The Fertilizer Manufacturers of Pakistan advisory council, in a letter to Finance Minister Miftah Ismail on Wednesday, has offered the federal government its support to formulate a workable direct subsidy scheme for farmers.
It may be noted here that a direct targeted subsidy mechanism to ensure that certain benefits are passed on to small farmers has been under consideration for the past two years. To this end, a voucher-based SMS-enabled direct subsidy mechanism was introduced by the government of Punjab considering high prices of phosphatic fertilizers.
However, despite making all-out efforts, the government has not yet been able to pass on this subsidy on expensive phosphatic fertilizers to farmers across the country.
While farmers in Sindh, KP and Balochistan are not being offered the subsidy at all, Punjab’s long standing issue of a shortage of funds means that farmers there cannot even encash
issued coupons. Resultantly, the lack of disbursement of a subsidy on phosphatic fertilizers during the last Rabi season led to less consumption of DAP in wheat that became one of the reasons ultimately impacting its yield. The government will now have to import over 3 MMT wheat to meet local requirements by spending foreign exchange.
Speaking with Profit, Executive Director FMPAC Brig Sher Shah said that a significant drop in the use of phosphatic fertilizer was witnessed due to unprecedented high prices and difficulties in import due to restraints on forex. He said that the government’s failure to subsidize costly fertilizers has also contributed to the decline in a balanced use of fertilizers. “The lack of a proper mechanism for subsidy distribution may lead to drastic impact on the crops,” Shah warned.
The FMPAC letter further reads that any proposal to provide direct targeted subsidy to farmers, especially in the absence of the availability of exact land records and accurate profiles of farmers, cannot be implemented in its true spirit.
It is pertinent to mention here that the consumption of nitrogenous fertilizers is three times higher compared to phosphatic fertilizers. Making farmers purchase fertilizers at higher prices will first require the availability of a substantial amount of additional cash. A significant portion of this is already arranged by farmers from aarthies who are hoping for a subsidy from the government, if it is provided to them at all.
This change will substantially increase the cost of production for farmers with disastrous impacts on crop yields; not to mention the negative political impact for the government in power.
Brig Sher Shah said that the fertilizer industry has always supported the government for the country’s economic growth by providing fertilisers to local farmers at affordable prices. However, he added that the government will need to take account of the above factors besides consulting with all other stakeholders to address the known challenges and role of provinces in implementing a subsidy scheme.
Moreover, he said that engagement with farmers is a must for the well-being of the farming community.