AS talks with the International Monetary Fund reportedly conclude on the bailout package, the farmers hold their breath wondering what it would mean to them.

Unfortunately, in the past the farmers had suffered the most as the government, under the donors’ pressure, had not only withdrawn the subsidies on inputs but also taxed the sector.

The western powers, especially the US, have used international financial institutions to create opportunities for multinationals in the Third World agri-trade. First, the Third World markets are opened up for, what is euphemistically called a private sector, and then come the multinationals, which sweep aside local players and create monopolies.

The phenomenal rise in food prices in the last three years, which the West is squarely blaming on generation of bio-fuel and the rising middle-class in China and India, stand a hard testimony to the western manipulation of commodity markets.

Only 13 per cent of wheat and four per cent of rice production is traded. It means that countries around the world store 87 per cent of wheat and 96 per cent of rice to ensure their food security. Even those huge national stocks have failed to withstand the power of speculators to make money at the cost of common man. That shows how excess money, not channeled into productive avenues, could play havoc to national food security..

With this background in mind, the farmers fear that the first causality of the deal with IMF could be the subsidy of Rs27 billion on di-ammonium phosphate (DAP) fertiliser. In that case, the next wheat crop could be the biggest casualty. With over 40 per cent water shortage in general, the situation would worsen in areas cultivated from water from River Chenab because of the Indian squeeze. With only half of the seed available, the crop already is in trouble.

Last year, when DAP price was around Rs3,000 per bag, some 70 per cent drop in usage was reported during the Rabi season. If the subsidy is withdrawn, the price per bag would go beyond Rs5,500 making it almost impossible for farmers to use it which would not only endanger the entire wheat crop but also take down food security with it.

That should not be allowed to happen if the government wants to get anywhere near its ‘dreamy target’ of 25 million tones. Even with 50 per cent increase in procurement price, the farmers need all other inputs and management skill, which, unfortunately are missing to repeat the last year’s production of 22 million tones, though the government claimed 23.5 tones and blamed smuggling for the domestic shortage.

But the actual production was around 22 million tones according to farmers’ estimates. If the government wanted to increase production by 15 per cent over last year, fertiliser, after water, is the most crucial factor. It would do better for itself if it could keep the subsidy intact. Farmers in the cotton-belt have already suffered some 40 per cent price crash and would find it even harder to finance such costly fertiliser.

But, with the PM’s advisor on finance already threatening to bring agriculture production under tax net and strip the sector, and economy, of ‘distorting subsidies’, the official resolve forewarns farmers to get ready for hard times ahead.

The government should make all conditions attached to the IMF package clear before signing it. It should rather take the deal to parliament and debate it thoroughly and let it be a collective responsibility. Otherwise, it would turn into social and political risk. The government has just faced countrywide protests when it tried to withdraw subsidy on power sector.

It could not take more than a week of protests across the country before backing off, slashing the power bills by 40 per cent for the time being and promising sanity in power charges. It could meet the same fate if it tried to irrationally withdraw the remaining subsidies, which are already small in number and quantum.

Agriculture hosts over 65 per cent direct or indirect employment – people do not move out of this sector with the thinning of its financial promise but they stick to it even while dropping below the poverty line. Any pressure on agriculture sector would directly result in increase in unemployment and poverty, and both these would haunt the democratically elected government.

Another threat could be the government importing three to four million tones of wheat next year, spending precious foreign exchange, which it currently finds difficult to get. Such an import would have damaging social and fiscal cost.

The government must keep bigger economic picture in mind before committing to the usual IMF conditions. It should not, in any way, sign papers that bring it short-term benefit at the cost of long-term economic and social interests of the country.