Workable direct subsidy scheme for farmers: Fertilizer industry seeks to lend govt a helping hand

LAHORE: The Fertilizer Manufacturers of Pakistan Advisory Council (FMPAC) has offered the federal government’s support to formulate a workable direct subsidy scheme for farmers which can pass the desired benefits on to the small farmers.

The FMPAC claimed to ensure that the desired benefit is passed on to small farmers; a direct targeted subsidy mechanism has been under consideration for the last two years. A voucher-based SMS enabled direct subsidy mechanism was introduced by the government of Punjab considering high prices of phosphatic fertilizers. Despite best efforts, the government has not yet been able to pass on this subsidy benefit on expensive phosphatic fertilizers to farmers across the Country.

In Sindh, KP and Balochistan this subsidy is altogether not being offered to farmers while Punjab has always faced shortage of funds due to which even issued coupons could not be encashed by the farmers. Resultantly, in last Rabi season lack of disbursement of subsidy on phosphatic fertilizers led to less consumption of DAP in wheat that became one of the reasons ultimately impacting its yield and now the govt would be required to import over 3 million MT wheat to meet local requirements by sending precious FOREX, FMPAC claimed in a letter written to the government in the near past.

Executive Director FMPAC Brig Sher Shah in the letter said a significant drop in use of phosphatic fertilizer witnessed due to unprecedented high prices and difficulties in import due to restrain on foreign exchange. Failure of the government to subsidize the costly fertilizers has also contributed to the decline in balance use of fertilizers. Lack of proper mechanism in place for subsidy distribution may lead to drastic impact on the crops, he added.

The FMPAC letter further reads that the inability of proposed subsidy scheme to provide the desired results, any proposal to provide direct targeted subsidy to farmers that too in the absence of availability of exact land records and accurate profiles of farmers, cannot be implemented in its true spirit. It is pertinent to mention here that consumption of Nitrogenous Fertilizers is 3X higher compared to phosphatic fertilizers. It seemed the government requires from farmers to purchase fertilizers at higher prices would first require availability of substantial amount of additional cash (significant portion of which is arranged by farmers from arthies) and then wait for subsidy from the govt, if at all provided to them. This change would substantially increase cost of production for the farmers with disastrous impacts on crop yields; not to mention serious negative political impacts for any government. Sher Shah said that fertilizer industry has always supported the government for economic growth of the country by providing fertilizers to local farmers at affordable prices. The government would need to take account of above security factors besides consulting all other stakeholders to address the known challenges and role of the provinces in implementation of the scheme besides engagement with the farmers if feasible for the desired well-being of the farming community.

Copyright Business Recorder, 2022