kissan Itehad, Major (retd) Muhammad Tariq, said due to weak market regulatory mechanisms, the benefits would go to industrialists and dealers rather than to farmers

Interestingly, the government had increased the price of gas a week before announcing the package. Owing to this price increase, the price of urea had risen by Rs200 per bag. Now, after negotiations, fertiliser manufacturers have agreed to reduce urea prices by Rs105 per 50kg bag given the reversal in the recent gas price hike. Maybe the farmers understand its implications, and thus have demanded the removal of GST on fertilisers.

Other provisions of the package are also potentially advantageous for well-off farmers. A significant reduction in the import duty on agricultural machinery and subsidy for solar tube-wells will entirely benefit the large landowners. The IPR has suggested that the GST on light diesel oil should be reduced from 29.5pc to 7pc as more than 85pc of the tube-wells are operating on diesel.

Overall, the farmers seem unhappy with the agriculture package. Farmer-based organisations like the Pakistan Kissan Ittehad, Kissan Board, Kissan Raj Party, All Pakistan Kissan Ittehad and the Pakistan Agriculture Forum have expressed their concerns.

However, the Kissan Welfare Association and the Kissan Bachao Tahreek have lauded the prime minister’s relief package and urged the government to implement it in a transparent manner.

If the incumbent regime is genuinely interested in reinvigorating this vital sector of the economy and making farming a sustainably profitable enterprise for resource-poor growers, it must come up with a comprehensive agriculture policy and potent measures after taking all the provinces on board.

The writer is a Research Associate at King Saud University, Riyadh, KSA.

Published in Dawn, Business & Finance weekly, October 19th , 2015

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