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Boosting Pakistan’s agrarian economy

Pakistan’s agricultural sector has been making enormous contributions towards the country’s economy, with 21 percent of its GDP and over 45 percent of the country’s employment generated directly by the agrarian sector. We are blessed with all the right resources for farming and cultivation as we have vast fertile lands, favorable weather, abundant rains and rivers, enriched by an extensive canal irrigation network.
Moreover, the agricultural sector continues to play an important role in mitigating the food crisis in the country, by ensuring food-security for a fast growing population. The agrarian industry also contributes 65% of Pakistan’s total exports and provides valuable raw materials to all the major industries in the country including; cotton, leather, sugar, flour milling and textiles.
Recognizing the significant contributions of the agricultural sector towards Pakistan’s economic growth, the Prime Minister announced a historic package in September 2015, allocating 341 billion Rupees, to enhance agricultural productivity, by ensuring the availability of cheaper fertilizers, seeds, loans, sufficient water, and cheaper electricity for tube-wells.
Measures are also being taken to promote modern-farming techniques and technologies, besides training and educating the farmers. The government has also shown support for the farming community, through the introduction of easier credit schemes and boosting the agricultural credit funds from Rs 336 billion in 2013 to Rs 700 billion in 2016-17. Despite these valuable contributions and incentives from the government, more work needs to be done to utilize this sector’s full potential, because the country is still facing the challenge of food-insecurity.
The fertilizer producers in Pakistan are struggling to achieve healthy growth in business by providing essential soil-nutrition products to enhance the yields. However, it is an absolute misconception that these large-scale, capital-intensive ventures are making excessive profits. In fact, the fertilizer sector has been prudently passing on the benefits of subsidies and incentives to farmers.
Their viability is also eroded due to the heavy taxation applied on this essential industry, with a burden of “Gas Infrastructure Development Cess” (GIDC) applicable @ Rs 300 per MMBtu of Gas usage. The government must ensure a sustainable level of viability for the fertilizer sector, as the growth of this industry translates into economic wellbeing and better food-security, through higher agricultural productivity in the country.
All major producers in Pakistan’s fertilizer industry have invested heavily, for large scale production of Urea. Since the supply of Natural Gas has been improved recently, the fertilizer plants have improved productivity and fully met Pakistan’s domestic Urea needs, while also being able to stock some surplus quantities. The industry’s total production figures currently stand at 5.5 million tons, while the demand hovers between 5.1 million and 5.4 million tons. At this juncture, the government took wise decision to allow Fertilizer Producer to export their surplus quantities, to earn valuable foreign exchange.
This industry is also playing a key role in improving crop-yields in the country, as it promotes progressive farming, advisory services, and research. Since Pakistan has been traditionally spending only 0.2 percent of its GDP on agricultural research, a more robust fertilizer industry can promise more funds, to promote innovative farming techniques and encourage the deployment of latest technologies to reduce costs of farming outputs.
The five major producers in Pakistan’s fertilizer industry have always responded to every call of the government, to facilitate the economy of the country, by launching developmental initiatives, while also providing generous funding for improving healthcare facilities and educational infrastructure in the country, besides supporting large-scale relief and rehabilitation programmes to manage victims of natural disasters.

Source: Pakistan Observer

Byline: Muhammad Sagheer

December 8, 2016

 

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