ISLAMABAD: Pakistani farmers urged the government this week to announce subsidies on fertilizers, electricity and diesel in the upcoming federal budget, warning that soaring input costs would make agriculture sector unprofitable for millions of farmers across the country.
Pakistan has sharply increased the price of petroleum products and fertilizer since the US and Isreal launched joint strikes against Iran in February. As the region remains engulfed in war, Iran has effectively shut down the Strait of Hormuz— a crucial global waterway through which nearly 20 percent of the world’s oil and gas supplies, as well as a large chunk of fertilizers, pass through.
Tensions have pushed up the prices of petrol and fertilizers worldwide, with Pakistan being no exception. Khalid Mehmood Khokhar, president of the Pakistan Kissan Ittehad (PKI) pressure group that represents the rights of farmers and the agricultural sector, said prices have increased so much that it is becoming difficult to cultivate crops.
“Our production costs have inflated,” Khokhar told Arab News on Wednesday. “It is very difficult for farmers to cultivate currently. In fact, agriculture is not a profitable business currently.”
Khokhar said a 50-kilogram bag of Diammonium Phosphate (DAP) is currently being sold for Rs17,500 ($63) and Nitrogen-Phosphorus is being sold for Rs11,000 ($40).
To make matters worse, the PKI president said power tariffs had surged to as high as Rs50 ($0.2) per unit from Rs5.35 ($0.02) that was applicable five years ago.
Khokhar said in neighboring India, fertilizer and electricity prices were about five times lower than those paid by Pakistani farmers.
“In our enemy country (India), the rate of urea is Rs884 ($3.2) in Pakistani rupees,” he said. “We are getting Rs4,500 ($16.2).”
He said farmers in India were buying DAP for Rs4,000 ($14.4) while in Pakistan they were getting it for Rs17,500 ($63).
He urged the government to “immediately subsidize” agricultural inputs in Pakistan.
“I request the government to give us a chance to balance the use of fertilizer and increase the country’s (agriculture) productivity,” the KIC president said.
Agriculture is counted among Pakistan’s most vital sectors, contributing 23 percent to the GDP and employing a large share of the national workforce.
Many farmers, however, say the sharp increase in production costs has made matters worse for small landholders who operate on thin margins and have limited access to formal financing.
Noman Shaikh, a 41-year-old farmer, cultivates about two acres of agricultural land in Islamabad’s Chak Shehzad area.
He said farmers have been suffering since the past couple of years after the government decreased its wheat support prices from Rs4,800 ($17.2) per 40-kilogram to Rs2,200 ($7.9).
Farmers have voiced concern after Pakistan discontinued its administered wheat pricing under conditions linked to International Monetary Fund (IMF) reforms.
The reforms require the government to step back from setting commodity market rates.
“The fertilizer is expensive. Labor is expensive. After that, the expenses of diesel are very high,” Shaikh told Arab News.
Shaikh said prices of urea and DAP should not exceed Rs8,000 ($29) and Rs4,000 ($14.5), respectively.
“We appeal that the farmers should get some relief in the fertilizers and diesel, so that their expenses are met,” he said.
’SHORT-TERM FIXES’
Adviser to the Finance Minister Khurram Schehzad said on Tuesday that the government’s priority is not to increase taxes or increase the existing burden on taxpayers in the new budget.
Speaking at a local news channel, Schehzad said the budget would reflect Islamabad’s intent to ensure an economic model driven by exports.
Muhammad Waqas Ghani, head of research at the Karachi-based brokerage firm JS Global Capital Limited, said policymakers were likely to offer targeted incentives in the new budget, especially for small farmers.
“Like every year, the government has planned a lot of incentives for the agriculture sector in the coming budget, specifically benefiting the small farmers.
He said the budget is likely to also allocate Rs15-20 billion [$53.96-71.94 million] for fertilizer subsidies to curb food inflation.
He added that the Digital Kissan Card initiative, which provides easy access to loans from the government, is also likely to be expanded in the budget.
However, he warned that these were “short-term fixes.”
“To achieve long-term growth, the government will have to fix the pain point this sector faces, particularly the heavy input taxation,” Ghani added.
