Dr Hafiz A. Pasha in his article "Agricultural pricing policy" has stated that "In the absence of any interventions, conditions in the markets for crops have deteriorated. The worst-hit are rice, cotton and potato growers. The commodity prices are persistently declining on account of present global decline scenario of oil prices. Its impact has been witnessed in our country also. To protect the farmers the government has taken following initiatives:
-- During 2014-15, the government has provided a subsidy of Rs 10 billion to facilitate small scale rice growers having around 10 hectares of rice land to help them combat the declining global rice export price. Due to low demand in international market rice mills have suffered huge losses. In order to provide relief to them, it was proposed that rice mills may be exempted from minimum tax for the Tax Year 2015.
-- During 2014-15, the government has also allowed Trading Corporation of Pakistan (TCP) to procure one million bales of cotton at the support price of Rs 3000 per 40-kg to benefit the farming community.
-- In order to facilitate the farmers and increase the wheat production, the government has increased the support price of wheat to Rs 1300 per 40-kg for the 2014-15.
-- For 2015-16, the government has enhanced a 20 percent increase in agriculture credit to Rs 600 billion.
> In order to facilitate the small growers and to reduce heavy expenditure incurred on diesel/electricity tube wells, it has been decided to provide interest-free loans for setting up solar tube wells or replacing the existing tube wells with solar tube wells. It is estimated that the cost of half cusec solar tube well may be up to Rs 1.1 million. Against a deposit of Rs 100,000 the government will provide interest-free loans through the commercial banks and will pick up the mark-up cost on these loans.
-- It has been proposed that for new industrial undertakings engaged in setting up and operating cold chain facilities, and setting up and operating warehousing facilities for storage of agriculture produce, may be granted Income Tax Holiday for three years if they are set up before 30th June, 2016.
The author's viewpoint that in 2014 government response to falling international prices was to protect the wheat and sugarcane growers through support and procurement price needs clarification that there was no support price for sugarcane rather it was indicative price.
Dr Pasha has also stated that all taxes on agriculture inputs need to be withdrawn like the introduction of GST at 17.0 percent on fertiliser and pesticides in 2010-11 which is contributing to squeezing the farmer in the presence of lower output prices. It is to mention that the government has already reduced non-adjustable sales tax to 7.0 percent, instead of existing rate of 17.0 percent, which will be charged on the local supply and import of certain agricultural equipment/machinery used in tillage and seed bed preparation, seeding or planting, irrigation, drainage and agro-chemical application, etc. The government is already in the process of devising a broad strategy to tackle the difficult situation of low international market prices by taking provincial governments on board.
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