Agriculture second highest priority in budget, says finance minister
The government has taken up a Tk3,198 crore project to promote farm mechanization, in an effort to bailout farmers who otherwise suffer from shortages of farm labourers during the crop harvesting seasons.
This is the first time that the government has included a farm mechanization project in budget in Bangladesh. Furthermore, Tk200 crore has been allocated to provide incentives for farm mechanization.
In a bid to cushion the impact of the Covid-19 pandemic, the budget for FY2020-21 also proposes Tk9,500 crore in farm subsidies, up from Tk9,001 crore in the outgoing fiscal year.
There will also be an allocation of Tk5,000 for the Agriculture Refinancing Scheme, to provide required agricultural credit to farmers. The scheme will be made through Bangladesh Bank in the upcoming fiscal year, Finance Minister AHM Mustafa Kamal said in his budget speech in parliament on Thursday.
However, Dhaka Chamber of Commerce and Industry (DCCI) President Shams Mahmud in his immediate reaction said that although subsidies in the agriculture sector have been increased to Tk9,500 crore and Tk5,000 crore has been allocated for Agriculture re-financing schemes, more storage capacity is needed.
Agriculture the second highest priority sector
The government allocated Tk15,441 crore for the agriculture sector, an increase of Tk2,643 from the revised budget of the current fiscal year. The allocation proposed for the ministry is 2.72% of the total proposed budget.
“One of our key priorities in our post-Covid-19 economic recovery plan is to keep the momentum of agricultural production,” said the finance minister.
“Agriculture is our second highest priority sector. To boost food production, we will lay emphasis on farm mechanization, incentives for irrigation, seeds and rehabilitation of agriculture, and continue to provide subsidies on fertilizers,” he added.
Incentives to continue
As in previous years, the sale price for chemical fertilisers will be kept unchanged irrespective of their import costs, and the government will continue to provide incentives to the agriculture sector, the minister said.
He further said the government has raised the target for government procurement and distribution of rice and paddy by 200,000 metric tons in FY2020-21, to ensure that farmers get a fair price while keeping the retail market price of rice stable.
"Another refinancing scheme of Tk3,000 crore has been announced for low income farmers and traders in the agriculture sector,” he added.
According to the minister, the government is also expanding low-interest credit facilities for poor farmers, recently repatriated overseas workers and skilled but unemployed youths in rural areas, to enable them to take up self-employment ventures in sectors such as agricultural production, agro-based services, small business, cottage industries, SMEs, etc.
Tk2,000 crore will be distributed through three specialised banks under this program, he said.
A total of 195 growth centres or haat-bazars will be developed to increase agricultural and non-agricultural outputs by stimulating rural economy, creating job opportunities and influencing supply chains
Food, nutrition security the main challenges in post Covid-19 world
Ensuring food and nutrition security for the large population in Bangladesh, and protecting the lives and livelihoods of farmers, farm labourers and relevant others engaged in the agriculture sector are the main challenges now for Bangladesh given the forecast of imminent famine in the post corona world, according to the finance minister’s budget speech.
“Various steps will need to be taken in agricultural production, marketing and different other areas to tackle the imminent challenge of food scarcity. The prime minister has given directives to ensure that not even an inch of land is left unfarmed, so as to ward off any possibility of food scarcity in the aftermath of Covid-19,” he said.
To effectively combat the effects of the novel coronavirus, the government this year will continue interventions such as agricultural subsidies, incentives and support cards for fertilizers-seeds and other agricultural inputs, support for agricultural rehabilitation, special agriculture credit at low interests and easy terms at the required levels.
Furthermore, farmers’ subsidies on procurement of agricultural equipment used in harvesting crops will continue.
Extension of crop diversification, reduction in post-harvest loss of crops and mechanization of farming will be reinforced, while research activities to develop quality jute seeds and diversified jute products will continue.
To encourage the agricultural sector, the minister proposed value added tax exemptions on some agricultural machinery at the trading stage.
The minister also proposed to continue zero VAT for basic ingredients of the agriculture sector and extension of tax incentives and exemptions on agricultural equipment and spare parts.