Current Issues in Agriculture

Agriculture and Technology Belated decision on wheat export

AFTER months of foot dragging on the issue, the federal government finally this week allowed export of one million tons of wheat and its products. But considering international market trends, the decision seems to have come at least three months late. No one is now sure whether the country can benefit from the decision. Even if it does, there is no scope for exports to touch the mythical figure of one million tons. Over the last few months, the Punjab government wrote to the federal government time and again for permission to export wheat. First, it wanted the private sector to export. But, later, as financial desperation mounted, Punjab wanted to export the commodity itself, and clear the massive stocks. The federation, however, kept de nying permission. Punjab wanted to grab an opportunity created in the world market during August this year, when the Russian crop had failed and the world prices peaked to $400 per ton. Traditionally, August and September are considered to be lean months in the world market for availability of wheat. The federal government, for purely political and Punjab-specific reasons, withheld the permission. It knew that Punjab finances would collapse if it does not clear its stocks. The province has been paying Rs80 million a day ? Rs2.5 billion a month, and Rs30 billion a year? To service wheat related Rs180 billion loans. The federal-provincial politics thus not only ruined Punjab finance to a greater extent but an opportunity was lost to earn foreign exchange and develop a niche in the international market. The international window, which opened in August, remained ajar till the beginning of the current month, as rains delayed harvest of Australian wheat ?second largest crop in the world. Once the Australian crop hits the world market, international price is bound to slide and make export of dearer Pakistani wheat more difficult. It was not only Russian crop failure, but a slight speculative pressure on wheat also helped drive prices up. Concerns about the next US winter crop, tightening the EU export supplies and mixed harvest results in Australia kept the prices high for a little longer than expected. These factors were in addition to world wheat production forecast of 644 million tons ?five per cent less than last year. All these factors put together created an opportunity for Pakistan and Punjab having biggest ever stocks. This week, wheat prices have come down to $324 and would go further below during the next two weeks when the Australian Wheat Board starts displaying its crop size and spot rates. The current rate of $324 per ton, translates into Rs27,500 per ton in domestic market. The official release price of little more than Rs25,000 leaves margin of over Rs2,000 per ton. But, the exporters have to get the wheat graded for export, which takes away 10 to 12 per cent of wheat. If transportation charges from Punjab are added, it does not leave any profit margin for exporters. Thus, at the present international price, which might not hold for more than two weeks, exports from Karachi might make little sense. Exports from Punjab certainly do not make financial sense, from where Rs300 per ton transportation charges are added. Apart from federal-provincial politics, the federal government must realise that exceptionally high domestic price of wheat has created a situation, where it would continue having surplus to varying degrees as long as it does not either

Page 1 of 11

rationalisedomes tic price or subsidise export. With current high domestic price and other incidentals charges added to it, export, would not make sense. Pakistan, particularly Punjab, needs to take a longterm view of the crop ?its future, export potential and possible markets. All big wheat exporting countries have created permanent institutions, like the Australian Wheat Board, to look after wheat exports. It is such institutions that continuously monitor wheat prospects throughout the world, deal in future buying of the crop and provide foreign buyers a platform to deal with producers and exporters. The need to create such institutions is underscored by three factors i.e. high domestic prices, massive and ever increasing stocks and domestic production, which, on an average, has gone up by around two million tons during the last four years. Thus, it is time for the federal and the Punjab governments to sit together and create a permanent arrangement for dealing with the crop on commercial lines..

Managing timely export

PAKISTAN has become self-sufficient in wheat and is able to export two million tons of the commodity. But the decision to export from the existing stock has come at a time when firm estimates about the size of current crop is yet to be available and the official procurement drive to gain momentum. It does not seem to be appropriate. Some analysts fear that wheat crop might be lower than its target of 25 million tons and the last crop of 23.5 million tons, due to drought and shortage of irrigation water. Others have shown optimism lately, saying that the wheat crop is going to be a bumper one and may be close to 23-24 million tons. The government of Punjab has raised its procurement target from four million to five million tons. However, according to some press reports, farmers in Sindh are not satisfied with the procurement arrangements and they are selling their produce to private parties against cash payments, even at a price lower than the procurement price of Rs950 per 40 kg. Following the government decision to export two million tons of wheat, buying by the private sector may pick up in coming weeks, possibly making it difficult for the government to achieve its procurement target. If the government s procurement target is not achieved and the private sector purchases bulk of the crop, artificial shortage of wheat accompanied by an increase in wheat/wheat flour prices may occur. The latest government decision to export wheat brings to the mind a similar decision taken a few years ago. The decision, at that time, was also taken in anticipation of bumper wheat crop. However, when final estimates were received, the crop turned out to be of a considerably smaller size. Accordingly, speculative elements were able to take full advantage of the situation. They created artificial shortage of wheat/wheat flour in the open market and sold their stocks at prohibitive prices. As per the government s decision, wheat was exported at a time when the international wheat prices were at a lower level. Later, when the government had to import wheat the same year to meet the shortfall, it had to pay considerably higher price for the imported wheat, since the international wheat prices had risen by that time. While announcing the decision, the prime minister had observed that the decision would benefit the farmers. What the PM had actually meant was that because of the export demand for two million tons, prices of wheat would not witness decline and wheat growers would continue to receive a good price for their produce. It was to achieve the same objective, when the government of Punjab lately decided to raise its procurement target from four to five million tons. It is, no doubt a step in the right direction to protect the interest of growers, so that they may be able to focus on maximization of production.

