Agri-subsidy aims to not let runaway food prices tumble further
What's in budget for agri sector:
- Tk16,000cr fertiliser subsidy to keep local market stable
- Advance tax withdrawal on pesticide raw material imports to reduce farming cost
- Concessional facility for two farming machinery to lower import cost
- Low-cost loan to facilitate cultivation of oilseeds, spices, maize and 24 crop
- Reducing wheat gluten import duty to 15% may make poultry feed slightly cheaper
- Reducing import duty on molasses to 10% may decrease cattle farming cost
- Processed meat imports to be costlier which will benefit local cattle growers
- Lowering tax-free income ceiling for poultry farmers to Tk10 lakh may make chickens pricier
Your breakfast, whether it is roti, paratha or bread, is not going to be as cheap as it was in early-2022. In lunch or dinner, protein intakes such as fishes, beef, chicken, or even egg and lentil soup with white rice also remain dearer.
The proposed national budget for the FY2022-23 cannot help you with the current food bills, but it aims at not letting the food cost spiral further by subsidising Tk16,000 crore in fertilisers.
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In other words, the subsidy – which is Tk4000 crore more than the revised budget for the FY2021-22 – intends to save the consumers from further food price hikes and farmers from international fertiliser price shocks.
As per agri experts, the proposed budget, however, has some contradictions too in terms of protein availability to people. It proposes import duty reduction on poultry and cattle feed raw materials and advance tax exemption on capital machinery import for poultry, but burdens the chicken and fish producers by lowering their tax-free income ceiling to Tk10 lakh from Tk20 lakh.
"The government should rethink about tax-free income ceiling for the poultry sector and fisheries entrepreneurs," said Jahangir Alam Khan, a renowned agro-economist.
Food prices had been spiralling since late-2021 as the supercharged demand roiled the international supply chain. The Russia-Ukraine war in February worsened the situation, as Ukrainian farmlands turned into battlefields, wheat, oilseeds and foodgrains got stuck at ports and fertilisers from the two fighting countries faced troubles in reaching the importing nations.
To lessen the import dependency, the FY23 budget proposed low-cost loans to encourage local farmers in growing pulses, spices, maize, oilseeds and 24 other crops. Besides, it proposes withdrawing advance tax on import of five pesticide raw materials.
The budget also talks about continuing a 20% rebate on power bills for irrigation, and 20% cash incentive on export of agro-products.
For agro-processing entrepreneurs, dairy producers and farm machinery-makers, the budget proposes a 10-year tax exemption.
To modernise the agriculture sector, the government has been providing farmers up to 50%-70% subsidies on the purchasing prices of 12 types of agro-machinery. The FY23 budget proposes a concessional import facility for combined harvesters and threshers.
The finance minister also proposed to reduce the import duty of wheat gluten and sugarcane molasses – two raw materials for poultry and cattle feeds. Besides, advance tax on poultry machinery import has been proposed to be withdrawn.
Mohammad Shah Emran, general secretary of the Bangladesh Dairy Farmers' Association, facilitating molasses import would not make any major difference to red meat prices as the local entrepreneurs usually collect it from the local market.
He appreciated 10-year tax exemption for the dairy sector, noting the policy support will boost the forward linkage sector and help generate new jobs.
