Archive for February, 2010

1.3m euro project to benefit 8,000 small farmers

Post Source: By Dawn Reporter – 20 Feb, 2010

ISLAMABAD, Feb 19: Enhancement in productive capacities and promotion of sustainable agricultural practices among 8,000 small-scale farmers in eight food-deficient districts of the country would be carried out under a project being financed by the European Economic Commission (EEC).

ActionAid, an NGO, will implement the project in Toba Tek Singh, Bahawalnagar, Taunsa Sharif in Punjab, Dadu, Nawabshah and Sanghar in Sindh, and Sibi and Mastung in Balochistan where the NGO would work in close cooperation with local organisation to reach out to the poorest of poor farmers and their families.

The 22-month project worth over 1.3 million euros would benefit 8,000 small-scale farmers and their families, farmers’ networks: Pakistan Kissan Ittehad (PKI) and Sustainable Agriculture Action Group (SAAG) as well as local government departments. The project will focus on promoting sustainable and bio-diverse agricultural practices, enhancing productive capacities and enabling direct access to markets for small scale farmers affected by food deficiency.

The project also aims to achieve increased productive and holding capacities of small-scale farmers (men and women) leading to increased income, improved quality of life and reduced levels of poverty among the target groups.


Diminishing returns on fertiliser use

Post Source: DAWN Economic and Business Review – 22 Feb, 2010

By Ahmad Fraz Khan 

THE fertiliser policy, especially urea, seems to have entered, what the economists call, “stage of diminishing returns.”
For the last few years, the official urea policy has been two-pronged – flood the local market with imported fertiliser to ensure supply and ensure sale at officially declared price. It, however, ignored a crucial aspect, the “efficiency of fertiliser application.” During these years, the federal and provincial governments tried to use urea import and its marketing for scoring against each other, and never bothered about promoting “efficiency of fertiliser use.” Punjab regularly blamed the centre for shortages, whenever they occurred, and exaggerated potential losses – projecting urea as the only panacea for all the production ills.

The federal government, on its part, responded with huge imports and threw the ball (taking fertiliser to the farmers at officially fixed price) into the province’s court. Punjab resorted to administrative measures to ensure sale at officially declared price.

Nevertheless, official sensitivity to urea availability and price had an un-intended impact; it turned urea into a much sought-after fertiliser and also projected it as the only recipe for increasing crop yield.

Consequently, urea consumption increased, and is still rising without corresponding increase in yield of different crops. No one bothered to check the efficiency of urea application. The consumption figures for the last three years reveal the trend. In 2006-07, the national consumption of urea was around 5.6 million tons. Next year, it touched six million tons and it has gone up to 6.4 million tons this year.

The domestic production of urea is only 4.8 million tons, which might go up to 5.4 million tons as two plants are expected to come online this year. The federal government, however, still has to import one million tons of urea at a cost of $300 million – a staggering amount of Rs25 billion in rupee denomination. Currently, urea costs around $300 per ton in international market. If price rises, the import bill would go up correspondingly.

Though varying increases have been reported in wheat, gram and rice crops at various stages in the last three years, it was largely due to expanding acreage rather than increase in per acre yield because of urea. There are other crops, like sugarcane and cotton, which saw their production sliding despite increasing urea doses as acreage declined.

Thus, the increasing use of urea has not brought the expected results, especially when analysed in the backdrop of huge import. It is because of its highly inefficient use. The government is guilty of focusing on quantitative supplies instead of qualitative use, resulting in massive wastage of fertiliser at the farm level. It is time to include “fertiliser efficiency” in the urea policy.

Scientists all over the world agree that urea is a highly wastage-prone fertiliser because of its composition – its major raw material is natural gas, which either evaporates quickly or leeches down the soil. In order to save it from both eventualities, it has to be buried in the root zone of a crop rather than throwing in open field.

In the Far East, rice growers roll its granules into small mud-pebbles and burry them in the root zone at the time of sowing. The other way is to apply water to the field to make it soft and then throw it with certain force so that it penetrates into the soil.

In Pakistan, both these ways of application are unknown. Farmers here either throw urea in the field increasing the chances of evaporation or apply it with flood irrigation to leech it down. This practice has to be stopped.

Fertilisers have their own protocol – when to apply, how to apply and how much to apply. Unfortunately, local farmers do not bother to check these protocols and waste fertiliser. It is time to arrest the trend.

The government should start looking for ways to increase efficiency of fertiliser application. It is not to argue that the government should leave the farmers at the mercy of greedy private sector but only to underscore that its price-focus neglects fertiliser efficiency.