Page 2 of 11

However, at the same time, it is the duty of the government to safeguard the interest of the consumers also. It should, therefore, be ensured that export of wheat does not result in shortage and higher prices of wheat/wheat flo The ur. physical exports of wheat should not be allowed until the procurement target has been fully achieved. By that time, a clearer picture would also emerge about the size of the wheat crop and the government would be in a better position to consider as to how its export decision could best be implemented. Over the last one year between April 2009 and April 2010, availability of wheat/wheat flour had remained satisfactory and the price of wheat flour also remained stable in the open market. This was because the government had procured a higher quantity of wheat and, at the same time, it did not allow any export of the commodity during the year. Besides, upward revision of the procurement price of wheat from Rs625 per 40 kg to Rs950 per 40 kg also helped in checking the smuggling of wheat across the borders. Thus, the item remained freely available in open market throughout the year, although at a higher price. The international wheat prices currently stand at a considerably lower level. According to online reports, US and EU wheat prices stand at $197 and $169 per ton, respectively, while top-grade wheat could attract a price of $225 a ton. These prices, when converted into local currency at the exchange rate of Rs85 to a dollar, work out to Rs14 to Rs19 per kg. On the other hand, the local wheat procurement price stands at Rs950 per 40 kg or Rs24 per kg. It may, therefore, not be possible to export wheat at current prices, after buying wheat from the local market at Rs24 per kg and adding mark-up and transportation charges to the cost. But, world commodity prices have always been subject to fluctuations. According to online reports, lower wheat prices at the moment are attributable to higher global production/expected production from the 2009-10 wheat crop. Global wheat stocks are, also, expected to hit their highest level since the 1980 s. However, these lower prices are likely to prove a disincentive for the wheat growers at the time of sowing wheat crop, which could result in lower production from the 2010-11 wheat crop. Thus, there is a possibility that the international wheat prices could witness a rising trend once again in 2010-11, after remaining at a lower level in 2009-10. For a country like Pakistan having meager internal and external resources and a higher poverty level it is always advisable to attach the highest priority to food security. The government should avoid all such policies and actions th at could have an adverse effect on the availability and stability of food item prices.

Unaffordable fertilizer prices

THE prices of fertiliser have gone up in the market with the arrival of Kharif season in the Khyber-Pakhtunkhwa. Growers say that surge in prices of fertiliser, an important input in farm production, has become unaffordable for small cultivators. They fear that its consumption in cultivation may drop considerably hampering the per acre crop yield. To avoid the situation, they have demanded sufficient supply of fertilisers at lower rates through an improved delivery system. Abdur Rahim Khan, general secretary of the Sarhad Chamber of Agriculture (SCA), said farmers in the province were not getting fertilisers at subsidised rates. The government gives a subsidy of over Rs750/50kg on imported and over Rs300 on locally manufactured urea. The farmers complain that they are not getting any benefit. Instead, the commodity is being sold at much higher rates in the market. If the farmers do not get any benefit from the subsidy, then of what use it is, he asked? Though there is no shortage of fertiliser in the market, the prices have gone up enormously during the last three months. Majority of the farmers are subsistence farmers who have no money to purchase expensive fertilisers. If the government does not intervene immediately, it may badly impact the sugarcane, maize and other Kharif crops, fruits and vegetables and bring down per hectare yield as well as result in under cultivation of land, he asserted.

