Commodity News Snapshot-Pakistan

3,500 tons of wheat supplied to Gilgit-Baltistan

ISLAMABAD (September 02, 2010): The government has supplied 3,500 tons of wheat by air to Gilgit-Baltistan (GB) on the Prime Minister' special instructions to avert any possibility of food shortage in the area. Federal Minister for Food and Agriculture, Nazar Muhammad Gondal said this while chairing a meeting to review the food items supply and availability in the northern parts of the country, here on Wednesday.

Pakistan producing over 40 types of fruits and vegetables: speakers

FAISALABAD (September 02, 2010): Speakers in a workshop on " Sustainable Management of Insect pests of fruits with special reference to citrus through modern protection and post harvest losses reduction techniques" said that Pakistan is producing more than 40 types of fruits and vegetables which have none to compare in the world with respect to taste and quality. But unfortunately we have also credit of using pesticides non-judicious.

Sugar stocks: MoI&P, PSMA presenting contradictory figures

ISLAMABAD (September 02, 2010): Ministry of Industries and Production (MoI&P) and Pakistan Sugar Mills Association (PSMA) are presenting contradictory figures with respect to sugar stocks held by mills, informed sources revealed to Business Recorder. According to the MoI&P, stocks with the mills were 536,326 tons as of August 31, 2010 whereas PSMA claims the stocks with its members mills were less than 0.4 million tons.

Wheat planting season: FAO asks world community for more funds

ISLAMABAD (September 02, 2010): United Nations Food and Agriculture Organisation (FAO) has asked international community to give more funds as wheat planting season is fast approaching in Pakistan where floods have destroyed country's most of the wheat seed stocks. Wheat, is staple food of the country, which is planted from September to November and more than half a million tonnes of wheat seed stocks have been destroyed by the floods, said a FAO report released here on Wednesday.

Growers condemn increase in diesel prices

LAHORE (September 02, 2010): Growers' organisations strongly reacting to the increase in diesel prices have said it will bring already hard hit farmers under further financial burden making it impossible to utilise machinery in agriculture. Agri-Forum Pakistan Chief, Muhammad Ibrahim Mughal while talking to Business Recorder said that around 3.5 billion liters of diesel was used by the growers and farmers in the agriculture sector.

Punjab agriculture board approves high priority research project

LAHORE (September 02, 2010): Punjab Agricultural Research Board (PARB) has approved a high priority research project 'improvement of value chains and tradability of farmer's produce' worth Rs 18.98 million. Approval of this project was given in 23rd meting of Board of Directors of the Punjab Agricultural Research Board (PARB) held here on Wednesday.

Official cotton spot rate cut to Rs 6,500 on improving weather

KARACHI (September 02, 2010): Official spot rate was lowered on the cotton market on Wednesday as floodwater is going into the sea, dealers said. The Karachi Cotton Association (KCA) official spot rate was dropped by Rs 50 to Rs 6,500, they said. In the ready business over 10,000 bales of cotton changed hands between Rs 6300-6800, they said.

Leather industry facing persistent decline in exports: Agha

LAHORE (September 02, 2010): The National Environmental Quality Standards (NEQS) which were fixed at level of 150 mg/liter chemical oxygen demand (COD) are unachievable for the leather industry thus the government should immediately provide interim relief and reduce the NEQ standards to rational level.

Who to blame for sugar price hike?

Sugar prices are hovering at around Rs 90 per kg and it is difficult to determine which of the key players is to blame: the government, including TCP, the sugar mill owners, the stockists, the wholesalers, or the retailers. Background interviews with officials and private sector stakeholders, however, do establish the fact that sugar price is at an artificially high level and someone is making windfall profits during Ramazan.

"The government is unable to control the rising price of sugar, which is as high as Rs 90 per kg in some parts of the country. The large stockists, who purchased sugar from mills and stocked it in their respective mills, are to blame," said an official who has been closely monitoring the sugar situation. The Cabinet, which is scheduled to meet on Wednesday, is expected to take up the issue of rising sugar price.

The Ministry of Industries and Production (MoI&P) which according to the Rules of Business is also responsible for taking measures to keep prices of essential items at a reasonable level is not accepting any responsibility for the price hike. Some officials of MoI&P told this correspondent that it is the responsibility of provincial governments to have check on prices through administrative measures and not that of the federal government.

The Pakistan Sugar Mills Association (PSMA), which was invariably blamed for manipulating sugar prices in the past, claimed that the industry sold 95 percent of sugar stocks at low rates and the current high price does not benefit the mill owners. "The failure of Trading Corporation of Pakistan (TCP) to import sugar well in time has increased market prices. Mills have hardly any stocks. Prices will stabilise if and when TCP sugar arrives," said PSMA Chairman Iskandar Khan while talking to Business Recorder. However, TCP Chairman Anjum Bashir, who was present in the federal capital on Tuesday, acknowledged that the delay of sugar import might have contributed to its current high price.

