Snapshot Saving the bread basket
The agricultural sector in Pakistan appears to be under great scrutiny for lack of efficiency and global competitiveness. As Asad Umar, former CEO of Engro Corporation, asserted in his recent presentation to members of the Agricultural Journalists’ Association, this loss of efficiency is denting the country’s selfsufficiency in production of various farm goods.
He claimed that production of various farm products has been low by 90 percent, as compared to the global benchmark. Sugarcane yield is 40 percent lower, wheat yield is 20 percent lower, non-basmati rice yield is 40 percent lower, cotton yield is 20 percent lower and milk yield per animal is 90 percent lower than global standards. Pakistan, once dubbed the ‘food basket’ of the subcontinent, is now struggling due to these factors and is increasingly becoming an importer of a large number of agri-commodities.
Economists are stressing on the need to focus on agriculture sector in the forthcoming budget and the government should enhance the GDP growth rate target through the agriculture sector by increasing crop production, thus making the country an agriculture-exporting country.
The government is being blamed for the inability of the farmers to store surplus agricultural produce due to inadequate storage facilities. Therefore the budget proposals require that the government should focus on cold storage facilities. Also, the upcoming budget should equally take into account the power sector, as farmers are unable to operate tube wells on electricity due to 18-hour load shedding while per acre yield is also low. There are suggestions for solar energy-operated tube wells and new projects for milk and meat production enhancement.
The demand for increase in budgetary allocations for the sector are aimed at checking the quality and standard of agriculture produce and research as per the nutritional value. In response to the payment problem of farmers who run from pillar to post to get returns on their agriculture produce, economists cite the example of the US and India. The US purchased surplus wheat from its farmers to encourage them to cultivate and enhance production. India has also improved its payments mechanism to farmers by involving the private sector.
The manufacturers of agricultural implements and machinery in Pakistan have appealed to the government to withdraw 16 percent General Sales Tax (GST) on agriculture tools and machinery in the interest of the industry. According to Muhammad Iqbal Mughal, executive member of the Pakistan Agricultural Machinery Implements Manufacturers Association (PAMIMA), the government has already reduced GST from 16 percent to 5 percent on tractors, but 16 percent GST on agricultural machinery and inputs still stands. He regretted that the sale of agri-tools and machinery dropped to 60 percent, adding that farmers prefer using traditional modes of agriculture due to lower costs. Thus, there are appeals for exemption of GST on agriculture machinery for smooth growth of the industry and agri-sector.
Significant consideration and action plans are required in the upcoming budget for the sector, as the industrial and trade sectors cannot perform without the agriculture sector. Importantly, the World Bank has forecast a food crisis in future and Pakistan can possibly earn good foreign exchange by focusing on this sector.