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On 26th May, hours before Finance Minister Ishaq Dar presented the government’s budget proposal to the National Assembly for the fiscal year of 2017-2018, farmers from all over Pakistan staged a protest in the Red Zone of Islamabad in front of the Parliament.

Riot police were swiftly deployed against the protesting farmers who were subjected to a vicious onslaught of water cannons and even bullets. 2 of the protestors were seriously injured and many were taken into custody. They were reportedly kept for the whole day in police lock-up without food or water.

“Farmers are being crushed under the weight of the government’s aggressive taxation” stated Khalid Mehmood Khokhar, president of PKI.

With the announcement of the budget and prevailing political crisis, the plight of these farmers failed to get any significant media coverage. But the reason behind their protest deserves attention due to the grave but little-known dilemma faced by the farming sector of Pakistan.

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GVS sat down with the President and senior representatives of Pakistan Kissan Ittehad (PKI) to learn more about the plight of the farmers.

“Farmers are being crushed under the weight of the government’s aggressive taxation” stated Khalid Mehmood Khokhar, president of PKI.

He produced statistics comparing the cost of production of the Indian farming sector versus those of the Pakistani farmers.

Crop Indian Cost PKR/40kg Pakistan Cost PKR/40kg Difference (%)
Basmati Rice 901 1371 -34
Gram 1359 2037 -33
Onion 380 694 -44
Wheat 763 912 -17
Cotton 1076 2533 -57

 

This stark disparity between the production costs is rendering the Pakistani farmers unable to compete with their Indian counterparts.

Mr. Khokhar emphasized the fact that Pakistan needed to independently maintain its food security which means that it cannot rely on foreign produce, especially that of a hostile nation, to satiate its local markets.

“GST being paid on inputs has increased the cost of production as well as commodities. Therefore, in order to enable Pakistani farmers to compete with farmers of regional countries, it is proposed that Govt. of Pakistan may waive-off GST on all Agricultural inputs.”

While the government has enacted a few measures to facilitate the farmers including the waving of General Sales Tax (GST) on pesticides, taxes on agricultural machinery, oilseeds, fertilizers, and tractors still do not allow local farmers to be competitive with Indians.

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Comparison of tax rates in India and Pakistan

Product India Pakistan
Fertilizer 0 5 Urea and 17 rest
Tractor 6 5
Agricultural Implements 0 7
Pesticide 0 0
Oil Seeds 0 5 to 16

 

On 5th May, in a letter addressed to the Ministry of Finance, the Agriculture Department of the Government of Punjab proposed a waiver of GST on all Agricultural Inputs.

It stated that “GST being paid on inputs has increased the cost of production as well as commodities. Therefore, in order to enable Pakistani farmers to compete with farmers of regional countries, it is proposed that Govt. of Pakistan may waive-off GST on all Agricultural inputs.”

In addition to the government of Punjab’s proposed measures, the Ministry of National Food Security and Research also put forth a budget proposal for the fiscal year of 2016 which recommended broad spectrum relief and incentivization for farmers. It advised easing of tax on all major sectors of the agricultural industry including poultry, fisheries, dairy and livestock, and agricultural equipment. However, all of these proposals were ignored by the federal government in the budget put forth on the National Assembly floor.

The most dubious, and the most consequential, aspect of the farmer’s dilemma is the fact that the government has not imposed any sort of tax on imports of fruit, vegetables, and cotton.

In addition to the challenges of tax production cost, farmers also have to live under the specter of an unregulated market. In Pakistan, the government has imposed a minimum market price only on wheat crop whereas the Indian government has imposed a minimum price on 26 crops. Without a minimum price, a potato farmer, for example, could be forced to sell his crop at Rs.10 per kilo while it may be sold in cities at Rs.50. This skewed equation has resulted in the disproportionate distribution of agricultural profits.

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The most dubious, and the most consequential, aspect of the farmer’s dilemma is the fact that the government has not imposed any sort of tax on imports of fruit, vegetables, and cotton.

The primary beneficiary of this policy is India as it is the main exporter of these crops to Pakistan.

Due to this hostile environment, PKI has decided to launch a movement to call attention to these issues.

They have put forth a list of demands addressed to the Prime Minister asking him to take action on the issues faced by the agricultural sector.

Mr. Khokhar warned that if the demands weren’t met within three days the PKI will launch a farmer’s movement in which farmers from all provinces will descend on the capital with their tractors to protest.

Agitation from this segment of society, the segment which constitutes a major portion of the PML-N’s vote bank, does not bode well for a government already embroiled in a battle for its survival.

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