"I do not agree that it was TCP's failure; I will rather say that delay in sugar import is one of the reasons for the increase in its price," he added. Lengthy process due to procurement rules in addition to delay in release of funds by the Finance Ministry are the main reasons for the delay in shipment as TCP cannot open LC without funds, he added.

He, however, itemised several other reasons which, he claimed, contributed to an increase in sugar price including higher rates of transportation, destruction of infrastructure due to the floods, excessive oil prices in flood-hit areas and disordered distribution of sugar among the affectees. TCP Chairman said that the provincial governments had picked up only 40 percent of sugar from the TCP so far, which implies that they have sufficient stocks.

In previous meetings of the Cabinet and the ECC, some Cabinet members expressed reservations over the delay in sugar import and demanded a formal probe to establish responsibility. These members will also be present in the cabinet meeting when this issue will come under discussion on Wednesday.

The Cabinet is also expected to ratify the decision taken by the Economic Co-ordination Committee (ECC) on July 20 and 29, 2010. On July 29, the ECC had directed the TCP to complete the ongoing sugar import process of 5,75,000 tons including the already arrived quantity of 2,64,000 tons and make all possible efforts to open tenders of the advertised quantity of 3,75,000 tons of sugar.

TCP implemented the decision of the ECC but it was not provided the required funds to open LCs despite the fact that the ECC asked the Finance Ministry to arrange funds for TCP immediately so that LCs for the tenders could be opened on July 31, and August 7, 2010, respectively.

The ECC had also decided that 100,000 tons of sugar, imported by TCP, would be offloaded in the open market at import price through provincial mechanism starting from July 28, 2010. The provinces were required to arrange payment through their selected dealers as they lift the stocks from TCP well before Ramazan. After completion of the current sugar import process the market forces would be allowed to prevail and the private sector would be encouraged to import sugar.

Copyright Business Recorder, 2010

Commodity News Snapshot-Pakistan

Sugar price may rise further

ISLAMABAD (August 26, 2010): Sugar price is expected to skyrocket to about Rs 90 per kg in the coming weeks as stocks with sugar mills are inadequate, said a market player on Wednesday. Currently, sugar price in Pakistan is higher than in India, Sri Lanka and Bangladesh but lower than Afghanistan. A ministerial committee, headed by the Minister for Industries and Production, Hazar Khan Bijarani, which met last week, did not reach any agreement on a plan to deal with the rising sugar prices.

Sindh's major crops badly hit by floods

KARACHI (August 26, 2010): Three major crops-sugarcane, cotton and rice-have been badly hit by the recent floods as the standing crops on some 1.4 million acres have been badly damaged in Sindh, it is learnt. The field staff of Agriculture Department has submitted a district-wise crop damage report after conducting survey of all 23 districts of the province to find out the agricultural loss to the standing Kharif crops in the province by flash floods, sources told Business Recorder on Wednesday.

Prices at cotton market firm amid strong demand

KARACHI: The Karachi cotton market witnessed a firm trading session while quality lint remained an issue on the trading floor amid strong physical prices, traders at the Karachi Cotton Association (KCA) said Wednesday.

Lint prices remain range-bound, spot rate stays put on cotton market

KARACHI (August 26, 2010): Steady trend was seen on the cotton market on Wednesday as buyers showed no reluctance in new deals on short crop news after historical floods in the country, dealers said. The Karachi Cotton Association (KCA) official spot rate was inert at Rs 6,450, they said. In the ready business nearly 9000 bales of cotton changed hands between Rs 6400-7000, they said.

Dollar slumps versus rupee

KARACHI: The dollar lost strength against the rupee in the interbank market, dealers said on Wednesday. The dollar commenced the day’s trading at Rs 85.66 for buying, lost three paisas and closed at 85.63 for buying and Rs 85.68 for selling. The euro regained its strength versus the rupee, as it started the day’s trading at Rs 108.19 for buying, gained 48 paisas and closed at Rs 108.67 for buying and Rs 108.87 for selling. The British currency appreciated against the rupee, as it started the day’s trading at Rs 131.97 for buying, rose 14 paisas and closed at Rs 132.11 for buying and Rs 132.31 for selling.

Bullion Rates

KARACHI (August 26, 2010): Gold and silver rates in rupees per 10 grams prevailing in major cities on Wednesday (August 25, 2010).

