Published in The Financial Express on Thursday, 5 June 2014.
Farmers brace for cut in agro subsidy in FY ’15 budget
Economists in favour of its increase
Yasir Wardad
Agricultural subsidy in terms of the total budgetary allocation in the upcoming fiscal year (FY) 2014-15 is likely to see a reduction following the declining trend of FY 2013-14, experts said.
They said in order to boost agricultural production, which is imperative for food security of the country, agricultural subsidy should be increased.
Finance Minister AMA Muhith recently said that the allocation for farm subsidy would be the same in FY 2015 as in FY 2014, the year when agro-subsidy worth Tk 90 billion was allocated.
“The subsidy remaining the same in FY’15 as in FY’14 means it will reduce in real term,” Prof M A Taslim, who teaches economics at Dhaka University, said.
“Considering the inflation, total budgetary allocation (which is tentatively 2.49 trillion in FY’15) and the Gross Domestic Product (GDP), the subsidy will reduce if it remains the same at Tk 90 billion,” he said.
“Subsidy in FY’13 was 6.34 per cent against the total budgetary allocation which reduced to 4.04 per cent in FY’14 and is going to be only 3.61 per cent (tentatively) in FY’15,” he said.
He said poultry farmers, potato and vegetable growers have incurred a huge loss in the eight months (July-February) of the outgoing fiscal year due to political turmoil. They should be compensated.
Agricultural economist Golam Hafiz Kennedy has said apart from farm subsidy, allocation for the ministry of agriculture (MoA) is also being reduced.
The allocation for MoA in FY’14 (proposed) has reduced by nearly 17.53 per cent from the revised budget for FY’13.
The government allocated Tk 122.70 billion for both development and non-development budget for the MoA in FY14, which was Tk 148.78 billion in FY13 (revised).
The allocation for MoA was only 5.51 per cent of the total Tk 2.224 trillion budget in FY’14, which was 7.85 per cent of the total Tk 1.89 trillion in FY’13.
Economist Dr A K Enamul Haque said besides indirect subsidies, which are given to fertilisers and electricity, direct subsidy should be reintroduced.
“The farmers got that kind of subsidy last in FY’10, when the government inaugurated farmers’ fair price card,” he said.
“After that the card hasn’t been used,” he said.
“Farmers showed tremendous success in the last ten years as rice production achieved a surplus yield, with wheat, maize, vegetable, potato, pulses, onion, oilseed and jute production achieving new records,” he said.
“But the government’s feedback is not significant against the farmers’ achievements,” he said.
“The challenge of the 21st century is to keep farmers in agriculture as there are many sectors available now where every day hundreds of farmers are shifting to,” he said.
“Ensuring profitable price and giving logical subsidies are the only tools to keep them stuck in farming,” he commented.
CPD (Centre for Policy Dialogue) additional director Dr Khandker Golam Moazzem said: “Total subsidies are going to be reduced in FY’15 compared to FY’14. “It is good news that agriculture is securing at least some amount.”
He said farm subsidy should be increased, and it should be given in the areas of non-cereal crops and cash crops like vegetable, fruits, jute, cotton, pulses, oilseed etc to boost commercial agriculture.
“Farmers are now concentrating on soybean, sunflower and mustard oil, where they need subsidy which can cut import cost for edible oil and fat,” he added.
However, the government spent 92 per cent (Tk 83 billion) of the total allocation for farm subsidy in FY’14 (until May), according to MoA.