Cashing in on
agriculture’s expansion potential
The forthcoming budget for 2004-05 should increase the
outlay for development strategies for the farm sector and
in order to set the stage for Pakistan to become a major
exporter of cash crops and value-added agribusiness products
over the next few years to take advantage of the rising trend
in world food prices
World food prices are expected to rise sharply over the next
three or four years if present trends continue, says a report
released last week by the Earth Policy Institute (EPI), an
independent Washington-based research group.
The report says four successive shortfalls in annual grain
harvests have reduced the world's carry-over stocks to their
lowest level in 30 years, amounting to only 59 days of
consumption. The relative shortage in stocks is partly
reflected in the fact that global rice prices are at a
five-year high, while wheat is fetching the highest price on
the global market since 1997.
The last time global stocks were so low in the early 1970s,
wheat and rice prices doubled. A similar pattern appears to be
asserting itself now, according to the EPI, as the prices of
basic food commodities are on the rise.
"If the estimated shortfall of 60 million tons materialises,
it will take the world into uncharted territory," notes Brown.
"Either world stocks will drop by 12 days of consumption,
falling to an all-time low of 47 days, or food prices will
As a big producer of food crops and other farm produce,
Pakistan has the potential to cash in on this rising trend in
prices by formulating and implementing strategies aimed at
making the country a major exporter of cash crops and
value-added agribusiness products.
For that to happen, however, the government needs to
substantially increase budgetary spending for programmes and
projects in the agricultural, rural development, irrigation,
horticulture, livestock, small and medium enterprises and
trade promotion sectors.
A beginning can be made, in the forthcoming budget, by
increasing outlays for the farm and agribusiness sectors.
China is now a big importer of farm produce, with the rising
demand being fuelled partly by the growth in population and
partly by rising per capita income levels and high GDP growth
that has made the Chinese economy the fastest growing major
economy in the world over the last twenty years.
According to one estimate, China's annual import of farm
produce has exceeded $ 10 billion a year in recent years. This
rising trend in imports is expected to continue, making China
a big potential market for Pakistani farm produce.
The two countries enjoy excellent relations and China is now
looking to import large quantities of fruit and other farm
produce from Pakistan. According to Chen Neiz Wge, a Chinese
agricultural expert who visited Pakistan last year, China's
big consumer market could become an important destination for
Pakistani mangoes, for example.
Pakistan produces the best mangoes in the world, as well as
a wide range of other top quality fruit. A team of Chinese
experts is due to visit Pakistan this month for a final
inspection of the arrangements to import mangoes from this
China has already agreed to issue a quarantine certificate,
allowing the import of Pakistani mangoes. The Chinese
Quarantine and Quality Control Bureau have declared Pakistani
mangoes pest-free and of good quality.
pest-related concerns of China have been adequately addressed
in a mutually agreed protocol between the two countries,
opening up a huge market in China for Pakistani mangoes.
Last year, for the first time, pears grown in western China
were transported overland to Pakistan, using the KKH (Karakoram
Highway). The same route can readily be used to transport
Pakistani mangoes and other fruit to western China.
Fruit exports to China (not just mangoes but many other
varieties as well, including citrus fruit) could become an
important source of foreign exchange earning for Pakistan,
with volumes eventually running into hundreds of millions of
dollars a year. But several problems need to be addressed
According to an interim report prepared by Rural Partnerships
Limited, in association with Enterplan Limited and SEBCON (Pvt)
Limited under the Asian Development Bank-financed Technical
Assistance TA 4058-PAK Pakistan Agribusiness Development
Project, "The overall trends that are apparent for fruit
production in Pakistan are that while the total area of
production has increased, the overall production has
The report says, "This is largely due to the problems in
Balochistan with the drought and subsequent water shortage
that has seriously cut the yields of apples, peaches, apricots
and grapes. Exports of fruit products continue, but production
fails to take account of this segment of the market which has
potentially high value, but stringent quality requirements."
