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Express Tribune
01-07-2025
- Business
- Express Tribune
Farmers demand end to GST on local cotton
Listen to article Following the government's decision to impose 18% General Sales Tax (GST) on imported cotton and yarn in the amended Finance Bill 2025, farmers and industry groups are now urging authorities to abolish GST on locally produced cotton and its by-products. Pakistan Kissan Ittihad (PKI) President Khalid Mahmood Khokhar has strongly opposed the continued taxation of domestic cotton, saying it unfairly targets local growers and further erodes already thin profit margins. While the Pakistan Business Forum (PBF) welcomed the tax on imported cotton to help restore balance in the textile value chain, it warned that domestic producers still bear the brunt. "Local spinners are still subject to GST, which they recover from farmers, effectively treating them as withholding agents. This is unjust and must be corrected," said PBF South Punjab Chairman Malik Talat Suhail. Cotton farmers, already burdened by soaring production costs, are finding it harder to keep cultivating. According to PKI, cotton output has dropped from 14.8 million bales in 2011-12 to under 7.5 million bales in 2024-25 — a decline of nearly 50%. Meanwhile, imports now exceed 5 million bales, and exports have nearly vanished. One major issue is the widening gap between input costs and output prices. In 2010-11, cotton fetched Rs5,500-6,000 per maund, or about $70 at the exchange rate of Rs85 per dollar. Now, in 2024-25, the price is around Rs7,600 per maund, equal to just $27 due to currency depreciation. This marks a 250% fall in dollar terms, while input costs have skyrocketed. Fertiliser prices have more than tripled in a decade. A 50kg bag of DAP (Diammonium Phosphate), once priced at Rs3,236, now costs Rs12,900 (298% rise). NP (Sarsabz Nitrophos) has jumped from Rs2,108 to Rs8,100 (284%), Urea from Rs1,035 to Rs4,230 (309%), and SOP (Sulphate of potash) from Rs2,807 to Rs10,000 (256%). These hikes have put over 90% of small and medium farmers under severe financial strain. Energy prices have also surged. Diesel has climbed from Rs85 per litre in 2012 to Rs264 in 2025. Electricity for irrigation has risen from Rs4 per unit to Rs42 — a 950% increase. Labour costs are up too, with cotton-picking charges rising from Rs100 per maund in 2010-11 to Rs1,000 per maund today. In response, PKI has outlined urgent reforms. These include abolishing the 14% GST on tractors to support mechanisation and removing the 18% GST on locally made tractor-mounted implements. They also demand removal of GST on "Khal Banaula," a key cotton by-product used in livestock feed. PKI has called for the creation of a Commodity Price Commission to ensure fair pricing and a guaranteed 25% return on farmer investments. They further propose a flat electricity rate of Rs10 per unit for irrigation tube wells and the timely export of surplus produce to stabilise prices and reduce losses. PBF echoed these concerns, stressing that taxes on cottonseed and cottonseed cake — exempt in most cotton-producing countries — hurt farmers and shift cultivation toward water-intensive crops, threatening both agriculture and water security. Both organisations warn that without bold reforms, Pakistan risks becoming a net importer of cotton.
