November 06, 2014
PM Nawaz Sharif on Sunday announced that there would be an increase in the support price of wheat to Rs 1300 per 40 kg as well as an imposition of a 20 percent regulatory duty on its import and a decrease in petroleum products’ prices, particularly of diesel, which would accrue huge dividends to farmers. This is a clear move on the part of the government to protect the farming community and may have come after fears of cheap Indian wheat. India wants to be allowed to transport cheap wheat to Afghanistan though Pakistan. The fear is not only that we are slowly losing a huge market to which transport is cheap, but that Indian wheat may flood our own markets as well as putting framers out of business. With these fears, it is quite understandable that the government would move to protection, but what is most needed is adequate irrigation and infrastructure. Our water, electricity and energy problems are ultimately what bring down production levels and subsidies are only short-term solutions that address the symptoms and not the problem.
In January, the government decided that imported as well as locally manufactured urea would be available at Rs 1786 per bag and these rates would be stamped on each bag. This was done in the effort to eliminate corruption due to a difference in prices of imported and local urea and also put an end to farmers’ exploitation by the middleman. Agriculture has always been our backbone, offering the most employment to the people of Pakistan. Government regulation and help is necessary, but it must be such that the effects can last. The point of a subsidy should be to help the farmer in such a way that his enterprise can become competitive. Whether these recent moves can cause that, is moot. Agriculture has always been subsidised and this might just compound the problem by making the farmers more secure. Yet, countries like the US have massive subsidisation of farming, to the extent that they are producing at rates that have made the agricultural economies of Africa and Asia redundant. However, their subsidisation resulted in mass growth, enough to create stockpiles to export. The subsidy system in Pakistan has not created any such dividends.