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Adverse agriculture condition

Higher farm subsidy sought in FY ’25

YASIR WARDAD | June 06, 2024 00:00:00

Agriculture-sector stakeholders are waiting for a substantially increased subsidy allocation in the budget for fiscal year 2024-25, which is set to be placed before parliament today (Thursday), as the farmers are passing through an adverse farming condition.

Under the circumstances, the government has already revised the subsidy allocation 47 per cent higher for the outgoing fiscal year (FY 2023-24) from the original allocation of Tk 170 billion to Tk 250 billion.

Meanwhile, the Ministry of Agriculture (MoA) has submitted a demand for allocation of Tk 180 billion on account of agricultural subsidies for the upcoming FY'25, officials said, adding that the Ministry of Finance (MoF) would decide on it.

Agriculture sector experts, however, thought that the sector deserves 10 per cent of the total budgetary expenditure considering the volatility in the global food market and the need for ensuring food security of the country.

A senior official of MoA told the FE that this hike could largely be attributed to factors including the surge in fertiliser prices in the global market, currency devaluation against the dollar, rising shipping costs, and escalated fuel prices.

According to the MoA, the national demand for urea fertiliser in the current financial year was set at 2.7 million tonnes, followed by 1.6 million tonnes of DAP, 0.9 million tonnes of MOP , and 0.75 million tonnes of TSP.

The government imported 1.58 million tonnes of urea, 0.672 million tonnes of TSP, 1.3 million tonnes of DAP, and 1.03 million tonnes of MOP until March last.

An analysis of the budgetary trends within the agricultural sector indicates a consistent pattern of escalating subsidies in the revised budgets, with the highest increase observed in the FY 2022-23.

Despite an initial allocation of only Tk 160 billion, the expenditure finally reached Tk 260 billion in FY'23.

Similarly in FY '22, an initial allocation of Tk 95 billion lastly escalated to Tk 120 billion. Economist M Asaduzzaman said that despite such hikes in subsidies, agriculture still gets below 6.0 per cent of the total outlay while research gets the least.

He said following the difficulties in sourcing foods from the global market amid the tough economic condition, the government should put utmost priority in the agriculture sector to ensure food from the domestic source. He said apart from crop agriculture, livestock and fisheries should also get necessary subsidies.

He suggested that there is a pressing need for a significant hike in the agricultural outlay amid the country's rising core budget.

As agriculture remains the backbone of our food production, Mr Asaduzzaman stressed that allocating more than 10 per cent of the budget to this sector is imperative this year. Economist Prof Dr Rashidul Hasan from Bangladesh Agricultural University said any budgetary measures should safeguard farmers' productivity and ensure uninterrupted access to essential resources such as seeds, fertilisers, and irrigation facilities.

Addressing recent concerns over irrigation shortages during periods of intense heat in April-May, he stressed the need for increased budgetary allocations to tackle such issues effectively.

Meanwhile, the Bangladesh Agro-Processors Association also proposed to increase subsidies on exports of agro-processed goods and streamlining tax policies to encourage investment in agro-processing industries.

BAPA Secretary Iktadul Haque said there is now an urgent need for comprehensive support to boost agricultural exports.

He underscored the importance of remaining competitive in the global market and urged for measures to enhance the industry's competitiveness compared to the competitor countries.

Addressing concerns raised by private importers, the Bangladesh Fertiliser Association (BFA) called for VAT exemptions on certain fertiliser imports to alleviate rising costs and ensure affordability for farmers.

Secretary of BFA Riaz Uddin Ahmed said that if the government addresses these issues in the budget, it would help raise fertiliser imports and reduce prices at the farmers' level.

Meanwhile, M Asaduzzaman stressed the need for more effective implementation of existing initiatives, such as discounts on electricity bills for irrigation, to ensure that all farmers, especially marginal ones, reap the intended benefits.

Stakeholders across the agricultural sector urged policymakers to heed these calls and prioritise the needs of farmers and agro-industries.

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