The
budget speech and the Agriculture sector An overview
The
budget speech of federal
Finance Minister Shaukat Aziz
revealed various steps taken by the government regarding the agriculture
sector for the year 2001-2002.
Under
the head of Economic Review, the minister said: As you are
aware, the Economic Survey, published by the Ministry of
Finance, has been issued a couple of days ago, giving complete
details of the performance of the economy during the year.
Accordingly, I would not want to take your time in repeating
the details of the Survey. What I would like to highlight,
however, are four important aspects of the economy:
Mainly due to the large scale and unprecedented drought, which led
to a decline in agriculture
output, the overall economic growth will be 2.6% compared to
3.9% last year. Agriculture
has 25% share in country’s income and as such its
performance affects the overall performance significantly. If
we exclude agriculture, the
rest of the economy has grown by 4.3% compared to 3.1% last
year. Excluding full impact of drought, the increase will be
4.8%
While
exclusively talking about the Agriculture
the Finance Minister said:
Agriculture
is the most important sector among the four sectors the
government has selected for leading the process of economic
growth. Pakistan is endowed with an immensely productive
agrarian base, but its harnessing on a sustainable basis has
always remained a distant dream. The vulnerabilities to which agriculture
is exposed, was only brought to sharper focus in the wake of
recent drought. There are essentially four challenges our agriculture
sector is facing:
(1)
Water shortages emanating from deficiencies in country’s
storage capacity and poor use of available water;
(2)
Price uncertainty and poor marketing methods;
(3)
Narrow export base of agriculture
value-added largely confined to crop sector, at the cost of
neglecting higher value added sub-sectors like fisheries,
livestock, poultry and horticulture
(4)
Limited supply of credit compared to actual needs.
These
challenges are formidable, but we have to face them squarely
for our survival depends on our ability to create a dynamic
and vibrant agriculture
sector, which is the main source of export-led economic
growth. The following key measures in the agriculture
sector have been taken to improve its performance and give it
a new orientation:
(1)
A medium term plan for radically augmenting water resources in
the country is being undertaken at a cost of Rs.86.1 billion
over the next three years, which will see construction start
of new storage capacity through such projects as Gomalzam and
Meerani dams, and new irrigation schemes like Thal and Katchi
canals and lining of numerous water courses. These initiatives
will provide an additional storage capacity of 4.5 MAF of
water, nearly a million acres of land will be brought under
cultivation and thousands of jobs will be created during
construction of these schemes;
(2)
A package of assistance is being drawn with the help of all
the public sector financial institutions to provide funding
for water conservation and development schemes by introducing
new means of irrigation and extending loans for installation
of tubewells, open wells desilting and brick-lining for water
channels, precision land leveling, drip irrigation system,
construction of mini dams, bed planters and water sweeter
processing machines. Furthermore, 10,000 tube-wells will be
installed in the provinces to increase the availability of
water at farm level;
(3)
To induce water conservation, farmers will be encouraged to
substitute water-intensive crops with crops requiring less
water. In particular, government is supplying cottonseed in
parts of Punjab and Balochistan for substituting cotton crop
with rice. Similar efforts will be encouraged for substitution
of sugarcane with cotton.
(4)
Price certainty is an essential need of the farmers. However,
this objective has to be weighed against the need to provide
the farmers the international prices, which were normally
higher than the prices prevailing in the domestic market.
Accordingly, last year we had abolished all restrictions on
export of agriculture
commodities except wheat. I am pleased to announce that the
government has lifted all restrictions on movement of wheat
within or outside the country. We have undertaken additional
reforms in wheat procurement and release procedures with a
focus on greater role of private sector and market forces.
These reforms will have a salutary effect on the price of
wheat. To give the necessary confidence to farmers, government
will continue to follow its policy of announcing support price
for wheat and indicative prices for other crops like
sugarcane, cotton and rice. Role of TCP to stabilize prices as
an active second buyer will remain intact.
(5)
To give a big push to agriculture
farming practices, government has designed a new policy for
corporate agriculture, which
will shortly be announced by the Minister for Agriculture.
(6)
A Horticulture Export Board has been established, comprising
all the stakeholders from farmers down to exporters, to
promote exports of fruits, vegetables and flowers. Government
will provide all the necessary infrastructure support to
facilitate the export of horticulture products;
(7)
Agriculture credit is
receiving due attention by the State Bank of Pakistan. During
July-April, total disbursement of credit to agriculture
sector was Rs.31.3 billion as against Rs.30.1 billion last
year, representing an increase of 4%.For next year, State Bank plans to give as much credit
to agriculture sector as can
be absorbed by the farming community. This is an unprecedented
move that would greatly enhance the flow of credit to the agriculture
sector.
(8)
To enhance the role of Agriculture
Development Bank, a new management of Bank and Board of
Directors with complete autonomy of operations have been
appointed. The management will undertake a grass-roots
reorganization of the Bank and adopt measures to significantly
improve the participation of the bank in agriculture
development.
(9)
Government will be distributing land to landless farmers as a
measure toward their empowerment. On the directive of the
Chief Executive, 92,792 acres of land in Sindh and Balochistan
has so far been distributed among 9601 landless Haris/farmers. This process will be further extended to ensure
proper cultivation of such land. ADBP has been asked to design
special package for providing credit to these farmers.
Mr
Shaukat Aziz described concessions to agriculture
sector as follows:
I
have already underlined the significance of agriculture
in country’s economy. To supplement the policy initiatives
aimed at accelerating growth in this sector certain relief
measures are proposed. Pesticides are an essential requirement
for agriculture. With a view
to reducing farmers’ cost of inputs, duty on active
ingredients of pesticides as well as the formulated pesticides
is being reduced from 10%-25% to 5%. This would help reduce
input costs to farmers;
Similarly,
duty on inputs of fertilizer industry such as sulphur and
zinc dust are also being reduced from 10-35% to 5%;
A
major irritant impeding healthy growth of poultry industry
is the duty on soybeans meal, which is an important
element of chicken feed. At present, duty at the rate of
35% is chargeable to such imports, which makes the cost of
feed quite high. It is proposed to reduce the duty to 10%.
This measure will have a salutary effect on the poultry
industry;