Page 3 of 11

The consumption of fertilisers is determined by soil, water availability, price trends and supply position. But the price issue usually is the main factor. The prices of urea has jumped from Rs730 to Rs840 per bag, DAP from Rs1,900 to over Rs2,600 while price of Zarkhez has gone up from Rs1,900 to Rs2,200 over the past three months, Khan added. According to the National Fertiliser Development Corporation, the monthly use of urea country-wide saw 8.8, 18.1 and 20.5 per cent decline from January to March as compared to the same period last year. The off-take of DAP dropped by 39.2 and 17.2 per cent in February and March as compared to previous Rabi season. Figures for Khyber -Pakhtunkhwa are not available but sources say the situation may have been even worse for the province. Farmers awareness campaigns are not needed on the issue. We know the importance of fertilisers. What we need is smooth, timely and cheaper availability of the commodity at the required time. Establishment of village agricultural centre, on the pattern of utility stores where all types of agricultural inputs are available to farmers, could solve the fertiliser supply problem, said a farmer. He said the government should try to improve the distribution mechanism. For this, it should closely work with farmers representatives and bodies. The private fertiliser companies should ensure a strict supervision of their dealer network. This, of course, will also requires that agencies and dealers should be provided enough stock of the commodity, he added. A marketing department official of a fertiliser company said that there were no official or controlled prices for fertilisers as it was a de-regulated industry. Domestic production of urea is less than the demand. Therefore, it is im ported and sold by the government itself through the National Fertiliser Marketing Limited (NFML). In case of delay in imports by the government, shortages may occur, resulting in higher rates in the market, he added. Regarding concerns that dealers are minting money by selling fertilisers at exhorbitant rates, he said the dealers were being monitored regularly and directed to sell products at company s prescribed rates. Any major irregularity or identification of any such an instance, results in strict action against the dealer which may lead to termination of his dealership. However, better planning and imports at right time by the government will ensure availability of urea at reasonable prices, he said. In Khyber-Pakhtunkhwa, the total off-take of urea and DAP for the coming Kharif season is estimated at 180,000 tons and 150,000 tons respectively. Federal minister for industries had told the Senate that the NFML supplied 41,956 metric tons of urea to Khyber-Pakhtunkhwa during September, 2008 to February, 2010. He said the body did not supply urea stocks to any area of FATA directly. However, he said, the NFML had 22 dealers in the province (in June 2003, there were 211 such dealers in the province). The government has deregulated fertiliser imports and its prices. But it needs to revive provincial quotas, restore provincial supply organisations in the public sector. The general sales tax on all fertiliser products will have to be waived off. The NFML should also open bulk stores in central and southern parts of Khyber-Pakhtunkhwa like those in Punjab and Sindh. This would facilitate the distribution system. It should also increase its coverage to more areas and assign dealership in other districts and Fata. The federal government had decided to offer the commodity to farmers through farm services centres but limited membership, insufficient outlets and lack of money with the bodies killed the initiative in the bud. To improve distribution of fertilisers, the bodies need to have more membership and more funds, argued a farmer from Charsadda. In areas where there are no farm services centres, district offices of the agriculture department should serve as provisional centres for fertilizers sales. Direct sales of the commodity to farmers have also been exploited by influentials. To check black-marketing and smuggling of fertilisers, daily reporting of quantity details to the district coordination officers should be ensured. Page 4 of 11

Problematic surplus wheat

A three-member committee of senior officials has been assigned the task of drawing up a strategy to utilise surplus wheat in the light of proposals received from different stakeholders.

Set up by the Economic Coordination Committee of the Cabinet, the body comprises federal secretaries for food, commerce and finance. Pakistan produced more wheat than it consumes this year. The carryover stocks from the last year added up to about five million tons of surplus. The government, the Federal Wheat Commissioner, DrShakeel told Dawn, procured offered wheat at the promised price, resulting in government having more wheat than its storage capacity. The government has yet to decide if it wanted to bring prices down to perk up demand of value added sector of wheatbased products ahead of Ramadan or find a suitable price and destination for wheat export to deal with abundance , DrShakeel, the Wheat Commissioner told Dawn over telephone from Islamabad. Yes, the proposal to supply atta bags worth Rs1000 under Benazir Income Support Programme instead of cash to deserving Pakistanis is also on the table along with other options. It is up to the secretaries committee to put the strategy before the cabinet which would take a final decision in this regard , DrShakeel explained, agreeing that the problem is both complex and critical. Nazar Mohammad Gondal, the federal minister for food told Dawn from Islamabad that the government has decided in principle to allow export of wheat. The decision regarding the timing and modus operandi for export will soon be made public , he said. The elected government has been able to improve wheat output by offering farmers an attractive support price. On the strength of comfortable supply position, it has also succeeded in stabilising price of the staple food. Atta (wheat flour), the byproduct used in making nan/roti (bread), is selling for Rs25 to 35 per Kg, depending on the quality and sale point. According to a rough estimate an average family consumes almost two kilogrammes of wheat flour a day and spends Rs1500-2000 on it in a month. The minimum wage has been pushed up to Rs7000 per month in May 2010 from Rs6000 earlier. The government, however, failed to manage the higher wheat output this year by making the wheat economy more efficient and competitive. Informal interviews of stakeholders by Dawn confirmed that the PPP government did not act effectively to utilise the current period of comfort when the crop size touched about 24 million tons, to break out of the boom/bust production cycles for a roti (local bread)-eating nation. The government was unable to generate additional domestic demand for the wheat based value added products or manage import orders to dispose off excess wheat stocks. Instead it procured more wheat than it could handle, dumping the procured crop at open spaces, risking damage and wastage of the valuable grain. Despite many viable solutions put forward by progressive growers bodies and others, the stranglehold of the vested interest was too strong to let new ideas to be experimented , Mehm Nawaz Shah of Sindh Abadgar Board, ud commented over telephone. There were complaints of widespread corruption in the provincial food departments and Passco. There was no effective monitoring or audit of procured stocks stored at different locations all ov the country. It was implied that there is er continued pilferage of wheat from these places.

