Farm mechanisation -- a strong candidate for fiscal concession

The next national budget is not far away and it's time for almost everybody to seek a few fiscal concessions from the revenue authorities.
The National Board of Revenue (NBR) has made it more of an annual ritual to sit with different trade bodies on the eve of budget presentation and take note of scores of demands coming from the latter. Many chamber bodies and trade associations place long lists of fiscal concessions knowing it fully well that most of the demands would not be even discussed at the level of policymakers.
However, the government keeping its eye on the revenue growth target does make lots of fiscal adjustments. In the process, a number of sectors get hurt and some others reap benefits. However, among all the real sectors of the economy, agriculture remains to be the recipient of minimum fiscal benefits.
The peasantry has lots of grievances in relation to the prices of farm inputs, electricity, diesel etc., and also that of their produce. But they don't have any representative bodies which can place demands before the appropriate agencies, including the NBR. For instance, during the past couple of years, the farmers did not get fair price for their Boro harvest. They could not even recoup their cost of production. If not anyone else, the media had highlighted their problems. But nothing has happened. However, as a natural response to a troubling situation, according to a recent report prepared by the US Agricultural Department, farmers owning a large swath of land across Bangladesh have abandoned Boro farming and switched over to better rewarding crops like maize and wheat this year.
This year, one trade body -- the Agriculture Machinery Association -- has placed a demand that has a bearing on the cost of production of the farmers and mechanisation of the agriculture sector.
The Association during a meeting between different small trade bodies and the NBR sought tax concessions for the assemblers of farm machinery.    
It said the farm machinery assemblers are required to pay value added tax (VAT) at the rate of 15 per cent and AIT (advance income tax) at 4.0 per cent on import of spare parts while the importers of complete farm machinery are paying tax at lower rates.
An agricultural ministry high official, present at the meeting, endorsed the demand made by the Association to help further growth of the sub-sector having an estimated market worth Tk.100 billion.
The farm machinery manufacturers and importers have been receiving state patronisation for long. Without such support the farm machinery sub-sector would not have reached the present state. Both local manufacturers and importers of agricultural machinery and equipment have made substantial contribution to mechanisation of the country's farm sector.
Draft animals and indigenous ploughs are now in the process of extinction. The use of power tillers, tractors, mechanised weeding machines etc., has been expanding at a fast pace and helping the country to grow more food to feed an ever-expanding population.
But except for small tools, the household level ownership of farm machinery such as tractors, power tillers, thrashers has not yet expanded that much because of the cost factor. Such machinery, including irrigation pumps and tube wells, are operated commercially under private ownership. The rents charged by the owners of these machines and implements, in most cases, are more than reasonable ones. Yet the farmers hire their services for they individually cannot afford the ownership of these machines. More importantly, they find it uneconomic to buy farm machinery individually for tilling land or post-harvest processing for only three times a year.
The best option for the farmers would have been the cooperative ownership of the farm machinery and equipment. Unfortunately, the cooperative movement has lost appeal at the grassroots for a host of reasons, including financial irregularities. The government, it seems, is also not that much enthusiastic about strengthening the cooperative movement. Moreover, poor performance of the existing cooperative societies in villages in the absence of proper supervision and monitoring has proved to be a major barrier to the task of popularising cooperative movement.
The government would be doing a great service to the agriculture sector if it could ensure the availability of farm machinery and equipment through efficient village cooperatives. The duty and taxes on the farm machines and equipment and their spares to be used by the cooperative societies also need to be reduced to a minimum to give the farm mechanisation process the much-needed boost.
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