Agriculture survives on subsidies.

Byline: Amjad Mahmood

Newspaper reports that the government is set to withdraw agricultural subsidies ahead of the International Monetary Fund (IMF) package have shocked stakeholders.

They fear that it may further choke the sector, which is already under stress for want of subsidies.

'The local farming sector receives just 20 per cent of subsidies that are available to the agriculture sector elsewhere in the world, including neighbouring countries like India and China,' says Jawaid Saleem Qureshi, convener of the Lahore Chamber of Commerce and Industry's standing committee on agriculture, seeds and pesticides.

Farming is not highly profitable in Pakistan because of a lack of sufficient subsidies, analysts say. Their withdrawal to meet the IMF conditions will weaken the sector's growth and hurt financial interests of the rural population.

The higher cost of production will render the local produce uncompetitive in the international market, he says.

'The budget should provide a 40pc subsidy on pesticides to offset the impact of the price hike caused by the rupee depreciation'

'Some landowners have already left the business by contracting out their land while exploring employment opportunities in urban centres. Now the government seems to be scaring away the contractors (lessees).'

Statistics available with the provincial government make an interesting comparison between the costs of production in the two Punjabs our province and the one across the Indian border.

Data reveals that the per-hectare cost of production for the wheat crop here is 48pc higher than that in Indian Punjab Rs76,248 versus Rs51,260. Likewise, the difference for the cotton crop is 45pc Rs127,526 per hectare here against Rs87,646 in India.

This difference increase further in the case of rice, sugar cane and maize crops (Rs124,429, Rs222,436 and Rs119,511 in Pakistan versus Rs67,580, Rs142,000 and Rs53,029 in India, respectively).

The Indian government pays subsidies for fertilisers. It offers a subsidy of Rs1,100 per bag of urea, Rs1,050 per bag for diammonium phosphate (DAP) and Rs765 per bag for muriate of potash. Islamabad has subsidised fertiliser by reducing the general sales tax from 17pc to 2pc.

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