Cool chain distribution and cold storage of fruit and
vegetables is another problem that needs to be urgently
addressed in the forthcoming budget. But accurate data on the
current cold store numbers and capacities throughout the
country are not available, with the exception of Punjab.
Also, much of the existing inventory of cold store equipment
is "dominated by old designs prior to the influence of thermal
efficiency and energy conservation being fully appreciated,"
says the Rural Partnerships' report.
The drought in Balochistan and other parts of the country
eased somewhat last year, with better-than-average rains. But
this year the sowing season of rice - one of the country's
major export crops - has been delayed for a month in Sindh
following an estimated 50 per cent water shortage in the
province's share of river flows. As reported in The News on
Friday, Sindh had sent its irrigation water indent of 58,000
cusecs (cubic feet per second) last week to the Indus River
System Authority (ISRA), in accordance with the water accord
of 1991, but the inflow of water at Guddu Barrage last week
was only 30,124 cusecs.
The report noted that the sowing season of rice started at the
end of April in the lower Sindh districts of Thatta and Badin,
but had not yet begun in other areas because the major source
of water supply - the Kalri Baghar Feeder Canal, which
offtakes from the right bank of the Indus at Kotri Barrage -
was discharging only 1,000 cusecs of water.
Last year, Sindh produced a bumper crop of rice after it was
sown on an area of 551,000 hectares against the target of
500,000 hectares. This year, however, the provincial
government has set the target of rice cultivation at 500,000
hectares, with a production target of 1,297,000 tonnes, as
against 1,433,000 tonnes achieved last year.
So Sindh is expected to have 136,000 tonnes less rice
available for export this year. Yet the provincial government
is discouraging the cultivation of rice by providing
subsidized cottonseed to farmers to replace it. "The decision
has been taken due to the unavailability of water," a
spokesman for the agriculture department told The News.
The report noted that as a result of this policy, last year
some 18,000 hectares of land - in Sindh's Larkana, Jacobabad
and Shikarpur districts - came under cotton cultivation after
the provincial government provided cotton seed to farmers at
50 per cent subsidized rates. "This year, cotton cultivation
in the province will be raised to 25,000 hectares," the
agriculture department spokesman said.
prospects for Pakistan's cotton crop this year look better
than last year, due to a projected increase in acreage.
Pakistan expects to harvest 10.72 million bales (170 kg each)
of cotton in the 2004-05 crop year, against 10 million bales
last year, a government official said on Friday. Textile
products are the country's biggest export earner, accounting
for more than 60 per cent of all exports.
Expectations of better water supply during the cotton sowing
season also encouraged hopes of higher output this year, along
with a near five per cent increase in land under cultivation,
Qadir Bux Baloch, Cotton Commissioner at the federal Ministry
of Food, Agriculture and Livestock (MINFAL), told the Reuters
news agency on Friday.
"The area under cotton is set at 3.14 million hectares (7.85
million acres) this year, up from 2.995 million hectares last
year," Baloch said. He said another reason for the higher crop
target was because many farmers were switching to cotton after
a sharp increase in prices.
As the Reuters report noted, "A pest attack and heavy monsoon
in September (last year) sent domestic prices to record highs
and resulted in last year's crop, some of which is still being
harvested, falling below a target of 10.55 million bales."
Despite being the world's fourth-largest cotton producer,
Pakistan needed to import around 1.6 million bales of
high-grade cotton in fiscal 2003-04 to meet the growing demand
in local textile mills. For the first time in years, the mills
imported at least 300,000 bales of cotton from India to bridge
the supply gap in the local market.
The irony, however, is that while domestic prices of cotton in
Pakistan soared to record highs last year, the price of raw
cotton in the international market has hovered at the 60 US
cents per pound level in New York since the 1980s.
Nothing better illustrates the need for a big agricultural
producer like Pakistan to focus on value-addition in its
effort to boost export earnings and promote higher levels of
GDP growth. Agribusiness value-addition strategies - not just
in the cotton sector but right across the board of the whole
agricultural sector - should therefore be one of the key
elements of the forthcoming budget.
By Kaleem Omar