By Mohammad Hussain Khan
Dawn – Frequent and sizeable imports of cheaper vegetables from India hurt Pakistani farmers while the idea behind imports is to ensure the availability of vegetables at affordable prices for urban consumers.Critics argue that the strategy for import/export is demand-driven when the interests of both growers and urban consumers need to be protected.
Owing to heavy subsidy for farmers in India, Pakistani growers say they simply can’t compete with Indian produce, if their hands remain tied. They argue that in absence of the government subsidy and support, they cannot make inroads into Indian markets.
“Besides receiving commodities, we need to seriously consider what we can send to India. It’s acceptable that the market should be free and consumers should be facilitated too, but does that mean that one competitor has all government assistance whereas other is left high and dry. Take the case of garlic. We are dependent on Chinese garlic nowadays as local production has gone down since we started buying it from China given its cheap price”, says Mahmood Nawaz Shah, vice president Sindh Abadgar Board (SAB). He fears this way Pakistani market will become dependent on imports and local production would continue to suffer.
The government fixes indicative prices of two crops — wheat and sugarcane — every year although farmers demand that minimum prices of rice and cotton should be set too. Owing to a weak regulatory mechanism, farmers complain that they usually don’t even get the subsidised farm inputs.
Economist Dr Kaiser Bengali believes that it’s the absence of an economic policy that creates chaos in the market, with small farmers crying hoarse against price distortion
“We lack an overall strategy to tackle issue of import or exports of goods as we always pursue demand-driven strategy alone”, argues Iffat Ara of Social Policy and Development Centre. She says the two governments of India and Pakistan need to mutually decide as to when import or export of agricultural commodities is to be allowed to protect interests of farmers as well as consumers.
Comparative study of input costs, which was recently presented to Economic Co-ordination Committee (ECC) of Cabinet, reveals that Indian farm inputs are much cheaper as compared to Pakistan. Per bag price of Indian urea (in Pakistani rupee) is Rs459-510 against Rs1,790 in Pakistan. Average DAP price in Pakistani rupee ranges between Rs1,931 to Rs2,125 in India while local price here is Rs3,580. Price of diesel in Pakistan is 24pc higher compared to prevailing price in
India while electricity is either completely subsidised for agriculture sector in India or a nominal amount per unit is charged from farmers.
Iffat points out that there is support price for wheat in Pakistan but no government policy is there for vegetables. “Everything can’t be left to market forces and the government’s intervention is a must to have a check on prices”, she argues.Besides, the government does not go beyond announcement of support price to see whether it reaches farmers or is pocketed by other market forces. She says government should monitor when prices of onion or potato increases and the status of local crop’s arrival in the market at that point of time.
Economists like Dr Kaiser Bengali believe that it’s the absence of an economic policy that creates chaos in the market with small farmers crying hoarse against price distortion. “We see long queues of vehicles on Wagah border carrying commodities which shows the quantum of goods actually entering our markets regardless of their rates”, he says. He points out that the WTO allows levy of countervailing duty if it is proved that a certain item has some sort of hidden subsidy. “Consumers are concerned about cheaper prices regardless of economic suffering of small farmers and losses to domestic market which can also compromise local productions”, he remarks.
Some farmers believe the government may not increase support price of wheat in the next year to ensure the availability of flour to urban consumers at affordable price. But it needs to ensure stability in farm inputs prices.