Coronavirus-hit agriculture sectors: Ministry seeks Rs 63.8 billion subsidy

Ministry of National Food Security and Research (MoNFS&R) has reportedly sought a subsidy of Rs 63.8 billion for different agriculture related sectors which are hit by the outbreak of Covid-19.

In this regard, a summary has been prepared for the Economic Coordination Committee (ECC) of the Cabinet, which says that Government of Pakistan (GoP) has announced a fiscal package of over Rs 1200 billion in the wake of Covid-19 pandemic.

Out of this package, an amount of Rs 100 billion has been earmarked for relief to Small and Medium Enterprises (SMEs) and agriculture sector. Ministry of National Food Security and Research has prepared a package of incentives for the farmers' in various sub-sectors of agriculture to cope with the Covid-19 after effects.

The following proposals have been accordingly presented for the ECC ;(i) subsidy on fertilizer - for the next Kharif crop(April to October 2020) a subsidy of Rs 925 per bag to DAP and other phosphatic fertilizers and Rs 243/ bag on urea and other nitrogen fertilizer has been worked out. The total amount of the subsidy would be Rs 37 billion.

The subsidy scheme will be implemented by the provinces and the amount would be disbursed through scratch card scheme, already being implemented by Punjab;(ii) reduction in mark-up subsidy - at present mark-up on agriculture loan by ZTBL is 18.4 per cent. A reduction in mark-up on the agri-loan of ZTBL@ 10 per cent during the year 2020 has been proposed.

This subsidy would require an amount of Rs 8.8 billion;(iii) the poultry sector is worst affected due to lockdown and closure of all marriage halls and other social gatherings, the ministry has proposed to delay the bank installments and mark-up on the loan by the poultry sector for one year and this relief scheme would require approximately Rs 4.7 billion;(iv) A subsidy of Rs 2.3 billion has been recommended on cotton seed fir the upcoming Kharif 2020; (v) subsidy @ Rs 300/pack of pesticide meant for white fly is proposed.

The subsidy would be Rs300 per application at an average of 4 applications per acre and will cover 5 million acres in Punjab and Sindh, which is around 80% of the cotton area.

The total cost of subsidy is Rs 6 billion; (vi) The ministry has also recommended Rs 1 billion subsidies on locally manufactured agricultural machinery &equipment and same amount of subsidy has been recommended for imported agricultural machinery & equipment.

An amount of subsidy to the tune of Rs 2.5 billion has been recommended only locally manufactured tractors as sales tax subsidy whereas a subsidy of Rs 0.500 billion has been proposed on imported tractors for one year.

The ZTBL will disburse agriculture loans to the tune of around Rs 88 billion during the year 2020. This includes both Rabi and Kharif seasons. As informed by ZTBL, about 85 percent loans are production loans and 15 percent are development loan. The amount of markup @18.4 percent per annum becomes Rs 16.236 billion.

If the markup subsidy @ 10% is picked by government, the farmers will pay only 8.4 percent mark up on the loans during 2020. The 10 % markup is estimated at Rs.8.800 billion.