KARACHI: Agriculture sector in the country witnessed
more than one hurdles during July to September 2011, resultantly support
price and procurement provide strength to some of the cash crops of the
country. According to first quarterly report of State Bank of Pakistan
(SBP) on Saturday, flood damage to Kharif crops, taxation on inputs and
low credit availability affected the growers’ margins. Although the
increase in support price is likely to help wheat production, it was
feared low global prices could make it hard to offload stocks that were
procured by Public Sector Enterprises (PSE). The last six months of 2011
proved difficult to the key assumptions on which this year’s growth
target were rested. Continuation of post-flood revival and global prices
of agricultural commodities softened significantly to the
disappointment of farmers. Moreover, industries found it difficult to
run gas or furnace oil based captive power plants, in the wake of gas
shortages and high oil prices. With this backdrop, realising the 4.2
percent growth target for FY12 gross domestic product (GDP) looks
difficult. Agri expert Shakeel Ahmad said there was a dire need to
improve supply chains, build storage facilities for cash crops and
develop market-based solutions to hedge against price fluctuation.
Although the increase in support price is likely to help wheat
production, but low global prices hit it hard to export the produce.
High fertilizer prices coupled with low agri credit availability created
liquidity constraints, which in turn led to a sharp decline in tractor
sales, he added. Manufacturing sector remained better with increase in
demand for consumer and intermediate goods (food, fertilizers, POL,
pharmaceuticals, consumer vehicles and cement). The initial assessment
indicates major losses to cotton due to floods in Central and Southern
Sindh. However, improved water availability, introduction of better
yielding variety of rice, and the increase in wheat support price, are
likely to help agriculture sector achieve its target for.
Cotton: The country will surpass the cotton production target set at 14.01 million bales for the 2011-12 crop season and reach 15.3 million bales by the end of April 2012, agriculture analysts said. Up till now the cotton production is estimated at 12.9 million bales. The CCAC also had reviewed its target after torrential rains and flash floods in the cotton belt in Sindh and Punjab at 12.2 million bales. Pakistan would produce more than 15.3 million bales by the end of April-May 2012 and this would be a record production. The three major reasons for the more than anticipated target are the use of BT cottonseed, appropriate fertilizer usage and water availability in major crop growing areas in Punjab and Sindh. The cotton crop target of 12.8 million bales was fairly conservative in early stage as compared to initial estimates of around 15.2 million bales. PCGA showed a YoY increase of 17.5 percent in cotton arrival up to January 20, 2012, he added.
Wheat: Wheat prices would remain depressed during the 2012 crop season, as global production is likely to be higher than initially thought. The most important development is the increase in the wheat support price to Rs 1,050 from Rs 950 per 40 kg. It was expected the higher support price to encourage growers to increase yields and also bring more area under cultivation. After conversion in Pak-rupee, the spot price of wheat in Chicago Board of Trade (CBOT) is around Rs 760 per 40 kilogramme as on December 8, 2011. However, this rise in support prices only partially compensates farmers against the steep rise in the cost of inputs during the past three years.
Rice: The harvesting of irri rice in Sindh and Punjab is generally completed by mid-October, whereas harvesting of basmati rice continues till mid-November. Flood-related damage to rice is likely to be limited as most of the rice (around 70 percent of the rice in Sindh) is produced in the upper region, which remained unaffected by the floods. According to the report by Suparco, the rice crop has benefited from substitution of irri rice with better yielding hybrid varieties, improved water availability and rich soil moisture. The expected rice production is over 7.0 million tonnes compared to 4.8 million tons produced last year.
Sugarcane: Flood-related losses to sugarcane are expected to remain low, as the crop is relatively resilient to flooding. According to Suparco, the expected sugarcane production is 53.9 million tonnes. However, sugarcane growers are facing problems as mills again delayed sugarcane crushing till mid-November 2011. This delay is costly for farmers as prolonged exposure of sugarcane to flood water in Sindh, deteriorates the crop quality, farmers remain cash-strapped for a longer period and in some areas, farmers were unable to switch to wheat as their fields were not available. Government allowed Trading Corporation of Pakistan (TCP) to procure 200,000 tonnes sugar from mills. This decision would considerably ease liquidity constraints of sugar mills.
Cotton: The country will surpass the cotton production target set at 14.01 million bales for the 2011-12 crop season and reach 15.3 million bales by the end of April 2012, agriculture analysts said. Up till now the cotton production is estimated at 12.9 million bales. The CCAC also had reviewed its target after torrential rains and flash floods in the cotton belt in Sindh and Punjab at 12.2 million bales. Pakistan would produce more than 15.3 million bales by the end of April-May 2012 and this would be a record production. The three major reasons for the more than anticipated target are the use of BT cottonseed, appropriate fertilizer usage and water availability in major crop growing areas in Punjab and Sindh. The cotton crop target of 12.8 million bales was fairly conservative in early stage as compared to initial estimates of around 15.2 million bales. PCGA showed a YoY increase of 17.5 percent in cotton arrival up to January 20, 2012, he added.
Wheat: Wheat prices would remain depressed during the 2012 crop season, as global production is likely to be higher than initially thought. The most important development is the increase in the wheat support price to Rs 1,050 from Rs 950 per 40 kg. It was expected the higher support price to encourage growers to increase yields and also bring more area under cultivation. After conversion in Pak-rupee, the spot price of wheat in Chicago Board of Trade (CBOT) is around Rs 760 per 40 kilogramme as on December 8, 2011. However, this rise in support prices only partially compensates farmers against the steep rise in the cost of inputs during the past three years.
Rice: The harvesting of irri rice in Sindh and Punjab is generally completed by mid-October, whereas harvesting of basmati rice continues till mid-November. Flood-related damage to rice is likely to be limited as most of the rice (around 70 percent of the rice in Sindh) is produced in the upper region, which remained unaffected by the floods. According to the report by Suparco, the rice crop has benefited from substitution of irri rice with better yielding hybrid varieties, improved water availability and rich soil moisture. The expected rice production is over 7.0 million tonnes compared to 4.8 million tons produced last year.
Sugarcane: Flood-related losses to sugarcane are expected to remain low, as the crop is relatively resilient to flooding. According to Suparco, the expected sugarcane production is 53.9 million tonnes. However, sugarcane growers are facing problems as mills again delayed sugarcane crushing till mid-November 2011. This delay is costly for farmers as prolonged exposure of sugarcane to flood water in Sindh, deteriorates the crop quality, farmers remain cash-strapped for a longer period and in some areas, farmers were unable to switch to wheat as their fields were not available. Government allowed Trading Corporation of Pakistan (TCP) to procure 200,000 tonnes sugar from mills. This decision would considerably ease liquidity constraints of sugar mills.
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