Tax on agricultural input will lead to decline in production: PASA chief

Imposition of General Sales Tax (GST) on agricultural inputs and implements have immediately resulted in 25 percent price hike in pesticides, 17 percent in tractors and 20 percent increase in the prices of fertilisers.
New taxation measures and immediate impact may either result in decline or stagnant agricultural growth, claimed Chairman Pakistan Agriculture Scientists Association (PASA) Jamshed Iqbal Cheema at a function arranged by the Association of Agricultural Journalists(AAJ) Lahore here Thursday.
He further said that less use of inputs due to its rising prices would ultimately translate into low production of crops. Cheema claimed that increased food prices had proved a biggest intervention for the growers' community to go for more production and it was being expected that the agricultural economy may have a 12 percent growth rate during the calendar year 2011.
However, he regretted that new taxation measures introduced by the Federal government would reverse the situation. Our agricultural annual production is estimated at around Rs 3300 billion and 12 percent growth means production of additional Rs 400 billion. He said that whole economy of Pakistan was dependant on agriculture and foreign remittance. 'Our big industrial sector including textile, sugar, flour, rice and leather are dependant on agricultural sector and growth in agriculture would save our economy in future,' Cheema maintained.
Chairman PASA said that he had given a presentation to a committee of the parliamentarians headed by Fauzia Wahab that the government instead of taxing the inputs should tax the agricultural income. The same slabs could be introduced on agricultural income as was applicable on salary and other income.
He was of the view that taxing agricultural input means decline in production. The committee was briefed that we were already behind in yield gap from even developing countries like India, Bangladesh and Sri Lanka. 'We are around 40 percent behind in yield per acre from these countries. In Egypt farmers use fertilisers at the rate of 500 kilograms per acre, Europe 380 per kilogram and in Pakistan it is at the rate of 132 kilograms per acre,' Cheema claimed.
While in seed, USA was using 100 percent maize hybrid seed in 1938. India was using 88 percent hybrid cotton seed today while ratio of utilisation of hybrid seed of Canola, Sunflower, vegetables and fodder stands at 100 percent. While in Pakistan we are only using 15 percent hybrid rice seed, 40 percent maize and below 50 percent in vegetable. 'As we are applying less input and even that of low quality so our yield per acre was also low,' he opined. He said that we should have encouraged the farmers to increase inputs to increase output.
Talking about the increasing prices globally, he said that all the commodity prices had registered 168 percent average price increase after the year 2005. Now every crop has become lucrative for farmer whether it is maize, wheat, rice, edible oil or cotton.
Earlier it was customary that farmers increase area under cultivation of that crop which register increase in prices but now price of every crop has increased almost with the same ratio, so there are no chances of increase in area under cultivation. It was an opportunity for all of us that we should encourage using more inputs.
He said that he had requested that committee not to tax input and instead give a target to the agricultural sector for increasing the growth rate. He regretted that Pakistan was among those four countries of Islamic World including Yemen, Afghanistan and Bangladesh which was under nourished our calories consumption per person is 34 percent less than the rest of the World.
He said that there was only one way to meet the food deficiency and that was to increase the production, but taxing the pesticides, fertilisers and agricultural implements would hamper this effort. To various queries, he said that usage of Urea and DAP fertilisers were increasing at the rate of around 4 percent on average in the country for the last 10 years while mechanisation and hybrid seed utilisation was also improving.