  

'Floods inflicted Rs 250 billion loss to agriculture sector'

MULTAN (August 26, 2010): Former Federal Minister Alhaj Sikandar Hayat Bosan has said that recent devastating floods across the country have caused damage worth Rs 250 billion to the agriculture sector with maximum losses suffered by the small farmers of around Rs 100 billion, while some facing total annihilation of their crops.

Damage to wheat stock: clarification

KARACHI (August 26, 2010): The Food Department is not in agreement with the contents of a news item carried by Business Recorder on Wednesday regarding damage of over 0.3 million tonnes of wheat stock by the recent flood and torrential rains. It is categorically stated that after taking into consideration of the monsoon rains and the damage probably caused by it in consequent thereupon.

Global Commodities Recap – 25th August, 2010

Precious metals rose for a second day as the dollar fell against the euro and raised concern over economic growth that hit equities, stimulating interest in the metal as a safe haven.

Gold is benefitted from renewed investor demand for safe-haven assets as evidence of a slowing economy mounts, which in turn has dragged global equities to their lowest since early July, when a recovery in risk appetite led prices to retreat from June's record highs.

Floods cause Rs 244.6bn loss to agri sector: MinFA

* Small farmers suffer loss of Rs 98bn, while some face total annihilation of their crops
ISLAMABAD: The devastating floods across the country have caused damage worth Rs 244.6 billion to the agriculture sector with maximum losses suffered by the small farmers of around Rs 98 billion, while some facing total annihilation of their crops.

This was revealed in the initial estimate prepared by the Ministry of Food and Agriculture (MinFA) on Monday in coordination with the provincial governments and Azad Jammu and Kashmir (AJ&K) government. However, the estimate prepared by the MinFA has also said that the agriculture loss could be higher in Southern Punjab and some parts of Sindh as clear pictures from many areas have yet not been received. The ministry has said that maximum damage by the floods has been made to the minor crops of Kharif season, which includes jawar, maize, moong and mash pulses and some citrus fruit varieties. “The most upsetting thing is that the minor crops are mainly cultivated by small farmers and in areas where growers have small land holdings,” said a senior official of the MinFA. “This loss is the most serious setback for the farming community because most of the small farmers have lost considerable number of livestock too as they had limited facility for their animals.” Among the major cash crops the ministry’s report highlighted that the largest loss of Rs 71.4 billion has been faced by the cotton crop.

Cotton was sown over 3.1 hectares in the current Kharif season out of which the floods have destroyed crops at 0.51 million hectares, as a result the production is expected to decline by almost 15 percent to 11.7 million bales as against the targeted cotton production of 14 million bales in 2010.

The Minister for Food and Agriculture Nazar Muhammad Gondal has said that Pakistan will face serious cotton shortage in coming days as more than 15 percent of the crop has already been hit by the floods.

“Two million bales have been destroyed in the floods in Punjab alone and we have yet to receive the complete details,” the minister added. The cotton crop has been seriously damaged in Bakkhar, Layyah and Mianwali districts apart from many other areas in southern districts of Punjab, while the left bank of River Indus in Sindh is the cotton belt and the cotton crops have suffered in Sukkur, Khairpur, Ghotki, Naushero Feroze and Benazirabad districts. The paddy crops in the country have faced a loss of Rs 56.3 billion and the worst hit areas are right bank districts of Sindh.

The countrywide paddy production is expected to decline by around 27 percent to 4.35 million tonnes as against the original estimated production of 5.95 million tonnes. Among the major crops, sugarcane farmers have suffered a loss of Rs 19.3 billion and its production is expected to decline to 47.23 million tonnes as against the estimated production of 54.83 million tonnes.

Pakistan Sugar Mills Association (PSMA) Chairman Iskander khan said that the initial reports suggest that the sugar cane crops in Charsadda, DI Khan and some parts of Southern Punjab have suffered damages. He said that 4 million tonnes of sugar production was expected in the coming season but now 3.8 million tonnes is likely to be obtained. The MinFA has estimated that the other serious issue faced by the country in the near future would be shortage of vegetables.[DailyTimes]

The economic losses of annihilating floods

 The economic losses caused by the deadly flood-the worst in Pakistan's history in almost all four provinces is yet to nail down. Significant losses are there for both people and the trembling Government.