The single-minded focus has not led to anywhere either. During the last two years, around 2,900 FIRs were lodged against fertiliser dealers and sub-dealers, only to see fertiliser disappearing from the market and becoming even more expensive. Its current price of Rs770 per bag does not make fiscal sense for dealers, leave alone other (unregistered) fertiliser outlets – which have to purchase it from dealers and add their own profit margin. There are around 15,000 unregistered outlets in the province against registered dealers numbering 4,000. The government has no control over these 15,000 shops.

The provincial governments would do better to cast their extension wings into major role of promoting fertiliser efficiency. It should also draw in fertiliser marketing companies and private sector stakeholders. These companies and stakeholders helped Punjab save its cotton crop when it was virtually wiped off by virus. If they can help Punjab achieve the miracle of saving cotton crop, there is no reason why they cannot promote fertiliser efficiency and bring the cost of production down.

Empowering the peasants

Post Source: Dawn Economic and Business Review – 22 Feb, 2010

By Saleem Shaikh

Peasants contribute about 70 per cent of the agriculture output in Sindh, but they suffer from a number of problems that hamper growth in productivity and improvement in their economic conditions. It is strange that those who cultivate grains and vegetables have to spend more than 70-80 per cent of their income on buying food for their families.

Although a majority of subsistence growers remain uneducated, they are skilled practitioners of agronomy. But because of the narrowing difference between the production cost and the profits from their crops, their quality of life is not improving.

Over the last three years, thousands of peasants in Sindh have slipped below the poverty line on account of their falling incomes. The acreage under cultivation has dropped due to irrigation water shortage, resulting in meagre arnings, mounting debts and poor savings. The lack of alternative income-generating skills is another hindrance to enable them to raise their incomes through any other source of employment.

“Because of unfair distribution of irrigation water, particularly at the tail-end areas, manipulating flows in water channels, tributaries and watercourses, poor access to farm credit, absence of subsidised modern farm implements, improved seed, bad farm-to-market road networks, exploitation by middlemen and corrupt attitude of revenue officials, the small growers are increasingly trying to shift to other means of livelihood,” said Abdul Majeed Nizamani, a Hyderabad-based grower.

Peasants can not afford to purchase tractors, farm implements and other allied machinery to modernise their farming and increase per acre yield, he said.

Taj Marri, a leader of small growers’ organisation, believes that farm productivity will never increase so long small landholders have access to |technology and knowledge about modern methods of cultivation.

The problem often faced by most of the small growers is getting a fair price for their produce. “Officials of Passco or TCP are seen procuring grain from influential and big landlords, while the stock with small growers is left ‘un-procured’. The peasants have no choice but to sell their products at throwaway price to buy basic necessities of life,” said Meer Ali, a grower in Larkana district.

“A smaller landholder cannot afford to take his produce to procurements centres from far away farming fields. Though it is the responsibility of the procurement agency to pick up farm produce at the production farm it hardly does so,” he complained and added, “The peasants are left at the mercy of either the middleman or moneylender, who lifts the grain from their fields without deducting transportation costs.”

According to a survey, more than 70-75 per cent farmlands are cultivated by tenants and peasants including sharecroppers, most of whom have little security and few rights.

“There are a number of government programmes for uplift of agriculture for which even sufficient funds have been earmarked. But there is hardly any programme that focuses on empowerment of the tenants and peasants and protection of their rights,” says Taj Marri, who is involved in the movement for protection of the rights of tenants and peasants.

Dr Sono Khangharani, a rural development expert, says that most of the peasants and tenants, hardly skilled in any trade except farming, are entirely dependent on landlords for their employment and livelihood. These poor and illiterate peasants and tenants dare not resist their exploitation by landlords.

“Unless these tenants and peasants are imparted modern skills in other sub-sectors of agriculture, their plight will remain unchanged,” he believed.

“Diversification of small farmers’ income by skill-development programmes on integrated farming involving livestock breeding and poultry and fish farming and dairy, is equally important for economic empowerment of small growers,” he remarked.
Cash-strapped small farmers mostly borrow from money lenders at exorbitant interest rates. The middleman or arthi provides credit and procures their farm produce, though it results in exploitation of growers’ resources.

The arthi makes high profits at the cost of wellbeing of small growers but plays no role in raising agriculture productivity, stated Nawaz Memon, general secretary of SAB.

“Until the government takes effective measures to put an end to exploitation of small growers and introduces programmes for their economic empowerment, agriculture would continue to under perform,” concluded Aijaz Qureshi, former general manager of Sindh Irrigation Development Authority (SIDA).

