Rising Incomes in Agriculture Sector Boost Pakistan's Rural Economy

[Riaz Haq]

Since taking the reins of power almost three years ago, the coalition government in Islamabad, which is led by the Pakistan Peoples' Party, has been increasing the support prices of wheat and other agricultural commodities every year. This policy has had the following effects:

1. It is transfering the additional new income of about Rs. 300 billion in the current fiscal year alone to the ruling party's power base of landowners in small towns and villages, from those working in the urban industrial and service sectors.

2. It has driven up food prices dramatically for all Pakistanis, particularly hurting the poor people the most.

3. It has reduced government tax revenues because the agricultural income is not taxed by either the federal or the provincial governments, and resulted in growing budget deficits.

4. It has significantly increased demand for consumer and industrial goods and services in the rural areas.

5. It has forced the State Bank of Pakistan to maintain a tight monetray policy which is drying up the much-needed credit for the industries and the average consumers alike.

In 2008, the government pushed the procurement price of wheat up from Rs. 625 per 40 kg to Rs. 950 per 40 kg. This action immediately triggered inflationary pressures that have continued to persist as food accounts for just over 40% of Pakistan's consumer price index. According to State Bank of Pakistan (SBP) analysis, cumulative price of wheat surged by 120 per cent since 2008, far higher than the 40 per cent between 2003 and 2007. it is also many times greater than the international market price increase of 22 per cent for wheat in the same period. Similarly, sugar prices have surged 184 per cent higher since 2008, compared with 46 per cent increase during 2003-07.

The transfer of additional Rs. 300 billion to Pakistan's agriculture sector during the current fiscal year 2010-2011 by higher prices of agriculture produce and direct flood compensation to 1.6 million affected families at the rate of one hundred thousands rupees each will boost economic confidence in the countryside. It will generate rural demand for consumer items including consumer durables such as fans, TVs, motorcycles, cars, refrigerators, etc.

The big feudal landowners have been the biggest beneficiaries of the PPP's gift of high crop prices. However, the policy has helped small farmers as well, as shown by a recent survey reported by The Nation newspaper. The survey of 300 farmers in Sind's Sukkur district was conducted by Sukkur Institute of Business Administration for the State Bank of Pakistan (SBP). It has highlighted the following about district's rural economy:

1. In Sukkur district, majority of the farmers are subsistence farmers. 31 percent of them own less than 5 acres of land, and another 34 percent own up to 12.5 acres of land.

2. They spend an average of Rs. 1,611 a month on their children's education, with some of them spending up to Rs. 12,000 a month.

3. Wheat, rice, cotton and sugarcane are the major crops being cultivated by 93 per cent, 58 percent, 37 percent and 12 percent of the respondent farmers in that order.

4. 24 percent of them are also growing fruits including dates, mangoes and bananas.

5. 22 percent of the respondent own livestock.

6. About half (49 percent) use privately purchased seeds for wheat cultivation, 33 perecent use their own retained seed and 18 perecent use the seed purchased from Public Sector Seed Corporations.

7. On average, a farmer uses 96.73 Kg chemical fertilizer per acre with the maximum and minimum of 350 Kg and 40 Kg respectively. The average per acre cost of wheat production is Rs. 10,670.

8. All 300 farmers are using tractors for cultivation and preparing land for crops, and some are using tractors for fetching their crop produce to market.

Already, the upside of the government policy is that Pakistan's rural economy is being spurred by high crop prices that may help the GDP growth this year and next. Increased farm incomes are whetting the rural households' appetite for industrial and consumer goods in 2011 and beyond.



A key indicator of growing rural economy is the double digit increase in the sale of tractors. Millat Tractors Limited, the largest supplier of tractors in Pakistan, had record sales of 41,500 tractors in the calendar year 2010, an increase of nearly 11% over 37,537 tractors sold in 2009. Of these 41,500 tractors, a record 5000 tractors were sold in the month of Dec, 2010 alone, acording to The Nation newspaper. Millat sold 10,000 units under Benazir Tractor Scheme and 5,000 units under the Sindh government tractor scheme in the last fiscal year. Another 10,000 units were sold as part of the Punjab government scheme, 70 per cent of the units were sold, according to Dawn News.

