Bumper Crops And Soaring Credit Drive Pakistan's Tractor Sales Boom

[Riaz Haq]

First seven months of the current fiscal year have seen tractor sales soar 45% to 38,173 units, according to data of the Pakistan Automotive Manufacturers Association. It is driven by a combination of soaring credit availability and bumper harvests of Pakistan's top three crops by area: wheat, cotton and rice.

Tractor Sales:

First seven months of the current fiscal year have seen tractor sales soar 45% to 38,173 units, according to data of the Pakistan Automotive Manufacturers Association. This is good news for Pakistan's tractor industry that has been in slump for several years as the agriculture output was stagnant.

Pakistani farmers use tractors for a variety of usual tasks ranging from tilling and planting to harvest and transport. Tractor owners recover their costs from more efficiently working their farms and renting out equipment when they are not in their own use.

Agriculture Credit Growth:

Pakistani banks provided Rs 500 billion (nearly $5 billion) worth of agricultural credit during the first seven months, July-January period, of current fiscal year.  It represents a 45% jump from the same period last year, according to media reports.

According to State Bank of Pakistan (SBP), commercial banks, specialized banks, Islamic banks, domestic private banks, microfinance banks and other microfinance institutions have together disbursed Rs 499.645 billion during the period under review, up Rs. 351.358 billion in the same period of last fiscal year.

Top Three Crops:

Wheat output is expected to be near all time high of 26 million tons. Cotton production is forecast to exceed 11.5 million bales, up from 10.6 million bales last year.

Source: FAO via Kleffmann Group

Pakistan rice exports have reached 2.59 million tons worth US$ 1.224 billion in the first 7 months, up from 2.27 million tons worth US$.961 Million last year,  recording growth of 27% in value and 14% quantity.

Pakistan ranks among the world's biggest producers of a variety of crops including wheat, cotton, rice, corn, sugarcane, onions, chickpeas and fruits, according to Food and Agriculture Organization Stats (FAOSTAT).

Crops vs Livestock:

Livestock farming contributes 53% while crops make up about 42% of Pakistan's agriculture output. The rest comes from fishing and forestry.

Pakistani livestock sector has growing much faster than the crop sector and more recent estimates show its contribution has increased to 56.3% of the value of agriculture and nearly 11% to the agricultural gross domestic product (AGDP). It's driven by growing domestic demand for meat and dairy products.

Crop Yields:

Pakistan's crop yields are comparable to India, among the lowest in the world, according to FAO (Food and Agriculture Organization) data.

Source: FAO via Kleffmann Group

World's highest crop yields are seen in Europe while the lowest are in Africa.

Maize, Potato, Rice and Wheat Yields in Hectograms/Hectare. Source:...

Value Added Agriculture: 

Livestock revolution enabled Pakistan to significantly raise agriculture productivity and rural incomes in 1980s. Economic activity in dairy, meat and poultry sectors now accounts for just over 50% of the nation's total agricultural output. The result is that per capita value added to agriculture in Pakistan is almost twice as much as that in Bangladesh and India.

Although Pakistan's value added to agriculture is high for its region, it has been essentially flat since mid-1990s. It also lags significantly behind developing countries in other parts of the world. For example, per capita worker productivity in North Africa and the Middle East is more than twice that of Pakistan while in Latin America it is more than three times higher.

CPEC Long Term Plan:

Beyond the current phase of China Pakistan Economic Corridor (CPEC) focus on energy and infrastructure projects, there is a long term plan that deals with modernizing Pakistan's agriculture. CPEC LTP outlines a more comprehensive effort involving the entire supply chain from agriculture inputs like  seeds, fertilizer, credit and pesticides to logistics such as storage and transportation systems.

Summary:

Pakistan ranks among the world's top producers of a number of major crops including wheat, cotton and rice. Soaring tractor sales are being driven by a combination of  rising credit availability and bumper harvests of major crops in the country this year. But the farm productivity and yields are still among the lowest in the world. CPEC LTP (long term plan) offers hope of significant improvements in agriculture sector to reach its full potential.

Related Links:

Haq's Musings

Value Added Agriculture in Pakistan

Agribusiness Drawing Investors to Pakistan

China Pakistan Economic Corridor

An Indian Farmer Commits Suicide Every 30 Minutes

Pakistan's Rural Economy

Pakistan World's 5th Largest Motorcycle Market

The Other 99% of the Pakistan Story

Pakistan Meat Industry

[Riaz Haq]

#Pakistan hired 63,000 people, unemployed by #COVID19, to plant 10 billion #trees while wearing masks & maintaining #SocialDistancing. Starts with 15,000 acres near #Islamabad to expand to #forest land throughout the country to fight #ClimateChange via @ https://www.upworthy.com/pakistan-hires-63000-people-to-plant-10-bi...