Dr Salman Shah, Former federal Finance Minister, estimates that costs of rehabilitation of the flood-affected population and reconstruction of damaged infrastructure in different parts of the country could be in the range of $ 4 - 5 billion. Another economist put the figure between $ 3.5 and 4 billion. These losses are enormous when seen in the context of cumulative damages of about $ 6.5 billion in 14 floods since 1956.
According to Shahid Javid Burki, another former Finance Minister and ex senior Vice President of the World Bank, “we should get ready for another poor year for the economy, in the terms of the rate of the growth in the national product, pace of job creation and inter-personal and inter-regional income distribution. The government’s prediction that GDP in 2010-11 would increase by 4.1% now seems extremely optimistic. Given some of the shocks the economy has received in last few days, it appears that the national product will not increase by more than 2.5 to 2.8% this year. This will be about the same as the revised rate of growth in 2009-10. If that came about, Pakistan’s current economic expansion will be less than one half that of Bangladesh and one third that of India. Pakistan today is South Asia’s “sickest” economy and will remain that way unless the policy makers move decisively”. 

Agriculture knockout 
According to the spokesman of the World Food Programme, Amjad Jamal, “At least 1.4 million acres of crops were destroyed in Punjab. Many more crops were destroyed in North West and Sindh. The flooding has caused massive damage to crops and also to the reserves that people had in their houses. Khyber Pakhtoonkhwa was a ‘food insecure’ province even before the floods, and now in a lot of areas, people can’t afford even one meal a day”.

Damages, on the one hand, are likely to affect raw material supplies to the downstream industry that contributes to the export sector and, on the other hand, reduce the demand for industrial products like fertilizers, tractors, pesticides and other agriculture implements. And all this comes at a time when agricultural productivity has been falling over the years.

 If we include the figures of Sindh and Khyber province, the total goes up to more than 2 million acres. This is massive damage. Sugar cane, rice and cotton crops have been badly damaged. Agriculture experts are saying that farm production in Pakistan, Asia’s third-largest grower of wheat and the fourth biggest producer of cotton, may decline by 20 to 30% because of this damage. The losses to agriculture and livestock would have a spill over effect on industry and commercial activities to a great extent. This is because agriculture continues to play a central role in the national economy. Accounting for over 21% of GDP, agriculture remains by far the largest employer, engaging 45% of the country’s labour force.

As the flooding has been widespread, the damages to cotton crops may not be verifiable at this stage. Cotton, being a non-food cash crop, contributes significantly to foreign exchange earnings. It accounts for 8.6% of the value of agriculture and about 1.8% of GDP.

Sugar cane is a major crop, which is an essential item for industries like sugar mills, chipboard and paper. Its share in the value of agriculture and GDP is 3.6% and 0.8% respectively. Another cash crop, rice, is one of the main export items. It accounts for 6.4% of agriculture and 1.4% of GDP. High quality rice serves domestic demand and earns $2billion in exports every year.

Mostly small cities and towns surrounded by the villages have been affected. The big chunk of the economies of these cities and towns depend on the rural population. The rural population depends on agriculture for its economic survival. There are hardly any big industries in the affected areas. There are small industries which are also agricultural based and depend on agriculture for raw material. The economy of South Punjab largely depends on Cotton and wheat crops and mango orchards. The rural economy of Khyber Pakhtoonkhwa depends mostly on wheat and maize crops and also produces a large quantity of high quality fruits and vegetables. The vegetables have completely been wiped out and big damage done to the fruit orchards. The standing waters in the orchards are causing further damage to them.

The canal irrigation system has also been affected and water for irrigation might not be available to the farmers in many areas for the next crop.  

Small farmers suffer the most
The affected areas of South Punjab and Sindh are dominated by the feudal lords, who own more than 80% of the irrigated land. Small farmers and peasants make up the majority in the population. Some work as daily wage labourers in the nearby cities and towns. A majority of the workers either work as public sector workers or are employed in the agriculture-related small industries.

The small farmers and peasants will suffer the most from this disaster as feudal lords and big farmers will transfer the burden of disaster onto the shoulders of peasants and poor farmers. Feudal lords and big farmers have shifted their families to safe places in the cities but peasants and small farmers are suffering and facing the miseries of life because they have no means to move out of the affected areas. They have no place to go and are forced to live under the open skies. Poor people have been left with nothing and at the mercy of the state machinery for rescue and relief. They have lost their livelihoods and shelter. Now, the real problem will start for them when authorities start to the pay compensation and reconstruction money. They will be asked to provide ownership documents to get compensation for their destroyed homes and livelihoods which they can not provide because these lands belong to the feudal lords. These peasants have been working and living on those lands for generations but they do not own the lands. The destruction of crops means that they will be left without any food reserves or money for months to come. The government will offer cheap loans and other facilities to the feudal lords and big farmers, but nothing will be offered to poor peasants and small farmers. They will be left at the mercy of private money lenders and feudal lords to be fully exploited. These private money lenders and feudal lords will offer loans to these peasants and small farmers at very high interest rates. These peasants will be forced to work like slaves for feudal lords just for few thousand rupees. This disaster will further impoverish the hundreds of thousands of already extremely poor peasants and farmers.[DAWN]