The agriculture sector is the hardest hit by this year’s floods, with initial estimate of losses exceeding Rs300 billion. It is believed that 1.3 million acres of Kharif crop of rice, sugarcane, cotton and maize were destroyed in Punjab, 80 per cent of the cotton crop in Bahawalnagar was destroyed and 3,200 acres of crops were damaged in Khyber Pakhtunkhwa (KP). As a result, food inflation may go up by 20-30pc.
Wheat prices are already up in Punjab and KP, principally due to supply disruptions, but some stocks may also have been damaged by floods. Of the 8.2 million farming families in Pakistan, 90pc, or 7.2 million, are small land-holders. Their income from Kharif crops has been washed away by monsoon floods. They are uprooted from their homes, and have no financial resources to undertake intensive farming for the Rabi crop that is around the corner.
There is an urgent need to make financial and other arrangements for these small land-holders to undertake intensive Rabi sowing. The recent floods have contributed to the land fertility and the next Rabi crop could well be a bumper crop.
Small landowners holding up to 12.5 acres in Punjab and KP, and 16 acres in Sindh may be provided financial relief to enable them to prepare the land for the coming season. At least 50pc of their flood losses may be compensated through government grants, with a maximum of Rs20,000; totalling about Rs154 billion. They should be compensated for the remaining 50pc of their losses through interest-free loans, meaning another Rs154 billion.
The State Bank of Pakistan (SBP) may ask the commercial banks to prepare a scheme in this regard, subject to on-ground verification. The loans should be disbursed in instalments on the condition that the entire assistance would be used for Rabi sowing. The SBP made a record profit of Rs2.5 trillion in 2024-25 and the above expenditure of Rs308 billion can be offset against those profits.
Since Rabi sowing is around the corner, the government may advise the SBP to take due steps on a war footing so that small farmers may take advantage. The present widespread flood damages to small agricultural landowners can be likened to the losses suffered by small industrial and commercial units during the 2021-22 Covid outbreak.
At the time, the SBP had launched a somewhat similar concessional scheme, underwritten by the federal government. It successfully mitigated the losses of the mercantile community. Small agricultural landowners need a similar partial mitigation of their losses due to floods.
MUHAMMAD FAHEEM
ISLAMABAD
