Salman Rafi Sheikh
While many had a sigh of relief when Pakistan’s Prime Minister announced, on September 15, the farmer’s relief package, many were still unsure whether it would succeed in stabilising the seriously declining agriculture in Pakistan at all or descend into the chaos of mere politics. Notwithstanding the Government’s intentions behind the relief package of Rs 341 billion, the package certainly came amid increasing protests by the farmers due to the seriously falling prices and uncertain market conditions.
Addressing a farmers` convention at the Jinnah Convention Centre, the Prime Minister said his government had decided to provide a cash support of Rs 5,000 with immediate effect to the growers of cotton and rice as a direct relief. The amount will be disbursed among the farmers owning a maximum of 12.5 acres of land. It will cost the government Rs20bn. The amount will be equally shared by the provincial government concerned. The package provides a direct benefit of Rs147bn to small farmers across the country whereas an additional loan of Rs194bn will be available to the agriculture sector.
Mr Sharif said that despite a bumper crop, rice growers were facing an uncertain situation because of falling prices in the international market. The decline in prices had badly affected the rice export of Pakistan and local market of rice has, too, been seriously affected with many deals deciding to shut their businesses down.
With the new rice crop coming up and abundant rice already in stocks, the growers as well as dealers were facing difficulties which would be ameliorated through measures to be announced soon, said the PM. To help change market condition and stabilise the ever falling prices, the Ministry of Commerce has been directed to explore markets in Iran, the Middle East and other countries for rice export.
The prime minister also announced that the government was establishing an Rs20bn subsidy fund aimed at reducing prices of the most essential fertilisers. The fund, to be equally shared by the federal and provincial governments, would help bring down the prices of potassium and phosphate fertilisers by Rs500 per bag.
The government spends a huge amount from the national exchequer on the import of urea. This year, the Prime Minister said, an amount of Rs25bn ‘has been set aside to provide fertilisers to farmers at subsidised rates.’ He also said that the local fertiliser companies had raised the price of fertiliser by Rs200 per bag and the government was negotiating with them to restore the old rate.
He expressed the hope that the increase would be withdrawn and asked the chief ministers of all provinces to ensure the cut by Oct 1. They have also been asked to devise a monitoring system at the tehsil level to ensure that the entire benefit is passed on to growers and no one takes even a rupee illegally.
He further said the government would provide Rs7bn in concession to farmers in electricity tariff. In the current fiscal year, a concessional rate of Rs10.35 per unit has been fixed for peak hours and Rs8.85 for off-peak hours. The payment of old bills can be made by Dec 31. Sales tax on bills amounting to Rs7bn will be paid by the provincial governments. Under the arrangement, the prime minister said, farmers would get a benefit of Rs14bn to energise their tube wells for irrigation purposes.
Notwithstanding various package categories, more than half of the Rs341bn promised under the package is in the form of agricultural loans, which only marginally qualify as an incentive considering the difficulties that small farmers have in securing access to bank credit. The package does try to enhance farmers` access to credit through various guarantees and by bearing the cost of loan insurance, but the impact of these is likely to be small. The promised reduction in fertiliser prices is already a part of the budget, but whatever declines are eventually achieved, the main problem of fertiliser distribution will still remain unaddressed, resulting in the benefit passing to large landowners with political connections instead of the small farmers.
