Agriculture: A Rare Bright Spot in Pakistan's Economy

[Riaz Haq]

Pakistan's agriculture sector grew 6.3% in 2023-24, far outpacing the overall economy that grew just 2.38%, according to the Economic Survey of Pakistan 2023-24.  This is good news for about 40% of the country's population working in the agriculture sector. By contrast, India's agriculture growth slowed to 1.2% in recent quarters. Studies have shown that strong growth in agriculture helps reduce poverty in developing nations like India and Pakistan. 

Snapshot of Pakistan's Economy. Source: Economic Survey of Pakistan...

The agriculture growth in Pakistan was the highest in 19 years. All major crops saw significant increases. Wheat output jumped 11.6% from 28.2 million tons last year to 31.4 million tons this year, the economic survey said. Cotton, severely damaged by floods and rains last year, reached 10.2 million bales compared to 4.9 million bales last year, growing by 108.2%. Rice output also saw a significant increase — up by 34.8% — reaching 9.9 million tons compared to 7.3 million tons. 

Strong crop output is in part the result of higher yields from increased water and fertilizer availability to farmers, according to the economic survey. 

The survey said the water availability during Kharif 2023 increased to 61.9 million acre-feet (MAF) from 43.3 MAF in Kharif 2022 (when the floods hit). For Rabi 2023-24, the water availability was 30.6 MAF, showing an increase of 4.1% over Rabi 2022-23.

Domestic fertilizer production during FY24 (July-March) rose by 17.3% to 3.25 million tons compared to 2.77 million tons in the same period of FY23. Fertilizer imports also increased by 23.7%, reaching 524,000 ton­s. The availability of fertilizer increased by 18.1% to 3.77 million tons. 

Pakistan's Rice Exports Soared 80% in Current Fiscal Year. Source: FT

The value of Pakistan’s rice exports soared to $3.6 billion over the last 11 months, up from $2 billion in July to May 2022-23. Its previous record for was 4.8 million metric tons of rice exports, valued at about $2.5 billion in 2021-22, according to the Financial Times. 

Pakistan is among the world's largest food producing countries. It produces large and growing quantities of cereals, meat, milk, fruits and vegetables. Currently, Pakistan produces about 38 million tons of cereals (mainly wheat, rice and corn), 17 million tons of fruits and vegetables, 70 million tons of sugarcane, 60 million tons of milk and 4.5 million tons of meat.  Total value of the nation's agricultural output exceeds $70 billion.  Improving agriculture inputs and modernizing value chains can help the farm sector become much more productive to serve both domestic and export markets.  

Agriculture is considered a key tool for reducing poverty in developing countries like Pakistan. It employs almost half of the rural workforce, contributes around 20% to the country's GDP, and provides raw materials for agro-based industries, according to a study by Yaping Liu, Asad Amin, Samma Faiz Rasool, and Qamar Uz Zaman.  However, some studies suggest that agriculture may only help mitigate rural poverty in the long term, while other sources say that sustainable agriculture practices can significantly improve agricultural production and reduce poverty.

Related Links:

Haq's Musings

South Asia Investor Review

Chicken Cheaper Than Daal

Meat Industry in Pakistan

Bumper Crops and Soaring Tractor Sales in Pakistan

Meat and Dairy Revolution in Pakistan

Pakistanis Consuming More Calories, Fruits and Vegetables

Eid ul Azha: Multi-Billion Dollar Urban-to-Rural Transfer

Pakistan's Rural Economy

Pakistan Among World's Largest Food Producing Countries

Pakistan Sets New Record For Rice Exports

Riaz Haq's Youtube Channel

PakAlumni Social Network

[Riaz Haq]

Weakness In India's Economy Is Showing In Quarterly Corporate Earnings - Bloomberg

https://www.bloomberg.com/news/articles/2024-11-04/india-market-buz...

It's raining earnings downgrades as economy slows

Read more at: https://www.ndtvprofit.com/markets/india-inc-faces-mounting-earning...