If there is a bright spot to the COVID-19 epidemic, it's the positive environmental impact that social distancing has had on the planet. There has been a steep drop in worldwide pollution and wildlife is returning to places that were once dominated by human activity.

The pandemic has also inspired many world leaders to champion a green recovery.

Pakistan has found a great way to help its laborers who've lost their jobs due to the health crisis by hiring them to plant saplings as part of the country's 10 Billion Trees program. The five-year project was launched by Pakistan's Prime Minister Imran Khan to counter the droughts, flooding, and rise in temperatures in the country caused by climate change.

Pakistan ranks fifth on a list of countries most affected by planetary heating over the past two decades by the Global Climate Risk Index 2020.

The country has been on lockdown since March 23, but the prime minster granted an exception for the 63,000 laborers it has hired for the program. The workers will be paid between 500 to 8000 rupees a day — about half of what a laborer would usually make —but it's enough to get by.

The work is a lifeline for the unemployed laborers but it will only put a small dent in Pakistan's unemployment rate. A recent assessment by the Pakistan Institute of Development Economics found that up to 19 million people could be laid off due to COVID-19.

Even though the work takes place in isolated areas, laborers still have to abide by social distancing rules. They must remain six feet apart from one another and wear masks.

Much of the planting is being done on 15,000 acres near the state capital of Islamabad as well as other pieces of state-owned forest land throughout the country.

"This tragic crisis provided an opportunity and we grabbed it," Malik Amin Aslam, climate change advisor to the prime minister, told the Thomson Reuters Foundation.

The United States should look into similar programs to help its unemployed citizens as well as the planet. During the Great Depression, president President Franklin Roosevelt mobilized the U.S. Forest Service, the Works Progress Administration, and the Civilian Conservation Corps to create a shelterbelt of trees that ran in a 100-mile-wide zone from North Dakota to the Texas panhandle.

The goal was to provide a natural barrier against the dust storms that ravaged the middle of the country during the Dust Bowl

Over seven years, 30,233 shelter belts were planted, stretching over 18,600 square miles, and containing over 220 million trees. It also provided much needed employment for thousands of workers who's livelihoods had been destroyed by the Dust Bowl and stock market crash.

In every great tragedy holds the seed of opportunity. The U.S. should follow Pakistan's lead and use that seed to plant a better future.

[Riaz Haq]

Tractors Industry is one of our most promising export-oriented area. I am glad to share that number of tractors sold in first half of FY 2020-21 increased by 43% to 21,800 units as compared to 15,200 units sold in same period of FY 2019-20, showing an increase of 6,600 units. 1/4

https://twitter.com/razak_dawood/status/1355055410538045441?s=20

Even more encouraging is the increase in export of tractors during the first half of FY 2020-21, especially Millat Tractors whose exports grew by 68% in value to USD 6.9 million compared to USD 4.1 million in the previous year...2/4

…In terms of quantity, Millat exported 850 tractors during the first half of FY 2020-21 as compared to 500 tractors in previous year showing a growth of 70% in quantity terms.
I congratulate the tractor manufacturing industry for this outstanding performance.. .3/4

…and encourage them to strive even harder to increase their footprint in the international market. 4/4

[Riaz Haq]

FY2020-21: Tractors assembling witnesses 59% growth in 11 months

https://dailytimes.com.pk/791852/fy2020-21-tractors-assembling-witn...

Owing to incentives offered by the government under its Agriculture Fiscal Package to mitigate the harmful impacts of COVID-19 pandemic and mechanization of agriculture sector, local tractor production witnessed about 59.03 percent growth in 11 months of current fiscal year as compared the production of corresponding period of last year.

During the period from July-May, 2020-21, 45,432 tractors were locally assembled as compared the assembling of 28,568 tractors of same period of last year, according the provisional quantum indices of Large Scale Manufacturing Industries (LSMI) for May 2021. The provisional quantum indices of Large Scale Manufacturing Industries (LSMI) for May 2021 with base year 2005-06 have been developed on the basis of latest data supplied by the source agencies. On month on month basis, the local production of tractors registered about 15,31 percent increase as about 4,105 tractors were locally manufactured in May, 2021 as compared the production of 3,560 tractors of same month of last year, according the data.