Earlier, the sales of Fiat and Massey Ferguson tractors grew to 1,632 and 3,194 units in September 2010 from 537 and 3,100 in August 2010. The overall sales of these tractors rose to 13,931 during July-September 2010 as compared to 12,690 units in the same period of 2009, according to Dawn news.

Over 50 per cent of the motorcycles and 40-45 per cent of cars in Pakistan are purchased by people living in rural areas. Total car sales in July-September 2010(including Suzuki Bolan) rose by 12 per cent to 30,030 units as compared to 26,812 units in the same period of 2009, according to Pakistan Automotive Manufactureres Association PAMA). Furqan Punjani of Topline Securities said car sales are expected to reach 154,000 units by the end of June 2011.

In addition to rising demand for cars and tractors, there is also an upward trend in two-wheeler sales. The cumulative sales of motorcycles in July-September 2010 rose to 126,701 units from 105,862 units in the same period of 2009.

While it is good to see Pakistan's rural farm economy perk up, it is also important to recognize that the overall national economic outlook can not improve significantly unless the growing budget deficits and rising inflation are brought under control. And this will require the ruling feudal elite to pitch in by paying their fair share of income tax on their rising farm incomes. It is time for them to lead by example.

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[Riaz Haq]

The export prospects of citrus fruits have improved as production is up and exporters anticipate sending larger shipments to a widening foreign market. Exporters expect kinnow alone to fetch $200m this season, up from about $175m last year, as they see a real boost in orders from Indonesia.

During a week-long visit to Indonesian cities last month, a 15-member delegation of the Sargodha Chamber of Commerce and Industry found that the demand for kinnow is rising there. Kinnow exports to Indonesia surged last year after a mutual recognition agreement on sanitary and phyto sanitary measures for agricultural products became effective. Besides this, the waiver of customs duty on purchase of Pakistani kinnow under the preferential trade agreement should continue to boost exports to Indonesia.

Meanwhile, the recent Russian move to ban imports of fruits and vegetables from the US and the EU is also fuelling optimism among kinnow exporters, who believe that the ban would eventually benefit fruit and vegetable exporters of Pakistan and other Asian nations. Last year, Russia had lifted the ban it had imposed earlier on Pakistani citrus fruits, but only after the export season had already peaked. Exporters anticipate a real rise this season.

They also expect larger orders from Malaysia, UAE, Saudi Arabia and other GCC nations, in addition to some European countries, because of improved processing, grading and packaging of citrus fruits.

After the successful launching of mango farm tracking earlier this year, Pakistan is now replicating this initiative with citrus fruits. Relevant officials began surveying kinnow farms in Punjab from early October. The survey is aimed at identifying the farms eligible for certification and standardisation for EU markets.

A higher projected production of 2.1-2.2m tonnes, up slightly from last year, is sure to enhance export volumes, say officials of the Pakistan Horticulture Development and Export Company.

Final official figures for last season’s exports are not available, but exporters claim they surpassed the target of 300,000 tonnes. This season’s target remains the same, and leading exporters claim that actual shipments will reach 400,000 tonnes.

http://www.freshplaza.com/article/132677/Pakistan-eyeing-citrus-fru...

[Riaz Haq]

Addressing the “Fruit and Vegetable Promotion Conference” in Karachi on Friday, Federal Minister for National Food Security and Research Sikandar Hayat Khan Bosan said that the dream of boosting exports of fruits and vegetables has been materialised thanks to the introduction of new technologies by the agriculture scientists.

