LAHORE: Proposal to levy 17 percent sales tax and 3 percent value added tax on hybrid seeds of maize in budget 2020-21 will not only increase the input cost of the farming community but also affect the government's vision of developing the rural areas by enhancing the productivity of the crop sector.
According to growers, Economic Survey of Pakistan says that total maize seed used in the country for sowing is 16,639 tons out of which imported seed is 12,758 tons. Maize, the third important cereal crop of Pakistan after wheat and rice, contributes 3.4 percent to the value added in agriculture and 0.6 percent to GDP.
Growers while talking to Business Recorder on Saturday said that introduction of high yield hybrid seeds laid the foundation for the growth of maize crop with the average yields across Pakistan having tripled from 17.4 maunds per acre in 1999-00 to 51.2 maunds per acre in 2019-20.
Now farmers are getting over 100 maunds per acre in spring season due to availability of world class hybrid seed by the R&D based companies.
Maize recorded a big increase in production to 6.8 million tonnes in 2018-19 to 7.2 million tonnes in year 2020. The commodity witnessed a growth rate of 6 percent and success of this crop can be traced back to late 1990s when high yield maize hybrids were introduced to replace traditional/open-pollinated varieties, they added.
The availability of grain has helped to meet demands of industries like poultry, dairy, wet milling etc which otherwise would have to import corn grain to meet the local food and feed demands. Much of the grain is consumed by the poultry industry as feed - approximately 70 percent of all grain produced locally.
Seed industry sources told Business Recorder that sales tax exemption at present is available to all seed products, including maize, both at imports and local supplies. However, the Finance Bill 2021-22 say that imported maize seed (for sowing) will now be subject to 17 per cent sales tax and 3 per cent value added, at import stage. This tax will eventually be passed on to the farmers while over 77 per cent of all maize seed is imported, therefore the impact on the economics of the crop will be widespread.
Aamer Hayyat Bhandara, a corn grower from Pakpattan and Malik Asfar Awan from Mailsi talking about the issue said that 80 per cent of the hybrid seed used in the country is imported while all other crops are exempted. They said that imposition of this tax would increase the price of imported seed by 20 per cent and accumulative economic burden will be like a bomb on the farming community.
They were of the view that growers will be forced to look towards the locally prepared corn seed which according to him are not very good in yield and quality. He said that the government should immediate revisit its decision and restore the tax exemption on imported maize seed as all other crops seed products are already provided this exemption.
Copyright Business Recorder, 2021