It is worth mentioning here that the government had initiated Rs1.5 billion sales tax subsidy on locally-manufactured tractors under agriculture package announced to revive the economically important sector and approved withdrawal of 5 percent sales tax on locally-manufactured tractors for one year. The government in May, 2020 announced a fiscal package of over Rs1.2 trillion in the wake of COVID-19 pandemic. Economic Coordination Committee of the cabinet division approved the package proposals. Out of the package, Rs50 billion was earmarked for relief to agriculture sector that contributes 18.9 percent to GDP and absorbs 42.3 percent of labor force. The package also includes Rs6.861 billion for provision of financial relief in terms of markup subsidy on bank’s loans to farmers, besides announcing sales tax relief measures to promote mechanization in agriculture sector to enhance per-acre crop yield. Pakistan produces tractors with a variety of working capacities in technical collaboration with foreign manufacturers, including New Holland Tractors and Massey Ferguson.

[Riaz Haq]

Pakistan Among Top 10 Producers Of Wheat, Rice, Sugarcane

https://www.bolnews.com/latest/2021/07/pakistan-among-top-10-produc...


Pakistan is blessed with a rich natural resource base for agriculture and is among the top 10 producers of wheat, rice, sugarcane and certain fruits, a government official said on Wednesday.

Addressing the participants of the international conference on “Best practices for building sustainable food systems in OIC Region”, held virtually, Federal Minister for National Food Security and Research Syed Fakhar Imam said that despite having one of the world’s best alluvial soils and the best irrigation system, the country could not fully harness the potential of the agricultural sector.

The main issues of the agriculture sector included the lack of quality seeds, cold storage facilities, farm mechanisation, trained manpower, post-harvest management, processing industries, and digital agricultural platforms, etc, he added.

The minister said under the dynamic leadership of Prime Minister Imran Khan, the government has prioritised the agriculture sector.

“We are working to diversify this sector, by enhancing focus on high value horticultural crops, oilseeds and pulses. Our government is also taking keen interest in livestock breed improvement, water conservation and promoting farm mechanisation. We are supporting farmers by furnishing quality seeds of improved varieties, providing farm machinery at subsidised rates, and disseminating improved production packages,” Imam said.

“Due to the excellent agricultural policies of our government; despite [the] Covid pandemic and locust attack, the production of wheat, rice, maize and sugarcane has increased to a record level. This year has been remarkable for [the] agriculture sector of Pakistan, and our economy got a boost with the record agricultural production, indicating a lesser reliance on food imports in 2021/22,” he added.

Additionally, due to the government’s favourable policies and interventions, the exports of agro-commodities have also increased significantly, the minister said, adding that considering the role of the provinces, the government is also engaging diversified stakeholders as the best tactic for building a sustainable food system in Pakistan. These strategic initiatives will help improve the public health situation, which is reflecting high rates of stunting, he added.

The conference was organised by the Islamic Organization for Food Security (IOFS) in collaboration with various international research organisations.

[Riaz Haq]

#Pakistan State Bank to offer discounted commercial lending for on-farm crop #storage. It will enhance the scope of #agriculture financing via EWRF (electronic warehouse receipts financing) for growers, increase crop yields & upgrade their social status. https://www.dawn.com/news/1676587/sbp-to-provide-unlimited-loans-fo...

The State Bank of Pakistan (SBP) is ready to provide unlimited loans for warehouse infrastructure projects in rural areas, central bank governor Dr Reza Baqir said on Tuesday.

Speaking at the Launch & Roadshow of Electronic Warehouse Receipt Financing (EWRF) for Maize Crop at Kasur’s district’s Chunian tehsil, the SBP governor said the commercial banks to provide loans for warehouse infrastructure development projects at six per cent markup. The aim is to support and enhance the scope of agri-financing via EWRF for farmers across the country, he added.

Dr Baqir said the central bank’s top priority is to help growers increase their per-acre yields, build and upgrade their social status. “The agriculture sector in Pakistan contributes 40-50pc in our economy (directly and indirectly). Among all growers, 90pc are the small ones out of which only 40pc become able to avail the credit facility.


That is why I have come here to tell the farmers to use the EWR financing facility as this will not only protect their produce but also make you able to get a better price in the market,” he explained.

He said the SBP, in the last fiscal year, had fixed Rs1.5 trillion agri loan target for all banks. However, the banks disbursed Rs1.365tr. This year’s target is Rs1.7tr, he added. The SBP chief requested the investors to come forward and build warehouses in rural areas in a bid to support the farmers.

Earlier he congratulated commercial banks – especially the Bank of Punjab and Habib Bank – on the initiation of EWRF for maize crop and advised them to extend credit to the farmers to full potential and make it easier for them to avail financing.

He said the system designed behind the EWRF is a win-win situation for all the three stakeholders including farmers, banks and the collateral companies as it offers a smooth and reliable process in terms of storage of the produce, receipts creation and provision of credit. He pointed out that last year only 59pc of the credit needs of the farmers were met through banks, which must now increase substantially.