“I am proud of the agriculture scientists, whose untiring efforts in research helped boost the exports of fruits, especially mango and vegetables from the country,” the minister said, adding that country’s mango was facing severe problems of fruit-fly disease, resulting in rejection of several consignments and consequently defaming the country besides inflicting huge financial losses to the national exchequer.

However, scientists of the Department of Plant Protection (DPP) PARC in collaboration with All Pakistan Fruit and Vegetable Exporters, Importers and Merchants Association managed to control the disease by introducing hot water treatment technology which resulted in export enhancement. He said that due to these efforts, the country has now become able to export mango and several other fruits and vegetables, opening up new avenues for country exports in the markets of USA, European Union, Japan and other countries.

The conference was organised by the DPP PARC in collaboration with All Pakistan Fruit and Vegetable Exporters, Importers and Merchants Association with an aim to promote agriculture production and exports.

Speaking on the occasion, Ministry of National Food Security and Research Secretary Seerat Asghar said that the ministry was taking all best possible measures to promote research and development in the agriculture sector.

http://www.pakistantoday.com.pk/2015/04/24/business/new-technology-...

[Riaz Haq]

Australian government would invest US$ 13 million under its Agriculture Sector Linkages Programme (ASLP) Phase-II to improve living standards of small farmers in Pakistan.

The first phase of this programme was launched in 2005 for the support of Pakistan’s agriculture sector which remained successful.

While commenting on the Phase II of the programme, Australian High Commissioner in Pakistan, Margaret Adamson said recently, it has been the cornerstone of Australia’s support to Pakistan’s agriculture sector.

She also highlighting the achievements of the ASLP Phase I and said it included the uptake of furrow irrigation by nearly 1000 citrus farmers in Khyber Pakhtunkhwa, resulting in up to 40 per cent reductions in water usage, and the first successful shipment of mangoes to Europe by a farmer’s consortium.

The High Commissioner informed that Australia is now importing fruit from Pakistan and termed it one of the achievements of the programme.

She said that collaboration between government, business and research bodies, supported by Australian expertise, led by Australian Centre for International Agricultural Research (ACIAR) has been a leading force in the dairy, citrus and mango sectors in Pakistan, and has provided a model for future engagement in agriculture and water between the two countries.

Margaret Adamson said that ASLP will be followed by a similar program that will be known as the Agriculture Value Chain Collaborative Research (AVCCR) programme.

Under design at the moment, it will draw on Australian expertise to assist Pakistan improve agricultural productivity, add value to raw agricultural products and improve access to markets for those products.

AVCCR will complement Australian government’s engagement with other investments in agriculture to provide strategic support to the Pakistan Government in the agriculture sector,” she added.

The High Commissioner said, “Our common climatic conditions, ecological diversity and federal systems of government are an obvious platform of mutual interest to share knowledge and to establish research and technical linkages between our two countries aimed at a sustainable future, food security,environmental protection and economic prosperity for our people.

“We are working closely with the Ministry of Commerce and the World Bank through a $10 million investment in the Pakistan Trade and Investment Policy Program to spearhead national efforts to promote and bolster exports and trade,” she added.

http://en.dailypakistan.com.pk/business/australia-to-invest-13-mill...

[Riaz Haq]

Auto sales rise 41pc YoY in July

https://www.thenews.com.pk/print/222765-Auto-sales-rise-41pc-YoY-in...

KARACHI: Sales of locally assembled cars, including vans, jeeps, and light commercial vehicle (LCVs), reached 19,577 units in July 2017, registering an increase of 41 percent year-on-year (YoY) basis, the latest industry figures showed on Thursday.

“These numbers are in-line with our estimates. We attribute this apparently large increase to low-base effect due to lower number of working days last year (eid holidays fell in July 2016),” said Rai Omar Basharat, an analyst at Topline Securities, in an auto sector research report.

The figures showed that sales of Pak Suzuki Motor Company (PSMC) increased by 37 percent YoY in the period under review driven by the strong demand for Wagon-R as its sales shot up 77 percent YoY.

