The government has reduced agricultural subsidy by 25% in the proposed budget for the fiscal year 2013-14 while the total budget in the sector has seen a rise.
Finance Minister AMA Muhith proposed a subsidy of Tk90bn, a reduction of Tk30b from the revised budget subsidy of Tk120bn in the agriculture sector in the upcoming fiscal.
“Reducing subsidy in the agriculture sector will cast negative impact on agro-production as most of the subsidy goes to fertiliser and irrigation,” said Dr Quazi Shahabuddin, former DG of Bangladesh Institute for Development Studies (BIDS).
The prices of fertiliser and irrigation will go up due to the cut in the subsidy thus making the production cost of farmers costlier, he added.
The ruling government has provided a total of about Tk230bn as agriculture subsidy for the development of agriculture sector over the past four fiscal years, the minister said in his budget speech Thursday.
The minister proposed a total of Tk122.7598bn for the country’s agriculture sector as development and non-development budgets for FY 2013-14 which was Tk89.11bn in 2012-13 fiscal budget. But it rose to Tk148.78bn in the revised budget.
The government raised the allocation in the agriculture sector as it wanted to keep up the present average 3.9% growth, the minister said in his budget speech.
Over the last two years farmers have been deprived of fair price of their production especially in case of rice and the production rate got stagnant during the period.
The government proposal to reduce agricultural subsidy will bring production down thus pushing the country to food insecurity, Quazi Shahabuddin observed.
In FY 2012-13, a total of Tk102.06bn has been disbursed as agriculture credit till March 2013, which is 72.2% of the target. The target of distributing agriculture credit in the FY 2012-13 and FY 2013-14 are Tk141.3bn and Tk145.95bn respectively. We have fixed the production target at 37,459,000 metric tonnes (MT) of food grains in FY 2012-13, of which Aush constitutes 2,370,000 MT, Boro 18,700,000 MT, Aman 13,300,000 MT, wheat 1,036,000 MT and maize 2,042,000 MT.
If this trend continues, hopefully the desired growth will be achieved in this sector in the upcoming years, the minister added.
“The government is providing all possible support to the farmers to sustain our achievements in the agriculture sector,” Muhith said adding that in 35 districts the government has supplied tractors, power tillers, harvesters and other agricultural equipment at 25% subsidised prices.
Under the agriculture rehabilitation programme, the government continues to supply seeds and fertilisers to the farmers free of cost.
As part of this programme, with a view to producing ‘Ufshi Aush and Bona Aush’ (Nerica), the government has distributed free seeds and fertilisers to as many as 3,32,500 farmers in the FY 2012-13 at the cost of Tk430m.
As a result, an additional 111,000 metric tonnes of paddy will be produced this fiscal year, he hoped.
Besides keeping the price of fertiliser within the farmers’ reach, the government has special emphasis on ensuring balanced use of fertiliser.
In order to maintain soil quality, the government has taken various steps to increase production of organic fertiliser in addition to the inorganic one.
For this purpose, in the past years, we set up 1.8mn compost pile annually in the homestead of farmers. We have fixed a target of setting up compost pile to additional 1.55m homesteads in the FY 2012-13, the minister also said in his budget speech.