Business Recorder
21-06-2025
- Business
- Business Recorder
PKI urges govt to set up Agri Price Commission, Agri Export Authority
LAHORE: Pakistan Kissan Ittehad (PKI) has urged the government to establish an Agricultural Commodities Price Commission to ensure a transparent pricing mechanism that guarantees farmers at least a 25 percent return on their investment. In addition, PKI also called for the creation of an Agricultural Export Authority to stabilize domestic prices and promote sustainable marketing of surplus produce. PKI President Khalid Mahmood Khokhar made these demands while speaking to journalists the other evening. He also called for the removal of the 18 percent GST on seed cotton, the abolition of GST on tractors and related implements, and the introduction of a uniform electricity tariff of Rs 10 per unit for irrigation tube-wells. 'Without urgent reforms, experts warn that Pakistan's agricultural sector, which remains the backbone of its economy is on an accelerating downward spiral, with far-reaching consequences for food security, economic resilience, and social stability,' he remarked. Reacting to the Punjab budget, he criticized the mere 10.75 percent increase in agriculture allocations, arguing that it reflects either a gross underestimation of the crisis facing the sector or a deliberate attempt to downplay its severity. 'Despite these alarming signals, the Government of Punjab has allocated only Rs 129.8 billion for agriculture in the 2025–26 budget a modest 10.75 percent increase from last year's Rs 117.2 billion. In the face of a multi-trillion-rupee crisis, this nominal increment of Rs 12 billion is widely seen as inadequate and dismissive of the sector's plight,' said PKI President Khalid Mahmood Khokhar. Adding to farmers' concerns is the government's proposal to tax agricultural income; a move many believe demonstrates a profound disconnect from the economic hardships currently faced by the farming community. Applying tax slabs designed for stable corporate businesses to climate-affected farmers struggling with water scarcity could prove disastrous. Such a policy risks deepening rural poverty, discouraging investment, and further destabilizing an already fragile sector, he warned. The affordability crisis among farmers has reached critical levels. A steep decline in fertilizer usage, particularly urea and DAP along with a significant drop in tractor sales, indicates that farmers are unable to invest during the current Kharif season. The prospect of declining cotton yields is increasing, and the potential impact on the upcoming Rabi wheat crop is also cause for concern. If this downward trend continues, it could trigger a dangerous food security emergency. Khokhar pointed out that Pakistan's agricultural sector is in deep crisis, with growth plunging by 5.84 percent over the past year, and major crop production shrinking by more than 13 percent. Agricultural exports have also sharply declined in 2024–25, laying bare the sector's deep structural weaknesses. Maize exports fell by a staggering 86 percent to just USD 58.9 million, while rice exports dropped by 15 percent to USD 3.3 billion. Copyright Business Recorder, 2025
Business Recorder
19-06-2025
- Business
- Business Recorder
PKI for establishing transparent pricing mechanism
ISLAMABAD: As Pakistan's agriculture sector faces one of its worst downturns in recent years, the Pakistan Kissan Ittehad (PKI) has called on the government to establish a transparent pricing mechanism and create an Agri Export Authority (AEA) to stabilise local markets and ensure food security. PKI President Khalid Mahmood Khokhar urged the federal government to form an Agriculture Commodities Price Commission (ACPC) that guarantees a minimum 25 percent Return on Investment (ROI) to farmers. He said that the move is vital for addressing the growing imbalance between domestic supply and demand while also creating incentives for future agricultural growth. In order to ensure stability in local markets and promote sustainable marketing operations, the creation of an AEA is inevitable, Khokhar said. He added that such an authority would help manage surplus production, balance domestic prices, and pave the way for consistent export strategies. He also called for the immediate abolition of the 18 percent GST on seed cotton, as well as the removal of the 14 percent GST on tractors and 18 percent on tractor-mounted implements, to encourage mechanised farming and improve productivity. Furthermore, Khokhar demanded a uniform electricity tariff of Rs10 per unit for irrigation tube wells to ease farmers' costs. Highlighting the gravity of the situation, he noted that the agriculture sector's growth contracted sharply by 5.84 percent in the last year, dropping from 6.4 percent to just 0.56 percent, while the production of major crops declined by 13.49 percent compared to the previous year. Cotton production fell drastically to 5.55 million bales, 50 percent below the target and 34 percent lower than last year, causing the cotton import bill to surge to an expected $4.45 billion 178 percent higher than last year's $1.6 billion. Wheat output also dropped by 8.91 percent to 28.98 million tons, representing an opportunity loss of approximately Rs250 billion in the international market, while maize production declined by 15.4 percent to 8.24 million tons, and sugarcane production decreased to 84.24 million tons from 87.64 million tons. Khokhar further pointed out that maize farmers are facing a severe crisis due to a sharp fall in market prices, with rates plunging by Rs1,200 per 40kg within a month following the arrival of fresh crops. Despite these alarming trends, the Punjab government's agriculture budget for the financial year 2025-26 increased only marginally by 10.75 percent to Rs129.8 billion, which Khokhar described as a token increment insufficient to tackle the multi-thousand-billion-rupee crisis facing the sector. He warned that such inadequate measures fail to address the depth of the problem and urged immediate structural reforms to safeguard farmers' livelihoods and ensure long-term food security for the country. Copyright Business Recorder, 2025