“With the launch of its new model, sales of Cultus increased by 66 percent YoY, whereas Ravi, which witnessed a jump of 41 percent YoY, also contributed to the growth of the company sales,” Basharat said.

He added that sales of Honda (HCAR) outperformed its peers, posting 113 percent YoY growth drawing strength from the success of the new Civic and a new SUV variant BR-V.

The report said that Indus Motors (INDU) sold 4,618 units in the outgoing month, up 11 percent YoY. “The company’s focus remained on production of higher margin Fortuner, which showed stellar growth of 543 percent YoY,” Basharat added. 

Also, according to the Topline analyst, buyers were postponing their purchase of Toyota corolla, waiting for the face-lift model, which has just arrived. According to the figures released by automakers, tractor sales continued to exhibit upward trajectory with sales growing by 125 percent YoY in period under review.

“We expect the lower GST, improving crop yield due to Punjab government Kissan Package and continuation of fertiliser subsidy to improve farmers’ purchasing 
power, thus improving the overall tractor sales going forward,” the analysts said in the report.

It must be noted that in the budget FY18, the Sindh government had set aside Rs2 billion in subsidy for farmers on tractor purchase. Moreover, truck and bus sales of Pakistan Automotive Manufacturers Association (PAMA) member companies in July 2017 remained strong, growing by 13 percent YoY.

“We foresee this trend to continue, fueled by China-Pakistan Economic Corridor (CPEC) led growth, higher road connectivity, lower financing rate and change & enforcement of axle load limit per truck on highways by National Highway Authority (NHS),” the Topline analyst said.

Finally, the sales of two and three wheeled vehicles grew strongly in July, up 42 percent YoY, owing to a rise in disposable income of lower middle class. “Sazgar Engineering Works Limited (SAZEW) outperformed broader 3-wheeler industry during the outgoing month, exhibiting 58 percent growth in sales YoY,” the report added.

[Riaz Haq]

Eid ul Azha Observance in Pakistan Transfers Billions of Dollars From Urban to Rural Population

http://www.riazhaq.com/2017/09/eid-ul-azha-observance-in-pakistan.html

An often overlooked benefit of buying and sacrificing millions of animals during Eid ul Azha celebration is the massive transfer of wealth from relatively rich urban population to the comparatively poor village population. In other words, it helps create jobs and redistribute wealth to alleviate poverty in a similar way as zakat, taxes and sadaqa (charity) do. Here's a blog post I wrote last year (2016) on this subject and I am reproducing it below:

Pakistanis are spending about $3.5 billion on Eid ul Azha this year, according to analysts. This includes $2.8 billion worth of livestock and another $700 million on clothes, shoes, jewelry and various services. This amount represent a huge transfer of wealth from urban to rural population in the country.

[Riaz Haq]

Blessings and bane that come with rain
Zulfiqar Kunbhar September 3, 2017 

http://tns.thenews.com.pk/blessings-bane-come-rain/#.WbSExtOGN-U

Sindh’s Thar Desert has witnessed severe drought in the past four years. The long dry spell caused acute shortage — of food for humans, fodder for livestock and water for wildlife. During this worst drought in the recent history, hundreds of infants have died of malnutrition. The famine like situation has killed not just livestock, an important source of livelihood, but also wild species.
But the recent monsoon rains had a magical effect on the desert which has turned green from brown, promising good times ahead not just for humans but wildlife as well.
At the same time poaching and trafficking of baby wild animals including peafowl, deer, partridge and wild rabbit in the region is picking up. Thar Desert is home to around 300 species of mammals, birds and reptiles.
Prolonged drought had impacted the economy, society and environment of Thar Desert. Natural water ponds (locally known as Tarae) dried up and ground water level deepened, affecting all forms of life. There was no cultivation. Green pastures, which are the main source of food for livestock and wildlife, had depleted. Locals would spend most of their time in search of food and water. In the drought years, almost half of the total population of locals migrated along with their cattle to the neighbouring barrage areas in search of food. So did the wildlife species.

