Big farm subsidy on cards

The finance ministry yesterday decided to inject a significant amount in the sector for greater crop output in response to an agriculture ministry proposal.

"We have no choice but to increase agriculture subsidy considering the reality," said Finance Minister M Saifur Rahman, who took the decision at a meeting with Agriculture Minister MK Anwar at his office yesterday.

Agriculture ministry sought to triple the current farm subsidy of Tk 300cr for the next fiscal year.

The finance ministry did not fully accept the proposal for Tk 1,000cr subsidy, but it decided to form a committee with representation from both ministries. The committee, to be formed within a couple of days, will specify how this subsidy will be given to farmers.

"Our population is increasing alarmingly while the cultivatable land is shrinking. In such a situation, we have no option but to increase crop production," Saifur told the press, emerging out of the meeting.

Saifur gave out a set of instructions to officials, attaching top priority to subsidy in seeds. He observed the seed subsidy may be increased by 50 percent.

He also asked to restructure the Bangladesh Agriculture Development Corporation (BADC) into a seed development institute. The reformed BADC will produce seeds, he said.

Agriculture spending will now be made under revenue budget instead of development budget. Spending from revenue budget will speed up utilisation of allocation as well as give agriculture financing continuity, Saifur noted.

To subsidise irrigation, Saifur considered two proposals of Anwar. Saifur agreed on subsidising power but rejected supporting diesel. Though Anwar was persistent, Saifur said subsidising diesel would lead to wastage and misuse that can not be prevented.

"Presently, the government provides 20 percent subsidy in power for irrigation in the Barind area (in Rajshahi, Chapainawabganj and adjacent districts). Such model can be applied in other places," said Saifur, suggesting Anwar to make a proposal accordingly.

The agriculture ministry proposed for Tk 600cr in fertiliser subsidy. Major chunk of agriculture subsidy comes through the Bangladesh Chemical Industries Corporation that produces urea fertiliser.

The agriculture ministry has sought subsidy in fertiliser import by the private sector. The finance minister was sceptical about subsidising fertiliser import by the private sector and farmers' benefit from it.

Proposing a guideline to subsidise fertiliser import, the agriculture minister suggested that only the importers registered with the Agriculture Extension Department will be allowed to import it.

The importers will have to furnish relevant documents before and after import, and a committee will fix the price for the importers to follow. The government will provide importers the subsidy only when these conditions are complied with.

Commenting on the government decision to up subsidy, Research Director of Bangladesh Institute of Development Studies Dr Asaduzzaman said, "If we must reach 7 percent GDP growth target, we have to increase agriculture output. That is why for the next 10 to 15 years, we need to invest in this sector without any interruption."

He also called for more investment in agriculture extension, marketing and development of technology.

"Agriculture is not just crops, but also livestock and fisheries," he said. "So, the investment should go in all these sectors."