Smaller landholders of 5-10 acres are denied farm credit by commercial banks, while Sindh Minister for Agriculture Syed Ali Nawaz Shah says that 40 per cent agricultural loan will be given to farmers owning 10-50 acres.

New approved varieties of various crops should be introduced and awareness in this regard be created among growers for timely cultivation and harvesting of crops to increase per acre yield.

Normally, the farmers get about 10-15 per cent less price for their produce at the time of the peak harvesting as the private sector deliberately does not enter the market to depress market prices.

The Sindh Agriculture Board has proposed creation of model centres to provide all services including issuance of passbooks, verification of record, creation of charge and disbursement, etc. under one roof in all the taluka headquarters to facilitate growers, especially small farmers.

Brackish water can overcome shortage: expert

Post Source: DAWN – Bureau Report – 18 Feb, 2010

HYDERABAD: The government should build new reservoirs and use brackish drainage water in combination with canal water to cope with the shortage of irrigation water, according to research scholar Mohammad Hussain Shaikh.

Addressing a seminar on “Identifying constraints towards under-performance of controlled irrigation system: A case study of downstream Kotri” here on Wednesday, Mr Shaikh said that Pakistan suffered a serious shortage of water and the situation in Sindh was alarming.

He said the government must provide the province its due share of water because the available surface water was not enough to meet crops’ needs and the ground water was of poor quality.

He said the precious resource needed to be used wisely and efficiently by adopting appropriate technologies.

Mr Shaikh, who is also registrar and the first officer in the history of the university to complete Ph.D research, stressed the need for managing land and available water resources on a sustainable basis.

Unfortunately, he said, water was not being managed efficiently and, as a result, Sindh faced a shortage almost every year.

He said that people in lower Sindh mostly relied on canal water and the agricultural land did not get sufficient quantity of silt and sedimentation from canals and distributaries, which were necessary for fertility.

Besides, there were no lined canals in lower Sindh because of which a huge quantity of water was wasted every year. There were no reservoirs to store excess water, especially during floods and rain, he said.

He pointed out that ground water was another major source of irrigation in the region.

Because of prolonged water scarcity, the quality of ground water had become poor and continuous use of brackish and saline water had caused salinity and soil degradation, causing various other problems, such as decline in crop yield and market value of land, reducing livelihood opportunities of on-farm employment and income from livestock products.

These problems added to food insecurity and poverty, he said.

He said that Pakistans huge surface irrigation network comprised three large dams, 16 barrages, 12 inter-link canals, two siphons, 43 main canals, about 4,350 distributaries and minors and more than 107,400 water-courses.

He said that water delivery system consisted of about 64,000 kilometres long canals to irrigate over 16 million hectares of land.

Mr Shaikh said his research was aimed at identifying key constraints of the irrigation system of lower Indus. He recommended that the government should construct new reservoirs.

If there was shortage of irrigation water, brackish drainage water could be used in different combinations with canal water.

He urged the government to keep a close eye on irrigation water because Indus delta was going through a process of degradation and recommended that the government must provide micro-loans to land owners and farmers to help them develop their land.

Vice-Chancellor Prof Dr Nazir Ahmed Mughal praised the research work and the scholars who had recently returned after completing Ph.Ds in foreign countries should also engage in research.

Wheat sowing area shrinks slightly

Post Source: The News – February 19, 2010
By Israr Khan

ISLAMABAD: Wheat sowing area has shrunk by a nominal 0.2 per cent to 22.303 million acres during fiscal year 2009-10 compared to cultivation of 22.35 million acres in the previous year.

According to the Ministry of Food and Agriculture’s final data available with The News, irrigated area for wheat cultivation increased two per cent to 19.7 million acres while rain-fed area dropped 14 per cent to 2.603 million acres. Last year, the irrigated area was 19.325 million acres and Barani area 3.026 million acres.

It says in Punjab total area under wheat cultivation (barani and irrigated) increased 0.142 million acres to 17.035 million acres. In Sindh, the sown area decreased 0.026 million acres to 2.521 million acres.

In NWFP, the area fell 0.61 million acres to 1.842 million acres while in Balochistan it dipped 0.103 million acres to 0.907 million acres in 2009-10.

Only in Punjab the irrigated area increased and in other provinces it decreased. In Punjab, the irrigated area rose 0.467 million acres to 15.649 million acres and barani area fell 0.325 million acres to 1.385 million acres.

In Sindh, irrigated area declined 0.007 million acres to 2.428 million acres while barani area was down 0.026 million acres to 0.093 million acres.

