Higher bank credit limit for farmers
There is good news for wheat and cane growers and congratulations to the major politicians who control – and exploit as needed – the cultivation of wheat and cane sugar. Banks will now offer 50% more agricultural credit to eligible wheat growers and about 44% more to sugar cane growers. What made this possible was the recent upward revision of credit limits per acre for these two politically sensitive crops as well as many others.
The central bank has instructed banks and development finance institutions (DFIs) to treat as legitimate the borrowing needs of wheat growers at the rate of Rs 60,000 per acre. He also advised them to offer agricultural loans of Rs 105,000 per acre to sugar cane growers. The central bank has taken this step to ensure that the money borrowed from banks and DFIs by wheat and sugar cane growers does not fall short of their actual needs and that they do not encounter obstacles to plant these crops and are considering doing something else.
The upward revision of credit limits per acre for all other major and minor crops, including cotton, rice, potato and pulses, was made on the same premise. Given that the wheat flour and sugar crises have hit Pakistan on several occasions, any action taken to ensure an adequate supply of wheat and sugar cane in the market is commendable – if it serves the intended purpose. . And, of course, the intended purpose of raising agricultural loan limits for wheat and sugarcane growers is to incentivize them to continue producing those crops so that no wheat flour and sugar crisis will occur. is emerging in the future due to lower than normal supplies. But to avert such a crisis, federal and provincial governments must also root out corruption and depoliticize the wheat flour and sugar manufacturing sector.
Will they do this? And, if so when? Nobody knows! That said, the increased credit limits per acre will hopefully benefit growers of all other food crops, including rice, corn, and minor crops of pulses, oilseeds, fruits, vegetables. and puzzles. The dynamics of rice and maize crops, and all other minor crops, remain much less politicized than those of wheat, sugar cane and cotton. Thus, it can be rightly expected that if growers of these crops get more bank financing based on land size, they will hopefully produce more.
This will help meet growing domestic needs and create new or additional export surpluses. Food security is becoming an increasingly threatening challenge in the 21st century and all sovereign states, including those that currently have national food surpluses, strive to ensure the sustainability of food supplies. Pakistan has also developed the National Food Security Policy. Unfortunately, very little is being done to achieve the policy objectives. The policy, put in place four years ago, stated that the country would increase the productivity of all major crops and close yield gaps. Four years later, we see no significant increase in the production per acre of the main food crops, ie wheat, rice, maize and sugar cane.
The yield per hectare of wheat, for example, remains close to 3 tonnes, a level already reached several years ago. Wheat yield in Pakistan exceeded 2.5 tons per hectare for the first time in 2005, but has since hovered between 2.5 tons and 3 tons with little annual variation, data obtained from annual economic surveys show. The story of sugarcane yield, however, is different. Its yield per hectare, which stood at 62 tons in 2018, first fell to 60 tons, then rose again to 63.8 tons in 2020 and finally jumped to 69.5 tons in 2021. With the upward revision of agricultural credit ceilings, it is to be hoped that this will go a long way in boosting both production and yield of all major and minor crops where crop policy does not play such an important role as in the case wheat and sugar cane.
Take the example of the potato. The SBP has revised upwards the credit limit for potato growers from Rs 77,000 per acre to Rs 120,000 per acre. This 56% credit limit increase is enough incentive for potato growers. Pakistan is among the top 20 potato producers in the world and its average annual production is not less than 4 million tons. Domestic consumption is less than 3 million tons. Exports of the remaining million tonnes can bring in huge foreign exchange for Pakistan. But potato exports are down as growers are not heard in shaping policy for minor crops, complains the Potato Growers Association (PGA).
By increasing the credit limit for potato growers, the central bank paved the way for an increase in both yield per acre and total production. But this goal can only be achieved if the Ministry of Commerce solicits input from potato growers on how exports can be increased and what specific incentives besides the higher credit limit growers need. . PGA President Mian Muhammad Siddique and Vice President Chaudhry Maqsood Ahmad Jatt recently told a local newspaper that Pakistan could earn $2 billion from potato exports if the Ministry of Commerce comes up with a policy to appropriate export with input from the PGA. Their estimate of export gains seems “too optimistic”, but their suggestions must be heard.
THE WRITER IS AN ELECTRONICS ENGINEER AND PURSUES A MASTER’S