Although last year there were some rains in the desert they were not on time, hence not beneficial for locals as they could not cultivate crop due to delayed rains. Also, there was no greenery.
This year monsoon arrived on time. The desert received the first rain in the beginning of July that continued for several days, restoring the beauty of the desert.
Rain has provided the much-awaited relief to the living beings and natural habitat. Thar Desert is recovering from the bad impacts of drought. Wetter Thar means greenery and pastures all around as this part is considered the most fertile desert. There is greenery on vast areas of sand dunes locally called ‘Bhit’. That also means better food supply to flora and fauna of the area.
Much of Thar Desert’s portion lies in Tharparkar district of Sindh, stretching over 22,000 square kilometres. 300 kilometres east of Karachi, along Indian border, it has faced persistent but periodic droughts for the past several decades.

[Riaz Haq]

#Pakistan PM to open 363 Km Kachhi canal to irrigate 72,000 acres farmland in Dear Bugti, #Balochistan. #agriculture

http://nation.com.pk/multan/14-Sep-2017/pm-inaugurates-kachhi-canal...


Quetta - Prime Minister Shahid Khaqan Abbasi is scheduled to arrive in Balochistan today (Thursday) for the inauguration of Kachhi Canal Project upon its completion in Dera Bugti.

As per reports, Premier Abbasi will arrive in Dera Bugti to formally inaugurate Kachhi Canal Project on Thursday for which all preparations have been finalised and he will also address a gathering of Pakistan Muslim League-Nawaz (PML-N) workers and supporters in Sui where a large number of tribal elites are expected to join the PML-N fold.

Tight security arrangements have been made for prime minister’s scheduled visit to Balochistan.

It merits mentioning here that the Kachhi Canal Project was kicked off in 2002 but delay in its completion made the cost of the project go high and the project kept on moving on a snail’s pace. After 15 years, its preliminary phase has been completed, while in the second phase the canal will irrigate more areas.

The 363-km long Kachhi Canal Project is located in Punjab whose 281 km part is in Punjab and 80 km falls in Balochistan. The canal originates from Taunsa Barrage at Indus River. The Kachhi Canal will provide sustainable irrigation water supply to 72,000 acres of agricultural land thus bringing green revolution in Balochistan.

The project embraces significant position in Balochistan water infrastructure and agriculture sector which will fuel financial progress in the province.

Balochistan Governor Muhammad Khan Achakzai, Chief Minister Nawab Sanaullah Zehri and other ministers, MPAs and security officials will be present at the inaugural ceremony of Kachhi Canal Project.

[Riaz Haq]

PM to inaugurate Kachhi canal project today

https://www.pakistantoday.com.pk/2017/09/14/pm-to-inaugurate-kachhi...


DERA BUGTI: Prime Minister Shahid Khaqan Abbasi will be paying a one day visit to Dera Bugti’s Sui area to inaugurate the Kachhi canal project on Thursday. He will also be addressing the gathering at the inauguration ceremony.

The pm will be accompanied by Chief Minister Balochistan Nawab Sanaullah Zehri, Home Minister Balochistan Mir Sarfaraz Bugti and other leaders who are also expected to address the gathering.

In consideration of the occasion, a local holiday has been declared in the district of Dera Bugti today.

Kachhi canal project is of strategic importance for the development of irrigated agriculture in Balochistan. The total estimated cost of the project is around Rs80 billion. The 363km long main canal (of which 351km is lined canal) stretches from Taunsa Barrage in Muzaffargarh to Dera Bugti district.

[Riaz Haq]

#Pakistan #wheat and #sugar #exports jump 100% in July 2017. #tobacco exports up 835%. Vegetable exports up 27% http://www.blackseagrain.net/novosti/pakistan-wheat-sugar-exports-i... …

The exports of wheat and sugar from the country during the first month of current financial year witnessed 100 percent increased as compared the corresponding month of last year.

