Raise in POL products' prices: farm sector to face extra burden of Rs 16 billion

The farm sector will have to face an additional burden of Rs 16 billion as a result of increase in petroleum products prices, especially diesel. Well-placed sources told Business Recorder on Wednesday that the farm sector uses 4 billion litres diesel every year and the recent increase in the petroleum prices would add about 3 to 4 percent.
The transportation costs would eventually push up the production cost of food items such as wheat, rice, sugar, sugar cane, pulses and livestock. Food prices in Pakistan would considerably increase this year due to high cost of production, especially, after the recent increase in the prices of diesel from Rs 98.82 per litre to Rs 103.46 per litre and the end users living in urban areas are likely to pay Rs 20-25 billion more, while purchasing essential food items.
Sources said: "The higher input cost in Pakistan has also led to poor performance of agriculture sector, as farmers have 20 per cent less yield compared to Indian farmers due to 70 per cent higher input cost."
Sources said almost 80 percent of agricultural productivity depends on Punjab, where per acre wheat yield is 29 maunds while in Indian Punjab it is 43 maunds per acre, which is about 40 percent higher than Pakistan. Average per acre wheat yield of across the country is 25-26 maunds, while in India it is 30-32 maunds.
The day-to-day increase in cost of production has discouraged most of the farmers who are now growing the quantity of food that is sufficient to sustain their families. Most of the growers are just concentrating on the quantity not the quality of their produce. In Pakistan 85 percent are small farmers having less than 12 acres of land. So, the frequent use of lower quality pesticides available at cheap rates by these poor growers has reduced the quality of the agri production.
The prices of inputs like fertilisers have already increased and forced growers to reduce its use. The price of urea fertiliser was just Rs 850-900 per 50-kg bag in 2010-11, but now it has risen to Rs 1900/50-kg bag. Similarly, DAP was selling at Rs 600-700 per 50-kg bag in 2010-11, which rose to Rs 4200 which is almost unaffordable for most of the wheat growers.
Sources said due to increase in the electricity tariff, tube-wells that are used by growers also added to the cost of production of commodities.
The State Bank of Pakistan has rightly said that the farm incomes are likely to decline this year as poor growers are not getting real return on their produce, resultantly the per acre yield of crops, fruits and vegetables will go down, sources maintained.
Pakistan cannot afford high import bill of edible products in case its agriculture sector fails to produce food as per the country's needs.
The July-December import bill has already increased from $1.547 billion in the corresponding period last year to $2.708 billion placing food group second in the import bill after oil.