Business Recorder
03-06-2025
- Business
- Business Recorder
Farmers warn govt against GST imposition on agri inputs
LAHORE: The Pakistan Kissan Ittehad (PKI) has warned the government against imposing general sales tax (GST) on agricultural inputs in the upcoming budget, stating that such a move would deal a final blow to the already struggling agricultural sector and further damage the national economy. 'The government should instead take immediate steps to reduce the cost of agricultural production,' said PKI President Khalid Mahmood Khokhar during a press conference on Monday. Khokhar accused the current leadership of pursuing policies that serve their political interests at the expense of farmers, causing irreparable damage to the sector and contributing to a sharp decline in crop production. 'Around the world, agriculture and food security are considered top priorities by governments. Unfortunately, in Pakistan, the sector is being undermined due to pressure from international financial institutions,' he said. Flanked by fellow PKI members, Khokhar highlighted the country's rapid population growth, warning that Pakistan is adding hundreds of thousands of mouths to feed every year. 'If we fail to stabilise and strengthen our agricultural system, we are heading toward catastrophe,' he warned. He further criticised the imbalance in taxation, noting that while there is no tax on imported cotton, locally grown cotton is subject to 18% GST. 'As a result, cotton production has plummeted from 14.7 million bales to just 5 million,' he said. He added that the country's import bill continues to swell due to the increasing reliance on imported food, while exports of key crops like mangoes, kinnow, and maize have halved in the past year. The PKI representatives emphasized that they are not seeking charity - only fair returns for their produce in line with international standards. 'Farmers should be able to earn a reasonable profit for their hard work,' they insisted. Khokhar painted a grim picture of farmers' current conditions, saying many are in rags and unable to apply adequate amounts of fertilizer or other inputs to their fields, resulting in declining per-acre yields. 'Farmers don't even have enough money to meet household expenses. Some have even had to postpone their daughters' weddings due to poor returns on their wheat crops,' he lamented. The PKI also rejected the Rs 15 billion relief package announced for wheat growers, calling it grossly insufficient against the estimated Rs 1,600 billion in losses. Khokhar urged the Punjab agriculture minister to fulfill his responsibility and work actively to improve the livelihoods and well-being of farmers. Copyright Business Recorder, 2025
Business Recorder
03-06-2025
- Business
- Business Recorder
Farmers warn govt against GST on agricultural inputs
LAHORE: The Pakistan Kissan Ittehad (PKI) has warned the government against imposing general sales tax (GST) on agricultural inputs in the upcoming budget, stating that such a move would deal a final blow to the already struggling agricultural sector and further damage the national economy. 'The government should instead take immediate steps to reduce the cost of agricultural production,' said PKI President Khalid Mahmood Khokhar during a press conference on Monday. Khokhar accused the current leadership of pursuing policies that serve their political interests at the expense of farmers, causing irreparable damage to the sector and contributing to a sharp decline in crop production. 'Around the world, agriculture and food security are considered top priorities by governments. Unfortunately, in Pakistan, the sector is being undermined due to pressure from international financial institutions,' he said. Flanked by fellow PKI members, Khokhar highlighted the country's rapid population growth, warning that Pakistan is adding hundreds of thousands of mouths to feed every year. 'If we fail to stabilise and strengthen our agricultural system, we are heading toward catastrophe,' he warned. He further criticised the imbalance in taxation, noting that while there is no tax on imported cotton, locally grown cotton is subject to 18% GST. 'As a result, cotton production has plummeted from 14.7 million bales to just 5 million,' he said. He added that the country's import bill continues to swell due to the increasing reliance on imported food, while exports of key crops like mangoes, kinnow, and maize have halved in the past year. The PKI representatives emphasized that they are not seeking charity - only fair returns for their produce in line with international standards. 'Farmers should be able to earn a reasonable profit for their hard work,' they insisted. Khokhar painted a grim picture of farmers' current conditions, saying many are in rags and unable to apply adequate amounts of fertilizer or other inputs to their fields, resulting in declining per-acre yields. 'Farmers don't even have enough money to meet household expenses. Some have even had to postpone their daughters' weddings due to poor returns on their wheat crops,' he lamented. The PKI also rejected the Rs 15 billion relief package announced for wheat growers, calling it grossly insufficient against the estimated Rs 1,600 billion in losses. Khokhar urged the Punjab agriculture minister to fulfill his responsibility and work actively to improve the livelihoods and well-being of farmers. Copyright Business Recorder, 2025