This is the highest proportion since early 2020, when the Covid-19 pandemic upended economic activity for months. Jefferies now forecasts that the earnings of Nifty companies will grow at just 10% in the year ending March.

India Inc. Faces Mounting Earnings Downgrades As Growth Slowdown Weighs Jefferies has cut fiscal 2025 earnings estimates for over 60% of the 98 companies it covers which reported second quarter earnings.

Global brokerage firm Jefferies has cut fiscal 2025 earnings estimates for over 60% of the 98 companies it covers which reported second quarter earnings. This is so far the highest downgrade ratio since early 2020, Jefferies said in a note on Oct. 30. "Above normal rains and weak government spending has impacted earnings outcomes," Jefferies said. A clear trend should emerge in the December quarter

For the 98 September 2024 quarter results that Jefferies analysed from their coverage universe, earnings downgrades (63%) were more than earnings upgrades (32%). Meaningful earnings per share downgrades were seen in most cement, oil & lending financials, mid-caps, auto and consumer staples players, it said.

The rising downgrades come as a result of a slowing economy with companies facing severe pressure from weakening urban demand. In recent post-earnings commentaries, heads of these companies have rued the slowing consumption of essentials such as food and shampoo to cars and bikes. Contrary to the Reserve Bank of India's optimistic forecast, Nomura Global Markets Research believes that India's economy

"This is probably the worst earnings cycle that we have seen going into Diwali in a long, long time," according to Rahul Arora, chief executive officer at Nirmal Bang Institutional Equities "What is very evident is that the rural economy is in a mess." Hindustan Unilever Ltd. coming with 2–3% volume growth, a low number from two-wheeler manufacturers, and even certain consumer discretionary company

[Riaz Haq]

Pakistan’s expert discovers seed tech in China during an event held in China under the Asian Seed Association.

https://thedailycpec.com/pakistans-expert-discovers-seed-tech-in-ch...

The Asian Seed Congress (ASC), the premier annual event of the Asian Seed Association (APSA), took place in Sanya, Hainan, China, from December 2 to December 5, with the theme “Riding the Wave of Growth in Asia Pacific.” Since its establishment in 1994, ASC has rotated its location yearly across different countries or regions within the Asia-Pacific. This year marked its 29th edition, setting a record with over 1,500 participants from 52 nations, making it the largest gathering in APSA’s history.

Dr. Rasheed, a seasoned agribusiness expert with more than 15 years of experience, represented Pakistan at the congress. Eager to stay abreast of emerging trends and establish partnerships, he expressed particular interest in vegetable seeds, including chili, tomato, melon, and watermelon. “This is my seventh Asian Seed Congress,” shared Dr. Rasheed, currently serving as the research advisor for Pakistan’s Patron Group. He was particularly intrigued by the trade exhibition, where global seed companies showcased their best varieties, while Chinese exhibitors highlighted cutting-edge biotechnologies.

Dr. Rasheed observed an impressive range of biotechnologically engineered seeds resistant to various environmental and biological challenges. These advancements, he noted, have the potential to significantly enhance agricultural yields in Pakistan.

Pakistan’s seed industry holds immense promise within the Asia-Pacific seed market, valued at $29.7 billion, contributing 32% of the global seed market. The region’s seed use is equally significant, with 26.9 billion tonnes, representing nearly 40% of the global total. Such collaborations, Dr. Rasheed remarked, could drive growth and innovation within Pakistan’s agriculture sector.

Highlighting the strong collaboration between Pakistan and China in the seed industry, Dr. Rasheed pointed out China’s extensive seed trade network spanning 116 countries. Hybrid rice, a notable achievement, has been successfully introduced and scaled in regions such as Asia and Latin America. As China’s strategic partner and close neighbor, Pakistan is well-positioned to benefit from and expand such cooperative efforts.

Hybrid rice has proven transformative for Pakistan. Following years of trials, the country has reached a milestone by exporting hybrid rice to third-party markets, symbolizing a significant achievement in agricultural collaboration between China and Pakistan.