LAHORE - The Lahore Chamber of Commerce and Industry Standing Committee on Agriculture has suggested the government that instead of providing subsidy of Rs14 billion on sale of DAP fertilizer it should give relief to farmers in sales tax on agri inputs, as no country imposes tax on agri inputs in the world. LCCI standing committee chairman Jawed Salim Qureshi complained that farmers are not benefiting from the government’s subsidy on fertilizers, as this subsidy has never been passed onto growers and real beneficiary are always manufacturers and industrialists.

The government is planning to inject Rs14 billion subsidy in a market size of over Rs150 billion and wants full control on price, sales, imports and other activities of DAP to ensure that the benefit of subsidy goes to farmers, which is not possible. Instead of giving Rs400 subsidy on DAP bag, the govt should remove sales tax on agri inputs, directly reducing the rates of pesticides and fertilizers by around 20 per cent.  

He said that the cost of inputs for agricultural produces had increased sharply while imposition of GST would further add the cost by 18 per cent. Therefore, the rise of Rs120 billion in agriculture loan would have not addressed the rising demand of financing in the sector.

Additionally, the allocation of Rs30 billion loans for small farmers under another head is inadequate, as 90 percent farmers are small. He said the proposed increase in general sales tax on seeds of sunflower and canola would also trigger further inflation. Four Brothers chairman and noted agri expert Engineer Jawed Salim Qureshi said that the cost of inputs in agriculture produces was continuously rising, while the proposed increase might result into the surge in cost of relevant raw and finished goods.

Replying to a question, he said that farmers of Pakistan are continuously at receiving end and are forced to run pillar to post in order to make both ends meet. Pakistani farmers have been victim of wrong government policies, while at the same time, they had to face shortages of water, fertiliser, electricity and diesel, he said.

Not only inputs are being sold at exorbitant prices in Pakistan, but farmers are unable to find them in the market, he said.

While comparing the situation with India, Engineer Jawed Qureshi argued that Pakistani farmers cannot compete with their Indian counterparts, as the Indian government is providing high subsidies on the agriculture inputs, making the cost of production almost half.  He said that the cost of production of Pakistani farmers is 66 percent more than Indian growers. There is a marked difference in prices of inputs, including fertiliser, seeds, pesticides, diesel and electricity in both the countries, he said.

The noted agri expert observed that Indian government’s patronage has economically strengthened their growers and enabled them to move to hybrid seeds and adopt tunnel farming and other latest techniques to minimize costs”, he said. As a result, despite transportation charges and other overhead costs they have out-rightly beaten Pakistanis, he added. Since inception, the agriculture sector remained neglected and suffered from the lack of investment by the government of Pakistan, he said, adding that India had always given intense importance to its agriculture sector augmented by various subsidies and other incentives.

India annually allocated trillions of rupees, while the Pakistan government spent peanuts on the agriculture sector, said Qureshi.