Taxes on farm inputs pinch
small growers
By
Mohammad Hussain Khan
June 20, 2011: THE levy of general sales tax and withdrawal
of subsidies as part of next year`s budget has not gone down
well with farmers.
The government had imposed 17 per cent GST on farm produce
and inputs in March this year, that was reduced to 16 per
cent in the budgetary proposals 2011-12. Growers said it has
a direct bearing on cost of production.
Farmers fear GST would badly hit agricultural productivity
as big landholdings are few and 90 per cent are subsistence
farmers.
Under new taxation regime the bulk of the growers would find
it hard to cultivate crops like wheat, which doesn`t give
fair returns owing to questionable writ of the food
department. For instance the government, according to
farmers, hasn`t increased the rate of 100kg bag of wheat to
be procured by the food department. By and large, the
growers do not get the wheat support price of Rs950 for per
40kg.
Small growers say they should not be subjected to heavy
indirect taxation. They can`t absorb sudden rise of taxes in
one-go.
The withdrawal of subsidies on inputs, according to
estimates of Sindh Abadgar Board (SAB), would account for
losses of Rs245billion to the country`s agriculture sector.
With increasing cost, the farmers would avoid applying
enough inputs – considered essential for increasing
productivity – as the prices would go beyond their reach.
SAB President Abdul Majeed Nizamani says that if a drop of
three maunds per acre yield in wheat, paddy and cotton and
100 maunds shortfall in cane per acre yield is to be kept in
mind due to withdrawal of subsidies, it would account for
loss of Rs204 billion to the agriculture sector. “When
prices of inputs record increase, it lessens their use by
farmers”, he says..
Dr Nadeem Qamar, President Sindh Chamber of Agriculture
(SCA), maintains that the world is pondering over the
question as to how to give a boost to agriculture because
next 25 years are supposed to be years of agriculture. “The
World Economic Forum (WEF) is discussing options how to
boost-up farm economy while our government is slapping
farmers with GST and flood surcharge,” Qamar says.
Farmers reckon that with new taxation measures a 50 to 100
per cent increase in cost of production may occur. The
companies that provide urea and DAP have increased prices on
account of gas shortages. Consumers will be the ultimate
sufferers since this burden will be passed on to them. For
cotton cultivation four to six bags are to be used per acre
and for sugarcane 10 bags of urea are preferred. With fresh
levies it would not be possible for small farmers to afford
it.
Ghulam Rasool, a small grower, says that he doesn`t know
what to do after steep rise in input prices because the
government is not increasing wheat procurement price while
being tail-end grower, he is facing untold hardships to
irrigate his land. “My cotton crop is drying as I am not
getting required supply of water while the urea bag which I
bought for Rs900 is now being sold at Rs1,500”, he
complains.
Qamar says prices of tractor has shot up to Rs1,180,000 from
Rs870,000 after 16 per cent GST and DAP`s cost is up at
Rs3,950 from Rs3,100. Urea was sold for Rs830 in December
last and in January this year its price was Rs1,020, showing
a 23 per cent increase. Same is the case with seed. For
instance, the price of a bag of rice seed available for
Rs380 last year has jumped to Rs667. A sustainable growth
rate can only be ensured through pro-farmers policies.
SAB`s Mehmood Nawaz Shah adds that worldwide farmers had an
uptake of 300kg of nutrients per acre while in Pakistan it
is just 145kg per acre. If prices of phosphate fertiliser
like DAP are increased, its application will drop. He calls
for saving small farmers from indirect taxation and bringing
big landholders under direct tax net on the basis of income,
provided GST is withdrawn.
Courtesy: The DAWN
