WEB DESK: An official of the Ministry of National Food Security and Research told Business Recorder that the government's decision to reduce the per unit electricity price for the agriculture sector by 3.50 rupees as part of the agriculture incentive package announced by the Prime Minister just prior to the local bodies elections in Punjab may benefit only the rich farmers.

His rationale is straightforward: only progressive farmers with sufficient resources have installed tube wells on their land while subsistence and even some middle income farmers purchase water from them. Thus until and unless these progressive or rich farmers pass on the reduction in the price of electricity onto their customers it is unlikely to benefit anyone other than those with installed tube wells.

According to data released in the Economic Survey 2015-16, tube wells in the public and private sectors were 1049.4 in number in the last year of the PPP-led coalition government; and declined to 1026.5 in 2013-14, rose to 1049.6 in 2014-15 and reached a total of 1086.2 by July-December 2015-16. Segregated data for private and public sector tube wells is not available.

Therefore, one can safely assume that it would be relatively easier for the government to ensure pass on of the reduction in electricity tariff for the farm sector on tube wells that are operated in the public sector and a challenge on tube wells operated by the private sector. Out of a total of 18.64 million hectares under cultivation of various crops 11.86 million hectares or 63.6 percent rely on tube wells for irrigation. Thus if the electricity price reduction is effective down to the grass root consumers then and only then would costs of production come down sufficiently to impact on farm output.

The other major component of the Prime Minister's farm package was enhanced credit. In 2014-15, credit disbursed by several agencies including Zarai Taraqiati Bank Limited, domestic private banks, commercial banks, Punjab Provincial Co-operative Bank Ltd (PPCBL) and micro-finance banks amounted to 515.8 billion rupees - a jump from the 2013-14's total of 391 billion rupees. The provisional estimates for last year (2015-16) are 385.5 billion rupees which partially explain why agriculture sector grew by negative 1.9 percent.

It is relevant to highlight the performance of the PML-N government in 2015-16 with respect to the farm sector (with data released for July-March) and compare it with the last year of the PPPP coalition government in 2012-13. The Economic Survey 2015-16 claims the following: (i) improved seed distribution reached 455,000 tonnes in 2015-16 compared to 327,000 tonnes in 2012-13; (ii) water availability was 137.5 MAF in 2012-13 and 133 MAF (July-March 2015-16) though the figure for the entire year would be greater than in 2012-13; (iii) fertiliser off-take declined from 3,621,000 to 3,035,000 MT; and (iv) credit rose from Rs 336,247 million rupees to 385,537 million rupees.

Given this data the question is what impact if any did the three years of PML-N have on the yield per hectare in comparison to 2012-13? The yield of (i) wheat per hectare, our staple crop, declined from 2786 kg per hectare in 2012-13 to 2752 in 2015-16, (ii) grams declined from 757 kg per hectare to 330 kg per hectare, and most disturbing of all (iii) cotton yield declined from 769 kg per hectare to 587 kg per hectare. Cotton is a major crop and its contribution to industrial output significant which may well explain why exports are down by 9 percent in 2015-16.

Thus there are serious issues with respect to the PML-N government's farm policy with its reliance on credit (which is hijacked by the progressive farmers in any event) and the reduction in electricity used for running tube wells (again a pro-rich farmer policy). Perhaps a better option would have been to extend support price to give a level of comfort to the subsistence and middle income farmers that a decline in the international commodity market would not sound the death knell to their farms.

Source: Business Recorder