The Ministry of Finance has expressed its inability to subsidise the local agricultural sector to make it competitive with the list of agricultural items that could be imported from India, which farmers’ lobby say may destroy the Pakistani agricultural industry after implementation of the Most Favoured Nation (MFN) status.
The government plans to grant MFN status to India by the end of December, and, according to the plan, land routes will be opened for trade with India by January next year.
Sources said that the Ministry of commerce, backed by stakeholders, had approached the finance ministry for allocation of subsidy for agriculture sector in the new trade policy so that Pakistani agriculture produce becomes competitive with Indian imports.
“However, the finance ministry has insufficient funds due to huge subsidy being paid to the inefficient power sector, and therefore is reluctant to go ahead on proposed financing plan for the agriculture sector,” sources said, adding that since agriculture goods were exclusive of the negative list, import duties will be levied on them.
“Presently, gas feed stocks to fertiliser factories are subsidised, amounting to Rs11 billion a year. However, surging oil prices and power outages have increased the cost of production, thus Pakistan’s agriculture sector is not equipped well enough to able to compete with Indian agricultural imports,” an official of the Ministry of Food Security and Research said.
Growers fear they will lose in the import deal with India. Farmers demand that major crops should be added to the sensitive list; barring Indian goods to shield the local sector. Earlier, farmers alleged that the government had not taken them on board during decision-making on the list of bilateral trade with India.
Officials admitted that import of sugar, pulses and red chillies will affect the domestic market.
“Indian farmers are enjoying huge subsidies and therefore, the government should subsidise the local farming sector to bring at par with the Indian farmers,” one grower said.
Other stakeholders raised concern that granting the MFN status to India was done without proper cost-benefit analysis of its impact on Pakistan’s economy.
The official said that the government was regulating wheat and sugar imports, therefore they will remain unaffected.
“If trade doors are opened without taking effective measures, and without negotiating reciprocal treatment and negotiating market access for Pakistan agricultural goods to India, local farmers will be left at the mercy of Indian growers,” a farmer said.
Published in The Express Tribune, November 21st, 2012.
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