In NWFP, irrigated area declined 0.006 million acres to 0.813 million acres and barani area fell 0.055 million acres to 1.028 million acres.

Irrigated area in Balochistan dropped 0.067 million acres to 0.81 million acres and barani area shrank 0.036 million acres to 0.97 million acres.

Owing to canal water shortage and drought fears in certain areas, the government has estimated production of about 23 million tons of wheat in the upcoming Rabi season, eight per cent or two million tons less than the target of 25 million tons.

The government has decided to carry over strategic wheat reserves of about three million tons to avert scarcity of the grain.

Though the government is optimistic about sufficient quantity of wheat in the domestic market, common man still believes smuggling can aggravate the situation. The government has to keep a vigilant eye on the issue.

In 2008-09, Pakistan harvested a record wheat crop of 24.03 million tons from an area of 22.36 million acres, an increase of 14 per cent compared to 2007-08 wheat harvest of 21 million tons.

Official sources said farmers used 9 per cent more DAP fertiliser and its price was in their reach. Urea was also consumed more than last year. Certified wheat seeds, land-leveling method and herbicides were used which could help boost wheat production.

Public sector’s procurement target for 2009-10 wheat crop has been fixed at 7.5 million tons and guaranteed minimum price (GMP) has been set at Rs950 for 40 kg with approval of the Economic Coordination Committee (ECC).

At the start of February this year, Federal Food and Agriculture Minister Nazar Muhammad Gondal at a press conference said below normal winter rains could affect wheat production, but ruled out any shortage. “Surely, there were fewer rains and our wheat production can be affected. However, our ministry is satisfied that there is no chance of wheat crisis and the country will have a carryover stock of about three million tons as strategic reserve,” he said.

Rains brighten crop prospects

Post Source: Dawn Economic and Business Review – By Ahmad Fraz Khan
Monday, 15 Feb, 2010


THE recent rainfall, breaking the four-month drought spell, has created some silver lining on the agriculture horizon. The rains have provided water at the critical stage of wheat maturity, improved storage situation and brightened the prospects of future filling of dams. The drought-breaking downpour, which was bigger than the last monsoon – producing over 500,000 cusecs water in first three days, besides increasing the base flow of all rivers – helped mitigate the drought effects to a great extent in some areas.

On February 8, three storages – Tarbella, Mangla and Chashma – held 0.99 million acre feet (MAF) water, which went up to 1.47MAF by February 11. During these days, flow at River Chenab touched 108,500 cusecs against routine flow of 6,000 to 7,000 cusecs.

Similarly, River Jhelum also crossed 120,800 cusecs, River Indus 70,200 cusecs and Kabul 34,500 cusecs against their January flows of 5,000 to 10,000 cusecs. They jointly increased storage by 500,000 cusecs and have increased base flow that could bring more relief in the next week or so.

Most important, the system produced massive snowfall in the catchment areas of both dams and improved chances, which were severely compromised till the end of January, of filling next season. With current amount of snowfall in Kashmir region, the month of May might not be as bad as perceived earlier.

All this augurs well for agriculture, which was threatened with crop failure till the end of last month on water account. Though the current spell has not entirely removed drought effects in all areas of the country, it has certainly left healthy effect on Punjab, especially the rain-fed areas.

Five of eight divisions, falling in central and upper parts, in Punjab – Lahore, Gujranwala, Sargodha, Faisalabad and Rawalpindi – received heavy showers to avoid most threatened drought effects. It was a mixed blessing for Sahiwal region.

Southern Punjab also received rains ranging from one to five millimeters. All of these are wheat-growing areas, and the crop was at booting stage – desperately needing some water.

With rains providing some water to central and upper Punjab and improving dams’ picture, the irrigation authorities now need to take water to those areas where it rained less, even if has to be done at the cost of other areas. The areas include Southern belt – Bahawalpur, Multan and Rahimyar Khan Divisions – that form food basket of Punjab. The focus, which has been even up till now, should now shift to these divisions because if crops fail there, which would, unless some extra-ordinary steps are taken. The province might not be able to achieve agriculture targets, especially of food security.

The provincial irrigation authorities now need to redraw their supply plans. Fortunately, water requirements in these areas are identical because of similarity of weather. Thus, instead of supplying water on rotation basis, as planned earlier, they must be given continued supply until crops are saved there.

Granted that it would be a tricky exercise for the province as almost half of the area depends on supplies from the Indus arm (Chashma-Jhelum link canal), where Sindh has its own reason to advocate closing supplies. Punjab and Sindh have already locked their horns over supplies from the Indus. Feeding some areas from the Mangla arm are simply impossible or very expensive in terms of water losses. But the areas must be fed to save crop there.

