It is ironic that the agriculture sector – the economy’s backbone and the largest national employer – continues to receive unplanned and ad hoc patronage from the government. Often official policy has reflected frantic juggling in relevant ministries. However, whenever there have been planned injections and thought out initiatives, results have spoken for themselves. For example, when the present dispensation took over in ’08 and raised wheat price from Rs625 to Rs950 per 40 kg, it has led to reserve availability of six million tonnes today.
And, we will still have a residue carryover of stock of three million tones when the new crop comes in. The policy fulfilled the planned criterion of providing a fillip to the farmer economy, whose additional incomes were designed to stimulate area and crop enhancement. But this year, the basic input cost of production has risen dramatically resulting in per acre cost of wheat to rise to almost Rs1075 per kg. If the government does not announce support price within a week or so the farmers may shift to other more viable crops. As a matter of calculation minimum profit which a farmer expects is around Rs1200 per 40 kg .In an environment when energy is scarce and there are daily increases in the price of electricity, the end price of wheat is bound to register a quantum increase, and subsequently harm the urban sector with no fault of the farmer.
It goes without saying that it is the government’s prime responsibility to protect people from unnecessary and unjustifiable bouts of food inflation. But with prices of crucial inputs going through the roof, the farming sector has no choice but to pass the price burden onto the next link in the chain. In such circumstances, it is not really fair to blame farmers for price hike in the end product.
The most prudent policy posture for the government to adopt presently is to make subsidies more targeted, for immediate positive impact both on commodity prices and the centre’s cramped fiscal space. Of the 32 odd per cent of the population that lives in urban centres, a surprising 80-85 per cent chunk survives below subsistence level. If staple food continues to become unaffordable for this segment, undesirable economic, social and political results are bound to follow. There can be no other way. Food must be made affordable, especially for the middle and lower income groups. India’s is a good example to follow. Like most progressive economies, they ensure food price stability for the lower classes by provisioning food stamps, cards, etc.
Also, there are numerous instances of cartelisation across industries. In the textile sector, primarily, manufacturers and ginners have combined to dictate market trends, allowing cotton buying only when they desire. Therefore, the government also needs to adopt a proactive policy of intervention. The government must also shift focus from a primarily input strategy to an output strategy. Price trends in the market are kept under far better check if the end product is subsidised, ensuring sales at right prices and appropriate timing.
We are not pushing for unfair advantages for the agriculture sector. Rather, our focus is making the government realise that ensuring fair advantages, and subsequently fair profits to farmers, especially the 85 per cent lot with holdings below 25 acres, is in the interest of all parties concerned. But first the government must shift from its present fire-fighting strategy for the sector. Farmers must be freed from the squeeze that prevents progressive expansion, and brings numerous subsequent price distortions in the wider economy. And while we’ll wait for the agriculture tax debate till the next column, it is pertinent to mention that measures like GST, excise tax, etc, also make inputs far more expensive than previously. In the resulting scenario, farmers can hardly jack up prices to a certain extent, allowing for their own subsistence while registering no extra profits, and end consumers end up paying much more for the same quantity. This must change. The sooner the better.
The writer is President, Farmers Associates Pakistan
Mr Tariq Busha is right in his perception. Farming community/peasants and rural labour,s plight deserve sympathy from the ruling class and bureaucracy, who all together not only harm, assuming them just dumb driven cattle, through bad policy framework, but regretfully, Govt agencies sitting in district and tehsil headquarters including revenue department, police, judiciary health, education and by and large all govt agencies deprive this class of society their hard earned money one way or the other for their vested interest. This is really pathetic and need reforms for minimizing corruption.
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