PM announces Rs 341 billion agriculture package
ISLAMABAD: Prime Minister Nawaz Sharif on Tuesday announced a Rs 341 billion relief package for small farmers, which includes direct cash support and provision of soft agriculture loans.
Addressing the Farmers Convention at Jinnah Convention Centre, the prime minister said the package was aimed at introducing progressive agriculture on scientific lines, reducing production cost of crops and making the small farmers prosperous. The prime minister said the country’s development was directly related to the uplift of its agriculture sector, particularly farmers. He said that under the package, small farmers would get Rs 147 billion as direct benefit, while Rs 194 billion had been allocated for agriculture loans.
He said the farmers cultivating rice and cotton at up to 12.5 acres of land would be given cash support of Rs 5,000 per acre. The government on this facility will bear the cost of Rs 20 billion each for rice and cotton crops. Nawaz said the global cost reduction of agriculture commodities had affected the income of farmers beside increase in prices of seeds, fertiliser and pesticides, which had resultantly enhanced the cost production. The prime minister announced setting up a Rs 20 billion fund to reduce prices of fertilisers which will lessen Rs 500 per bag of Potassium and Nitrate fertilisers.
Also, the government was negotiating with local fertiliser manufacturers and gas companies to revert the increase in prices of fertilisers, which had gone up by Rs 200 per bag. He said it had been decide to provide Liquefied Natural Gas (LNG) to fertiliser companies to overcome the shortage of gas supply. Prime Minister Nawaz Sharif said the government would bear the Rs 2.5 billion premium on the agricultural insurance, which will benefit 0.7 million small farmers. He said solar tubewells would be provided on mark-up free loans to the farmers who own up to 12.5 acre of land.
The mark-up of seven years would be paid by the federal government with a cost of Rs 14.5 billion. He said this would ensure a saving of Rs 1,600 and Rs 500 per day for the farmers running tubewells on diesel for five hours daily and on petrol for same duration, respectively. He stated that the electricity price for running tubewells at peak hours had been fixed at Rs 10.35 per unit and Rs 8.85 at off-peak hours. He said the sales tax on these bills, amounting to Rs 7 billion, would be borne by the federal government. The prime minister said the customs duty, sales tax and withholding tax on the agriculture machinery had been reduced from 45 percent to nine percent.
He said rice millers had been given full exemption on the turnover tax for year 2015-16. He said the traders of agriculture commodities, fruits, vegetables and fish would get an exemption of three years on income tax while the sales tax on cold chain machinery had been reduced from 17 to seven percent. Nawaz said the installation of production unit of halal meat that will be registered before December 31, 2016 will be given a four-year exemption on income tax. Banks in general show reluctance in giving loans to small farmers due to risks involved which, he said, could be overcome through provision of guarantees.
Prime Minister Nawaz said the government would provide Rs 30 billion as fifty percent guarantee to banks on loans. This will benefit around 0.3 million farming households through Rs 0.1 million each with collateral loans. He said that the time-limit to pay back Rs 34 billion outstanding loan on the rice traders had been extended up to June 30, 2016. The State Bank of Pakistan is working to reduce the mark-up rate on agriculture loans by two percent which would give a benefit of Rs 11 billion per anum to farmers, Nawaz said.
He said the Zarai Taraqiati Bank Limited and commercial banks would provide one-window facility to the farmers seeking loans. The value of production unit had been increased from Rs 2,000 to Rs 4,000, which would help farmers get double the amount of loan against their land value. The prime minister said a committee has set up under the supervision of Federal Minister for National Food Security Sikandar Hayat Bosan which would work out ways to increase per-acre yield and reduce cost of agriculture inputs.
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