During the month of july, 2017, about 353 metric tons of wheat valuing US$ 114,000 exported as against the export of the same month last year.

According the data of Pakistan Bureau of Statistics 58,555 metric tons of sugar worth of US$ 27.584 million were also exported from the country during the period under review.

Meanwhile, about 188 metric tons of tobacco valuing US$ 730,000 exported as compared the exports of 24 metric tons worth of US$ 78,000 of same period last year.

The exports of tobacco from the country registered 835.90 percent increase during first month of current financial year as compared the same month of last year, it added

During the period under review, about 24,393 metric tons of fresh fruits worth US$ 19.483 million exported as compared the exports of the corresponding period of last year.

On the other hand about 32,702 metric tons of vegetables valuing US$ 10.330 million exported.

During the period under review fruit exports decreased by 16.10 percent, where as vegetables exports increased by 26.80 percent respectively, it added.

[Riaz Haq]

Value Added Sector Helps #Pakistan’s #Exports Upsurge. Textiles up 11.8%, non-textiles up 23.5% - https://pakwired.com/value-added-sector-behind-pakistans-exports-up... … via @pakwired

According to a recent report by the Pakistan Bureau of Statistics (PBS), Pakistan’s exports have shown a positive trend backed by rising exports via the value added sector. The growth pattern has been observed during the first two months of the current fiscal year 2017-18. The upward trend in the value added sector has given a significant boost to cummulative export numbers as the New Year kicked off.

Total exports during the two month period, July-August, increased to $3.49 billion as compared to $3.12 billion showing a growth of 11.8%. While the increase in non-textile goods has been registered at 23.5% reaching $1.31 billion during July-August 2017-18 versus $1.06 billion during the same period last year.

PERFORMANCE OF VALUE AND NON-VALUE ADDED TEXTILE EXPORTS

Readymade garments have given a major upward push to the overall exports pie increasing by 15.65% on a yearly basis reaching $418.63 million during July-August period. Garments in general have also surged by 16.4% showing volume based growth.

Another integral value-added product, knitwear managed to go up by 7.53% to reach $439 million during July-August. The volume based increase of knitwear exports was 8.23%. Additionally, bed wear exports grew by 8% amounting to $384.32 million while its quantity wise growth stood at 8.79%. Furthermore, the value based growth of towel exports showed 0.67% rise while its volume based growth was registered at 0.03%.

Conversely, the picture has not been equally nice for the intermediate goods like cotton yarn, as their exports slumped by 4% (value) and by 3.3% (volume). Deteriorating demand of cotton yarn and fabric from China is considered a crucial reason for their low sales. Another slump has been seen in the exports of cotton cloth, down by 7.8% in terms of value and quantity. Exports of raw cotton have also seen a downward trend with 14.7% in value and 14.15% in volume during July-August 2017-18.

A major blow has emanated from exports of non-value added products such as cotton carded, which dropped by a whopping 100% in value and volume. In addition, exports of tents and canvas declined by 22% in terms of value. On the other hand, exports of yarn slumped by 0.2% in value but increased in terms of volume.

Quick Read: When will Pakistani companies really value their human resource?

A GLANCE AT NON-TEXTILE EXPORTS

From the non-textile related goods, rice exports grew by a significant 40% during the two months. Basmati and other types of rice exports took a major leap.

From the food category, a major jump was seen in exports of wheat, sugar, fruits during the given period. Crude petroleum and petroleum naphtha registered a growth of 100% and 404% accordingly. Nonetheless, exports of sports goods and carpets saw a downward trend.

Value added leather products increased by 5.8% which was witnessing continuous slump during the last two years. Footwear showed a feeble growth of 0.1% during July-August 2017-18. Furthermore, surgical and engineering goods managed to rise by 26% and 23% respectively.