ISLAMABAD: Pakistan on Wednesday approved a Rs56.6 billion agriculture relief package for farmers to provide them subsidy on fertilizers, cotton seed, pesticides and sales tax on locally manufactured tractors amid the coronavirus pandemic.

The stimulus package is part of the Rs100 billion out of Rs1200 billion coronavirus relief package already announced for small and medium enterprises and the agriculture sector.

The Economic Coordination Committee of the Cabinet (ECC) – an apex federal institution to discuss and decide economic and financial matters – has approved the package as prepared by the Ministry of National Food Security and Research.

Under the package, the government is offering a Rs37 billion subsidy to farmers on the purchase of fertilizers. This amount will include a subsidy of Rs925 per bag on phosphorus fertilizers and Rs243 per bag on urea and other nitrogen fertilizers.

The government is expecting an offtake of about 3.04 million tons for urea and 0.95 million tons for the phosphate fertilizers in the upcoming cultivation season.

The fertilizer share in the cost of production for major crops is estimated to be around 10 to 15 percent. “The provision of subsidy would reduce cost of production for farmers,” the ECC said in a statement, adding that this would also increase farmers’ affordability to use quality fertilizers for their crops.

Other items in the relief package include a reduction of Rs8.8 billion in mark-up of agriculture loans, Rs2.3 billion subsidy on cotton seed and Rs6 billion subsidy on pesticides.

The government has also granted a subsidy of Rs2.5 billion on the sales tax on locally-manufactured tractors for a period of one year.

Provincial governments will be responsible for the utilization of the relief package, though a clear-cut implementation mechanism for it is yet to be devised.

In Pakistan, the agriculture sector contributes 18.5 percent to the country’s Gross Domestic Product (GDP) and provides 38.5 percent employment to the national labor force, though it has always remained a low priority for successive governments.

“Over the last decade, the performance of agriculture sector has fallen short of desirable level, mainly because of stagnant productivity of all important crops,” said the Pakistan Economic Survey 2018-19.

Farmers on the other hand rejected the package, saying it will only benefit “seed and pesticide mafia” in the absence of an effective mechanism for its implementation.

“The government should give interest-free loans to small farmers to help them bear the escalating cost instead of playing these gimmicks,” Mian Muhammad Umair Masood, general-secretary of the Pakistan Kissan Ittihad, told Arab News on Wednesday.

He said the government should also announce a fixed electricity rate for tube-wells along with lowering the cost of phosphorus fertilizers from Rs3,800 to Rs2,400 per bag and urea fertilizers from Rs1,650 to Rs1,200 per bag.

“Farmers are using decades-old bt2 cotton seed which is highly susceptible to pests and other diseases,” Masood said. “The government should invest in seed research instead of doling out funds to mafia in the name of farmers.”