The funds will be needed to subsidise diesel used to run irrigation pumps and soil-testing facilities in upazilas and to provide farmers with quality seeds at lower than market price.

Yesterday's decision came after last month's government plan to scale up the level of farm subsidies, one of the lowest in the world.

Agriculture Minister MK Anwar, presiding over the meeting, said the government wants to provide subsidies from which farmers will directly benefit.

Both the prime minister and the finance minister are willing to make the money available for the subsidies, he earlier indicated.

The budget envisages Tk 300 crore in farm subsidies. The agriculture ministry estimated that it would spend Tk 200 crore on fertiliser and that Tk 100 crore to be spent on subsidising diesel is not enough.

Meeting sources said at least Tk 300 crore would be required to subsidise 865,213 diesel-run shallow tubewells and over 15,000 deep tubewells, and Tk 200 crore to provide seeds at a subsidised rate and soil-testing facilities.

Presently, only the users of electric pumps are given subsidies. The minister earlier told The Daily Star, "Currently, the farmers using diesel pumps have to incur a 30 per cent more cost than the users of electric pumps."

The minister said 25 to 50 per cent of the subsidies would be disbursed in the current fiscal year and the rest next year. "We're hopeful of getting more than the allocated Tk 300 crore this fiscal year and will go for a new cash support programme for farmers," Anwar said.

State Minister for Agriculture Mirza Fakhrul Islam Alamgir told The Daily Star earlier that the subsidies Bangladesh now provides for farmers are way below the subsidy level in the developed countries.

Official statistics say Bangladesh provides farm subsidies at only 3.3 per cent of the aggregate value of its annual farm produces, although the World Trade Organisation rules allow the subsidy level up to 10 per cent.

The government has recently made banks lower their interest rate from 13-14 per cent to 10 per cent in farm credit to boost the agriculture sector.