Pakistan announces agriculture measure to boost ailing economy

Karachi  - Pakistan's federal cabinet on Monday decided an overhaul of its economic backbone, agriculture, by announcing several measures such as increasingwheat buying prices for farmers.

The government hiked the minimum wheatpurchase price by around 45 per cent for upcoming crop to 950 rupees (12 US dollar) per 40 kilogram against previous 650 rupees.

"We (the government) will buy the wheat if in any part of Pakistan the wheat is sold less than the minimum purchase price," Prime Minister Yousuf Reza Gilani briefed newsmen after the cabinet's meeting in capital Islamabad.

Gilani also announced providing special credit cards to small farmers so that they could easily afford essential items such as seeds, fertilizers, pesticides and agriculture machinery at low interest rates.

Agriculture is a cornerstone to Pakistan's ailing economy and accounts 25 per cent of its gross domestic product and 60 per cent of the workforce.

Analysts say the past 12 months of severe food shortage and a whopping increase in food prices inflation at current 34 per cent amply demonstrates the country's failure in revitalizing its agriculture sector.

During the last year several food riots over wheat and rice occurred in many cities, affecting the middles-class as well as the consumers at the lowest end of society.

Gilani also said the new policies would ensure ample supply of urea and fertilizers as well as fuel for power generators to minimize the impact of ongoing prolonged load-shedding that reduced the farmers' access to water through electricity-run water pumps.

The new policy has also come at a time when news reports are suggesting the country would again face a major wheat shortage in current fiscal 2008-2009 (July-June) due to water supply disruptions from neighboring rival India.

Pakistan heavily relies on water from Indian side of disputed Kashmir.

Meanwhile, the World Bank forecasts relatively low GDP growth of 3.5 per cent for 2008-2009 against 7 to 8 per cent during the last eight years, thanks to healthy crops and massive inflows of US aid money lavished in exchange for Pakistan's cooperation in Washington's wars on Islamic extremists.