Agricultural production costs likely to go up

It is deemed to be bad news for the agriculture sector as its allocation in the proposed budget for the fiscal year 2023-24 has not increased compared to the budget size.

In his budget speech on Thursday, Finance Minister AHM Mustafa Kamal also proposed to reduce the amount of subsidy on the overall agriculture sector.

Analysts, however, said that production costs, including those of fertilisers and irrigation, may increase in the coming days as the allocation for the agriculture sector has not been increased. It can affect the production cost of agricultural products, including rice, pulses, oil, and vegetables. Besides, the facilities provided to the farmers may also decrease, they added.

They further said agriculture as the main sector should get increased allocation and subsidy, but the government is reducing it which can pose threat to food security.

The finance minister unveiled a proposed budget of Tk 761,785 crore for the fiscal year 2023-24 which was Tk 678,064 crore for the current fiscal year. He proposed to allocate Tk 43,703 crore for the agriculture sector which is 5.78 per cent of the total budget.

Though the share of the agriculture sector in the budget has been reduced, the proposed allocation for the agriculture sector was 6.2 per cent of the total budget in the current fiscal year.

Besides, the budgetary allocation for the agriculture has not increased at the same rate as the total budget has increased. The size of the proposed budget has increased by more than 10 per cent compared to the current fiscal year. In contrast, the allocation for the farm sector proposed in the next budget has been increased by only 3.78 per cent.

As per the ministry’s financial allocation figure, the budget has proposed to reduce the allocation for the agriculture sector. It can be seen in the proposal for the allocation to food, agriculture, and fisheries and livestock ministries in the agricultural sector. Although the amount of money has increased in the next fiscal year, the allocation for this sector has decreased by 0.33 per cent.

In the next fiscal year, Tk 35,374 crore has been allocated for these three sectors, which is 4.64 per cent of the total budget. In the current fiscal year, this allocation was Tk 33,698 crore which is 4.97 per cent of the total budget.

Apart from this, subsidy on the agriculture sector has also been reduced in the budget by more than Tk 9,000 crore compared to the current year’s revised budget.

Dr. Jahangir Alam Khan, an agricultural economist told the Business Post that considering the local and global economic situation, the amount of resource allocation for the agriculture sector is not enough for ensuring food security. “From that point of view, the agricultural sector is deemed to get neglected,” he added.

If the country’s inflation is taken into consideration, there is no growth in the agriculture budget because the country’s inflation was 9 per cent and the agriculture budget increased by only 4 per cent. Besides, subsidy has also been reduced in the budget. Even in FY2011-12, the allocation for the agriculture sector was above 10 per cent of the total budget. Allocation for the agriculture sector is being reduced year after year, he added.

Although the subsidy on agriculture is not increased in the proposed fiscal year, the finance minister said, 2 crore farmers will be brought under the agricultural input support card. Initiatives to give smart cards to all farmers have been talked about, he added.

Besides, there are plans to increase milk production to 236ml per capita availability from 200ml at present.

The finance minister said they have adopted an action plan to build a smart livestock sector and double the production through disease control of cattle and poultry.

“In FY2023-24, our target is to increase the daily per capita availability of domestically produced milk to 236gm, to produce 46 lakh levels of semen in cattle breed development and conservation to artificially inseminate 42 lakh cows/calves across the country, to breed 41.5 lakh chickens in government poultry farms and to distribute at subsidised prices.”