Subsidy on fertilizer

The federal government appears to be routing the subsidy on urea fertilizer to farmers through urea producing companies instead of a direct cash subsidy to small farmers having landholdings of 12.5 acres or less since it does not have a mechanism in place to do so. This is despite a proven fact that cash grants are more beneficial than blind subsidies and there is less wastage in direct subsidy. Why is it not possible to give cash grants? Don't we have data of small or subsistence level farmers at least at the provincial level? The success of the BISP scheme shows that it is possible, at least now, through use of technology. The BISP board comprising eminent persons has utilised the poverty survey to minimize misuse of funds. The big farmers have been the major beneficiaries of support price for wheat and there are media reports of cornering of gunny bags by them.
The federal government has earmarked an amount of Rs 160 billion for urea subsidy. According to domestic manufacturers of this commodity, domestic sales have come down from a peak of Rs 110 billion in 2011 to Rs 21 billion last year and total subsidy amount on account of urea has declined from Rs 132 billion to Rs 24 billion in the same period. This is inclusive of net subsidy in natural gas and direct subsidy on urea imports.
Let us endeavour to ensure that price of urea drops in the domestic market. For the first time the price of imported and domestically produced urea is minimally different. The big importers can import urea free of import duty and sales tax as they have resources to do so or can pool their resources. The big guns are a dominant force in the elected assemblies and they want to hog the government funds. They should not be allowed to do so. We understand that the drop in commodity prices is hurting the agriculture sector in a big way. However, our industrial manufacturing as well as food security are dependent on producing commodity like cotton and also wheat domestically as well as minor crops locally instead of importing from across the border. We must remain self-sufficient to retain our sovereignty. We need to strive for it or else be prepared for a large current account deficit in future.