The government has a lower growth rate target of 3.3% for the agricultural sector in 2014-15, after the sector failed to meet the targeted growth rate for 2013-14 by 1.5%.
The worst performing subsectors of the agricultural sector, minor crops and cotton ginning, dampened the better than expected growth of major crops, which surpassed its target by 1%.
Beside important crops, every other subsector within agriculture failed to meet growth targets.
The government now aims for a GDP growth rate of 5.1% in the fiscal year 2014-15, compared to last years target of 4.4% which the economy failed to meet by 0.3%.
In the budget for 2014-15 the government has set aside Rs20.52 billion for agriculture out of the total allocation of Rs47.59 billion under the Economic Affairs head of current expenditure.
Below is a chart showing the yearly allocation in millions of rupees for agriculture, food, irrigation, forestry and fishing under the economic affairs head of the budget.
The Minister of Finance Ishaq Dar in his budget speech said that a National Food Security Council will be established to ensure agricultural policy coordination across provinces.
He also announced several incentive and support packages for the agricultural sector.
A credit guarantee scheme for small and marginalised farmers is being introduced to encourage banks to finance small farmers who previously did not have access to banking facilities. Under the program the government, through the State Bank of Pakistan (SBP), will guarantee up to 50% loans made by financial institution to farmers who have up to five acres irrigated and 10 acres non-irrigated land holdings.
Dar also introduced a crop loan insurance scheme for farmers that covers the risk posed by natural calamities, climate change and plant disease. The total budget cost of the scheme is Rs2.5 billion.
The sales tax on tractors has also been reduced from 16% to 10% to encourage the use of tractors in farming.
Dar added that the SBP will increase overall credit to the agriculture sector to Rs500 billion in the year 2014-15.
Dairy and livestock
In its federal budget for fiscal year 2014-15, the government has allocated Rs300 million for the Livestock Insurance Scheme for small livestock and dairy farmers, Finance Minister Ishaq Dar said in the budget speech on Tuesday.
Dairy and livestock segment is 12% of the country’s gross domestic product (GDP) and 56% of its agriculture. With dairy segment alone accounting for 27% of agriculture sector, Pakistan is one of the world’s top five producers of milk having an annual turnover of over 36 billion litres of tradable milk.
By contrast, the majority livestock ownership is at subsistence level, which increases the risk of loss, Dar said in the budget speech.
“In order to mitigate the risk of losses of small livestock farmers, the government is introducing the Livestock Insurance Scheme for all farmers getting financing for up to 10 cattle,” the finance minister said.
The scheme would cover livestock insurance in case of calamity and disease, according to Dar. The scheme would benefit 100,000 livestock farmers or families.
This story will be updated as more analysis comes in.
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