On the occasion, heads of all commercial banks signed the system usage agreement with a private collateral management company that has digitised all of the accredited warehouses to enable farmers to keep their produce there, get EWRs and then apply and receive loans equaling to 70pc of the total production value from any bank within a couple of days. The core objective of the EWRF is not only to provide loans to the farmers but also to hold and protect their produce for a better price in the market.

Moreover, the facility also enables farmers to have a minimum loss of produce since 15-20pc of the total agri production (rice, maize, wheat, etc) goes to waste due to the non-availability of well-maintained warehouses in the rural areas. Lack of warehouses also forces the growers to sell their produce at cheaper rates to the commission agents, middlemen etc.

Senior SBP officials, presidents and CEOs of all commercial banks, senior Punjab government officers, businesspersons, farmers and notables of the area also attended the EWRF launch ceremony.

[Riaz Haq]

Tractor assembling increases 16.22pc during last fiscal year

https://pakobserver.net/tractor-assembling-increases-16-22pc-during...

Local tractor assembling witnessed about 16.22 percent growth during last fiscal year (2021-22) as compared the corresponding period of last year.

During the period from July-June, 2021-22, about 58,922 tractors were locally assembled as against the assembling of 50,700 tractors of same period last year, according the data of Large Scale Manufacturing Industries.

During last fiscal year, the upsurge of tractor assembling was mainly attributed to the government’s incentives for the farming communities to mechanization local agriculture sector by reducing tax on locally manufacturing tractors.—APP

[Riaz Haq]

Pakistan sets up center to boost agricultural growth with $500 million Saudi assistance


https://www.arabnews.pk/node/2333736/pakistan


The center will work in collaboration with Saudi Arabia, the UAE, Qatar, Bahrain and China on various projects

It aims to enhance modern agro-farming in Pakistan by utilizing over 9 million hectares of uncultivated state land

ISLAMABAD: Pakistan has established a Land Information and Management System, Center of Excellence ((LIMS-CoE) to enhance modern agro-farming by utilizing over 9 million hectares of uncultivated state land, a senior official said on Thursday, adding that Saudi Arabia provided an initial $500 million investment to set up the facility.
Pakistan, an agriculture-based economy contributing 23 percent to the GDP and employing 37.4 percent of the labor force, faces recurrent economic hardships. Currently, the productivity remains below par, with a decreasing cultivation area, a population-production gap, and agricultural imports amounting to $10 billion.
According to the World Food Program, around 36.9 percent of Pakistanis are food insecure, with 18.3 percent experiencing severe food crises. The country faces a shortfall of 4 million metric tons in wheat production against a total demand of 30.8 million metric tons, while cotton production has fallen by 40 percent to around 5 million bales in the last decade.
“As far as the high efficiency irrigation system is concerned, Saudi Arabia has already given us [Pakistan] $500 million,” Maj. Gen. Shahid Nazeer, who heads the LIMS-CoE, told reporters at a briefing on Thursday.
“Aimed at enhancing modern agro-farming utilizing over 9 million hectares of uncultivated waste state land, LISM-CoE has been established under the Director General Strategic Projects of Pakistan Army.”
The state-of-the-art system will revolutionize means to steer agricultural development through real-time information about land, crops, weather, water resource and pest-handling under one roof, according to the official.
The center will work in collaboration with Saudi Arabia, the United Arab Emirates, Qatar, Bahrain and China on various agri projects to enhance Pakistan’s exports.
“In the next 3-4 days, a very high-powered Saudi delegation is coming to Pakistan to explore this kind of investment in four major sectors including agriculture, mines and minerals, information technology (IT) and defense production,” he said, adding this would be done under the umbrella of the Special Investment Facilitation Council (SIFC) that was recently established to revive the Pakistani economy.
Nazeer said the LIMS-CoE was aimed at ensuring food security and optimizing agricultural production in Pakistan through innovative technologies and precise, sustainable agricultural practices based on agro-ecological potential of the land, while ensuring the well-being of rural communities and environment preservation.
“The main objectives of the center included consolidation and reclamation of uncultivated waste land, optimal decision; what and where to grow, development of a master plan for modern farming, implementation of state-of-the-art agriculture management practices, practicing agro-intelligence for digital and precision agriculture, better utilization of technology to enhance yield and effective decision support system,” he explained.
The LIMS-CoE recently initiated modern agri-farming projects in Punjab, according to the official. Efforts were being made to use certified hybrid seeds with concurrent development involving joint ventures with multi-national companies, which could pay rich dividends. In agriculture and gardening, a hybrid seed is produced by deliberately cross-pollinating plants that are genetically diverse.
“Hybrid seed gives 30-50 percent more yield, world is using 80 percent hybrid seed, while Pakistan currently uses only 8 percent of hybrid seed,” he added.