On positive side, the country might be able to achieve its gram target of 650,000 tons, which was impossible without the current spell of rains. The entire crop falls in the rain-fed areas, which had been without water for the last four months. The cost of crop failure could have been huge as it could have added a billion rupees or so in the food import bill.

The persistent drought in these areas has wiped off wheat crop on around 400,000 acres. If March remains cool and some residual moisture survives, the farmers can profit by sowing the groundnuts by early March.

The current spell also drives home one point very strongly: our total dependence on the Mother Nature for farming. Had it not rained in February, or they were delayed by another fortnight, the country could have been in for a massive, some say simply unaffordable, economic trouble. It underscores the cost of ill-planning on water front.

It is time for water planners to reassess the whole situation and come up with a plan that meets the current and future agriculture requirements. The weather phenomenon is expected to become more and more erratic by the day if the metrological pundits are to be believed. Pakistan’s water plans are at least 30 years behind to meet the current weather variations, leave alone changing future requirements. It is a big mess, getting bigger and deeper by the day.

Water conservation measures need to be taken along with developing new reservoirs. Currently, the country does not have enough stores to keep water and absorb weather shocks.

Agricultural income tax in next budget:Tarin

Post Source: DAWN Staff Reporter – 13 Feb, 2010 

ISLAMABAD: The government would bring new services into the tax net in next year’s budget and generate meaningful revenue contribution from property, agricultural sector and stock markets, Finance Minister Shaukat Tarin said on Friday. 

During a meeting with a task force on private sector development, the minister said the government would convert capital value tax on property into capital gains tax and its rate would be kept dynamic. He said a tax on agricultural income would be introduced in the next financial year. About the capital gains tax, the minister said talks would be held with stock markets representatives next week and the process could be completed much before the finalisation of the new budget. 

Later, talking to journalists, the minister brushed aside speculations about his resignation and said he was not the kind of person who would leave the field and run away, adding that he would prefer to confront any opposition. Mr Tarin said the government planned to empower and strengthen all regulatory bodies to improve governance, adding that he would ensure that heads of all regulatory bodies were hired purely on professional consideration. 

He said the appointment of the heads of regulatory bodies like State Bank, Auditor General, Nepra, Pemra and Ogra would be presented before parliament for ratification for the sake of credibility and people’s confidence. He said the government would introduce laws under which the Auditor General of Pakistan would submit his reports and findings directly to the Public Accounts Committee. 

When asked how did the government plan to reform the legal and judicial system for dispute resolution and economic issues, the minister said his ministry planned to sit with judges to resolve the matter.


Taxing agriculture

Post Source: Dawn Editorial 

The government’s financial difficulties seem to have compelled policymakers to refocus attention on improving revenue through taxing agricultural income. This was underscored by the finance minister’s vow to impose agricultural income tax from the next financial year. 

Agriculture constitutes almost one quarter of our economy. Yet successive governments have failed to effectively tax income generated by the sector. Agricultural income tax, as a result, has remained stagnant at less than Rs1bn for more than a decade despite the prices of agricultural commodities having risen manifold over these years. 

As things stand today, agricultural income tax is mainly collected in Punjab. In Sindh, its collection remains insignificant and there is hardly any recovery in Balochistan or the NWFP. 

The stagnation in agricultural income tax recovery is blamed on the presumptive nature of the tax and exemptions given to small landholders.

Imposed effectively and indiscriminately, agricultural income tax has immense potential to generate billions of rupees in government revenue. But powerful landholders have always used their political clout to counter efforts to tap the potential of this tax. 

It remains to be seen how the government withstands the pressure exerted by them if and when it tries to increase the collection of agricultural income tax. 

However, one thing is quite clear: the government is fast running out of time to increase its tax revenues. It must raise the abysmally low tax-to-GDP ratio of less than 10 per cent, which is at the heart of the budgetary problems staring the government in the face. 

Sustainable growth will remain a pipedream unless the government’s fiscal position improves through a drastic increase in the collection of tax revenue.

Nevertheless, an effective, exemption-free agricultural income tax alone is not going to strengthen the financial position. The government also needs to do some serious thinking to do away with tax exemptions allowed to the real estate sector and share business. 

These two sectors have enormous potential of generating revenue. Taxing them will also weaken opposition to agricultural income tax. The principle of equity demands that nobody be exempted from paying taxes irrespective of the source of their income.