Prime Minister Shehbaz Sharif on Monday announced a relief package for farmers worth billions of rupees to help them cope with the devastation caused by this year’s floods.
“The country’s progress is directly proportional to the development of Pakistan’s agricultural sector,” he told a press conference alongside various members of the federal cabinet and the government’s economic team. He said that as part of the ruling coalition’s drive to revive the agriculture sector, loans worth Rs. 1,800 billion would be provided to farmers, while there would be no interest on loans taken by farmers from flood-hit areas. The government has allocated Rs. 11 billion for this purpose, he said.
“As you all know, the incumbent finance minister [Ishaq Dar] is quite strict … he will ensure that all the amount is provided to the farmers,” he said, regretting that commercial banks often avoided granting loans to small farmers without government support. The government, he said, has increased the value of a product index unit from Rs. 4,000 to Rs. 10,000 to help farmers obtain agricultural loans.
According to the prime minister, the governments at the center and in provinces would provide over Rs. 8 billion to small farmers in flood-hit areas, while the government would also provide loans of Rs. 50 billion to youth living in rural areas who wished to become professional farmers. These loans, he said, would have an interest rate lower than the market rate, adding around Rs. 6.5 billion had been set aside for this purpose.
Additionally, per Sharif, interest-free loans would be provided for tenant farmers in flood-hit areas, with the government allocated Rs. 5 billion for this. He said the incumbent government also wanted to promote small and medium enterprises, and had allocated Rs. 10 billion for modernization.
Subsidy on fertilizers
On fertilizers, the prime minister said plants had agreed to slash the price of di-ammonium phosphate (DAP) by Rs. 2,500/bag, bringing the consumer price to Rs. 11,250. Similarly, he said, the government plans to import 500,000 tons of urea, of which 200,000 tons have already arrived in Pakistan. Praising the industries minister, he said the price of imported urea had been reduced by $100/ton, saving the country precious foreign reserves. “In order to strengthen the agriculture sector of Pakistan, the government has also decided to allocate Rs. 30 billion as subsidy on urea so that small farmers can get fertilizer at cheaper rates,” he added.
The government has also allocated Rs. 13.2 billion for the free provision of 1.2 million bags of certified wheat seeds to farmers of flood-ravaged areas, he said, adding that 50 percent of this would be provided by the center and the rest by provinces.
P.M. Sharif regretted that tractors locally manufactured in Pakistan could not be exported, which had raised their prices for farmers. “I, along with Dar and other authorities concerned, tried to end the monopoly of the tractor industry; however, the stakeholders straight away refused to cooperate with the government,” he said, adding that the government had now decided to import secondhand tractors—no older than five years—to meet demand.
He noted the government did not prefer to do this and had been forced to do so due to the intractable attitude of the local industry. He said the government would provide a 50 percent rebate on duty for the import of five-year-old tractors and 36 percent for three-year-old vehicles.
On electricity prices, the prime minister said interest-free loans would be provided to the owners of 300,000 tube wells to help them setup and utilize solar energy. Under this scheme, he said, farmers would only pay monthly instalments, while the government would pay the mark-up. He said the government was also introducing a Rs. 43 billion subsidy for farmers as “immediate” relief, capping their electricity cost at Rs. 13/unit.
On wheat imports, the premier reiterated that he had resisted allowing private sector imports to conserve foreign exchange reserves. He regretted that wheat had been imported in the past due to reduced production, and had to be imported again this year due to the floods. He said 1.6 million additional tons of wheat would be imported, while 1 million had already reached Pakistan.
To a question on funding for the package, the finance minister claimed everything was factored in. “Most of the items are budgeted and funded and hopefully we will not have any problem with the IMF,” he said, adding that the package was the need of the hour for farmers.
This year’s floods have caused massive damage across Pakistan, washing away roads and bridges, inundating crops, killing over 1,700 people and leaving more than 33 million homeless. According to a Post-Disaster Needs Assessment report compiled by the Planning Ministry, over $30 billion in total damages have been incurred, with reconstruction needs alone requiring more than $16 billion. The report has noted that agriculture, food, and livestock losses require $3.7 billion for revival.