LAHORE: The stakeholders of agriculture sector have called upon the government to recognize agri services as an industry by extending proper incentives including exemption of sales tax @ 16 percent on renting agri-machinery and income tax relief for five years.
They also demanded that instead of inventing solution, modify the existing solutions to the local needs and integrated players with understanding of crop value chain should produce trained staff at each touch point.
Contrary to popular belief that there is minimal custom duty on the import of agriculture machinery, the landed cost is 1.4 times the C&f value of equipment. This needs to be addressed for a given time frame to allow the import.
These proposals were floated at a discussion arranged by the Agriculture Republic, a think tank, to discuss different issues faced by the agricultural sector and ways out. The set of proposals developed through this discussion also called for effective deletion plan to develop local parts of a successful mechanized system of machines eventually leading to cost effective local manufacturing of machines.
Small and medium level progressive farmers should be educated and helped to develop high tech farms by using state-of-the-art machinery. Private sectors can transfer and localize machinery being adopted in our neighbouring countries like India and China. Farmers' cooperatives should be supported by providing soft loans to import and subsidies agriculture machinery to improve farm output, supply chain, packaging and processing, the discussion proposed.
Successful implementation of farm mechanization requires an effort by policy makers, institutions and extension workers to train and educate the farmers and then introduce new mechanical techniques, modify, expand and adapt existing ones. This will be possible when farm mechanization status in the country is critically reviewed and after that the gap between researchers and farmers minimized.
The estimated total size of the agricultural machinery sector is approximately $1.3 billion. The sector consists of a combination of tractors, harvesters, and other small-scale agricultural machinery.
Market share is between five countries that supply more than 70 percent of the total imported agricultural machinery and equipment, the United States, China, Japan, Italy and Germany. US' alone market share is approx 30 percent.
In addition to tractors, the US and EU export used agricultural machinery to Pakistan, including harvesters. Domestic industry has the indigenous capacity to produce agricultural machinery and equipment to meet only 15 percent of the country's total requirements.
Aamer Hayat Bhandara, founder of Agriculture Republic, in his remarks observed that everyone knows the importance of modernization of farming and its help in raising its productivity, still the integrated farm mechanization is slow. He said lack of policy direction, low lending and poor local agricultural machinery manufacturing are the hurdles in mechanization. Policy measures and strategic interventions are needed to create an enabling environment for the private sector to adapt and reverse engineer the agri machinery and implement, he added.
Fouad Bajwa, the moderator of the discussion said that technology and its adoption are indeed both philosophical and critical for improving productivity and maximizing yield but it is also an expensive endeavour. The provincial govt in Punjab had an activity underway for Establishment of Hi-Tech Mechanization Service Centers (HMSCs) and recently the agriculture department has launched new projects and schemes like E-credit, farm mechanization and potash subsidy scheme under the Chief Minister's Kissan Package of 100 billion rupees.
Copyright Business Recorder, 2020
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