IN its end-of-the-term budget for the next fiscal year, the PML-N government has set the agriculture sector’s growth target at 3.8 per cent. This is just the same rate that the government claims to have achieved this fiscal year against the target of 3.5pc.

Can our underdeveloped agriculture sector achieve such high growth for a second consecutive year?

Dr Miftah Ismail, who was elevated to the post of finance minister from his previous position of adviser to the prime minister hours before presenting the budget, provided a clue in his budget speech. He said this is possible if the country moves away “from a subsidy-driven approach to a market-driven dynamic policy regime”.

He said the country needs a second green revolution to unleash its growth potential of agriculture, which will help it achieve better yields, increase investment in agriculture technology, improve research and development, make cropping patterns more adaptable to climate change and improve management and labour practices.

But the question is: will the upcoming fiscal year create enough room for the caretakers (who will come shortly) and for the next government (that will take charge after end-July elections) to achieve all this? No one can answer it at this point, as lots of ifs and buts are involved.

The next year’s budget does not give us hopes for an early resolution of structural flaws in cropping patterns, commodity storage, price discovery and information-sharing mechanism

However, in his budget speech Mr Ismail proposed a couple of measures that he thinks should be helpful. These steps include the continuation of previous fiscal year’s incentives to the agricultural sector, a reduced uniform rate of general sales tax (GST) on all kinds of fertilisers and a cut in import duty on agriculture machinery.

In addition, a couple of concessions in duties and taxes for the dairy and livestock sector are also part of a package that the present government believes can be helpful.

However, there is a contradiction of sorts in these measures. One the one hand, Mr Ismail says the country can achieve high growth potential of agriculture by moving away from subsidy-driven approach to a market-driven dynamic policy regime. On the other hand, he is proposing exactly the opposite. Or is it because the PML-N government cannot afford to propose bitter pills for agriculture before elections?

Leave it here and now consider this: better performance of major crops has been a key driver of this year’s high growth rate of agriculture. But dig deeper and you note a decline in the targeted production of cotton, how an increase in sugar cane output emboldened sugar millers to keep cane suppliers unpaid, and despite a big wheat output only a part of the total surplus found its way to foreign markets.

Such things point towards structural flaws in cropping patterns, commodity storage, price discovery and information sharing mechanism and in the lack of harmony among stakeholders and between provinces and the federation. Sadly, the next year’s budget does not give us hopes for their early resolution.

Mr Ismail mentioned in his speech two developments: one, the transfer of the subject of cotton from the Ministry of Textiles to Ministry of National Food Security and Research; and two, the passage of Plant Breeders Rights Act.

Plant Breeders Rights Registry established under this act would help in producing higher yield varieties of cotton and other crops through the availability of better-quality seeds, he said.

He said the federal government is working with provincial governments to formulate and enforce a policy to halt the conversion of cotton-growing areas into sugar cane fields. But making this announcement at the end of the government’s term is unusual, to say the least. If the PML-N was serious in this matter, it should have formulated and implemented such a policy during its five-year term.

Some other announcements about promoting agriculture are of similar nature. For example, the finance minister said that tariff subsidy on agriculture tube wells would continue, agriculture research support fund and agriculture technology fund would be established, each with initial allocation of Rs5bn, and agriculture research organisations would be revamped.

Even if these and similar announcements are taken as PML-N’s pre-election promises, our farmers can ask the government why it failed to take these measures in the past five years.

For the next year’s budget, the outgoing government has set a target of Rs1.1 trillion for agricultural lending, up from Rs1.001tr for the current year. As a corollary measure, it has once again increased the production index unit, or PIU, value for the next year to Rs6,000 from Rs5,000 for this year. That, of course, will help farmers get larger bank loans.

Enhanced bank lending to agriculturists, application of GST at a reduced uniform rate of 3pc and lowering of sales tax on agricultural machinery from 7pc to 5pc are three key measures that may help achieve an ambitious 3.8pc agricultural growth target in the upcoming fiscal year.

Some other measures proposed in the budget should also help boost productivity in livestock, fisheries and minor crops. These include withdrawal of 3pc customs duty on imports of bulls meant for breeding purposes, a reduction in concessionary customs duty on imports of feed meant for livestock from 10pc to 5pc, permission for the import of fans for use in dairy farms at a concessionary duty of 3pc to members of Corporate Dairy Association, exemption from sales tax currently charged on animal feed of dairy farms, removal of an existing 10pc duty on sales tax on fish feed, and the provision of freight support on potato exports.

However, as the legality of presenting a full fiscal-year budget by the government just a month before its departure remains under question, one cannot be sure whether these or other incentives for the agriculture sector would materialise. And even if they do, promoting agricultural growth would not be very sustainable, as the government has conveniently left several structural issues unanswered.

For example, the budget says nothing on how the mass of total arable land would be increased, how water shortages in different parts of the country primarily due to discord between provinces and the federation would be addressed or how cotton economy would get a boost just because of the transfer of this subject from one ministry to another.

Besides, the budget makes no mention of how CPEC investments would impact the agricultural sector. Nor does it remove concerns in the minds of ordinary farmers regarding the possibility of mass-scale agricultural land transfers to Chinese companies in the name of corporate farming.

Published in Dawn, The Business and Finance Weekly, April 30th, 2018