Agriculture is pivotal for the national economy and its digitalization will play an important role in pushing the sector forward, said Pakistan-China Joint Chamber of Commerce and Industry (PCJCCI) President SM Naveed during a video conference held with Chinese industrialists to highlight striking prospects of the agriculture sector in Pakistan.
Training Pakistan Limited Director Business Development Faraz Shafiq, while giving his presentation, apprised conference participants of his organization that imparted skills to progressive, non-traditional agribusinesses and reviewed the underlying challenges faced by agribusinesses in the production process. He spoke about the challenges encountered by the industry and briefed that the industry lacked modern and up-to-date technology, which was needed to meet agricultural demand. To help support the business matchmaking session, Shafiq was connected with a group of over 200 Chinese counterparts who engaged in detailed correspondence for future ventures. It was also noted during the conference that steel foundries in China were shutting down at an alarming pace due to increasing pollution. Considering this, Director Guard Filter Shahrukh Malik was asked by Chinese peers to initiate the manufacturing of steel products in Pakistan by relocating modern technological tools from China to Pakistan. Agriculture sector continued to win the government’s heart and mind in the budget as it received extended relief measures and subsidies on multiple counts to remain vibrant and be able to feed the nation. “The government has increased agriculture credit limit to (a cumulative) Rs1,100 billion for the next fiscal year… from Rs1,001 billion last year. Additionally, the interest rate on agriculture credit has also been reduced significantly,” said Finance Minister Miftah Ismail while announcing the budget in the National Assembly. At the end of February 2018, disbursement stood at Rs570 billion, and it is expected to increase to Rs800 billion by June 2018 against the set target of Rs1,001 billion, he said. Considering fertilizer as the critical farm input, the federal government reduced sales tax on all kinds of fertilizers. “I am happy to announce that from July 2018 there will be a reduced uniform GST rate of 2% on all fertilizers. This will eliminate distortions in the tax regime, further reduce fertilizer prices and promote the use of balanced nutrients,” he said. The rate of sales tax on supply of natural gas to fertilizer manufacturing plants for use as ‘feedstock,’ presently chargeable at the rate of 10%, may be reduced to 5% to cater for cash flow issues of manufacturers. Likewise, the rate of sales tax on Liquefied Natural Gas (LNG) to be imported by fertilizer manufacturers for use as a feedstock is also proposed to be reduced from 5% to 0%, he said. He also proposed to reduce GST on agriculture machinery from the current 7% to 5%. Availability of water is necessary for crop production. The government presently provides electricity for agriculture tube well at reduced rates. During 2018-19, the scheme will continue in these areas where the provincial governments agree to share the cost of subsidy on a 50:50 basis. The government is also proposing setting up an Agriculture Research Support Fund with an initial allocation of Rs5 billion. “The fund will provide financial grants for research and development of modern plant and seed varieties for achieving higher crop yields. The fund will be jointly managed by Finance Division and Ministry of National Food Security and Research,” he said.
The government is also proposing to establish a separate fund for indigenization of agriculture technology with an initial allocation of Rs5 billion. The livestock sector continues to be the largest sub-sector of agriculture in Pakistan. To sustain the growth in the sub-sector and provide further relief, it is proposed that “customs duty of 3% on import of bulls meant for breeding purposes be withdrawn,” Ismail said. Presently, available concessionary rate of customs duty on the import of feeds meant for livestock sector may be further reduced from 10% to 5% and fans meant for use in dairy farms be allowed at a concessionary rate of 3% to members of the Corporate Dairy Association.
The agriculture sector, the backbone of Pakistan’s economy, recorded a growth of 3.81%, its highest growth in 13 years, according to the Pakistan Economic Survey 2017-18. The sector surpassed last year’s growth of 2.07% with next year’s target set at 3.5%. The growth comes as the government hugely favored agriculture, offering friendly policies, subsidies and billions of rupees worth of packages, which critics say are to appease the vote bank that is largely associated with the sector. After agriculture underperformed in 2015-16, putting a dent on GDP growth, the government announced various policies, including incentives and subsidies on fertilizer, power, tractors, agriculture loans and packages like the Kissan Package worth Rs341 billion. “Pakistan’s agriculture sector plays a central role in the economy as it contributes 18.9% to the Gross Domestic Product (GDP) and absorbs 42.3% of the labor force,” the survey said.
Published in Melange Intl. Magazin in July 2018.
