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July 8, 2020

Pakistan Announces Cash Grants for Rice, Cotton Growers Amid Global Price Slump

Pakistan’s Prime Minister Nawaz Sharif announced cash grants for rice and cotton growers, as part of a 341 billion rupees ($3.2 billion) relief package for farmers, affected by slump in global commodity prices and natural calamities back home.

Pakistan, South Asia’s second-biggest economy, is aiming to produce 6.9 million tons rice in the Market Year 2015-16, nearly same as the last year, leading to surplus stock of the commodity which is staple for nearly half of the world. The country’s domestic consumption of milled rice is about 2.3 million tones a year.

To compensate for falling global prices of rice, Sharif announced immediate cash grants of 20 billion rupees to small farmers, with up to 12.5 acres of land holding. Under the package, small farmers will receive 5,000 rupees per acre grant.

Sharif also announced similar cash grants for cotton growers, affected by lower commodity prices as well reduced production due to rains.

Pakistan’s 2015-16 cotton production is forecast at 10 million 480 lb bales, down slightly from the current year’s production. Pakistan annually import about 3 million bales of 170 kg to meet demand of the textile sector which accounts for nearly half of the country’s exports.

Demand has gone up since 2014 after Pakistan was granted Generalized System of Preference “Plus” program by the European Union that has increased the country’s exports of textile goods  worth nearly $1 billion to that region.

The United States Department of Agriculture has estimated that Pakistan’s may need to import 2.0 million 480 lb bales to meet higher demand and offset the decline in production.  In its 2014-19 export policy, Pakistan has announced its intention to double the value of textile exports.

Cotton is mainly grown in two provinces of Punjab and Sindh. An estimated 1.6 million farmers grow cotton, with most of the staple is produced by small farmers cultivating less than five hectares of land.

Farmers in cotton growing areas have limited alternative planting options. Rice, corn, and sugarcane are all possibilities, but, at this stage, there do not appear to be any crops that would be

Sharif also announced total exemption from turnover tax to Pakistan rice millers for the current financial year that began July 1.

To offset the impact of cut in commodities prices and increase in the prices of agriculture inputs, Sharif announced to set up a fund of 20 billion rupees which, he said, will bring down the cost of phosphate and potassium fertilizers per sack to by at least 500 rupees.

The government also announced to pay 2.5 billion rupees to help nearly 700,000 farmers pay premium for crop insurance. In addition to that, interest-free loan will be provided to farers having up to 12.5 acres of land, to help install solar-powered tube-wells or convert existing tube-wells running on electricity to solar.

Agriculture accounts for about 21 percent of Pakistan’s gross domestic production, according to the country’s central bank.

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