Page 5 of 11

The high-placed officials outright dispelled such allegations. It is very irresponsible to implicate individuals without solid evidence , an officer in Islamabad responded. The PPP government raised the support price of wheat to Rs950 to encourage farmers to grow more wheat at the risk of a backlash from WTO that discourages direct government intervention in the market. The policy paid off and the country reaped a bumper crop of 23.86 million tons despite low per acre yield. The WTO, however, served on Pakistan a notice on complaint of wheat producing nations. Wheat exporting countries have sent a consultation reference under WTO provision of (Agreement on Agriculture) that Pakistan provided extra subsidy to wheat producers in the form of higher wheat support price , a source in the ministry of commerce confirmed. To support growers and build on stocks the government procured 6.7 million tons of the current crop, according to data provided by Wheat Commissioner Office in Islamabad. The covered storage capacity maintained by the government is said to be four million tons. The capacity is just about enough to store the last year s stock only and the crop procured during the current season has not been stocked at silos and storages. The government officers in the food ministry and other departments admitted that storage facilities are sub-standard. When contacted, NazarGondal said the government was aware of the situation and would announce some schemes to upgrade and build modern storages next month. Some relevant people pointed to a nexus of widespread corruption in the food departments and the federal ministry. There were vague indications of the involvement of influential personalities in corruption in the wheat sector. The better performance of agriculture sector could not be used to energise the manufacturing sector because of the government apathy and inefficiency , a progressive farmer from Multan commented. The incidents of atta (wheat flour) riots, violence at utility stores, long lines at sale points and attacks on certain godowns (storage sites) in cities of Karachi, Lahore and Quetta two years back are still fresh in collective memory of the nation. The lack of policy or snags in its implementation, particularly to improve storage capacity of agriculture produce, continue to pose risk to the food security in a populous country of 170 million people. The sudden spike in commodity prices in 2007-08, induced countries like China and India, to focus on building up their buffer stocks of essential food commodities. The dividends of better wheat crop could have been utilised had the government been equipped with a policy and streamlined institutions. Sadly, half way through the season, the government seemed to be groping in the dark, yet to move beyond committees and commissions , commented a disgusted economist. There is a need to improve wheat economy by cutting on wastages, diverting excess supply to value added s ector and improving competitiveness in the sector by streamlining supply chain. Consumers and producers of agriculture commodities take turns to suffer in consecutive years. The fact is that the powerful trader-babu nexus finds ways to mint money in situations of both abundance and scarcity , commented another commodity market watcher. According to Agriculture Policy Institute s Wheat Policy Analysis for 2009-10, Pakistan is the 8th largest wheat producer in terms of area and 6th in production but holds 49th position in terms of yield.

Sugar crisis brewing

Yet another sugar shortage is looming large ahead of Ramazan due to the government s inability to import the commodity according to national needs. Page 6 of 11

The consequences of the shortage are predicted to be harsh for both consumers and the government. Soon we will find consumers either paying very high prices for the sweetener or waiting for hours in long queues to buy it in small quantities at subsidised rates. It is difficult to say who is responsible: the Trading Corporation of Pakistan, the bureaucracy, business groups or people working on behalf of certain influential politicians? All players appear to have collaborated to manipulate the situation to their advantage and prevent the TCP from importing 1.2 million tons of sugar before the June 30 deadline. The Economic Coordination Committee of the cabinet, too, avoided pinning responsibility on anyone in its Tuesday meeting. Some very powerful people could be involved. The consequences of the shortage are predicted to be harsh for both consumers and the government. Soon we will find consumers either paying very high prices for the sweetener or waiting for hours in long queues to buy it in small quantities at subsidised rates. Though the authorities claim the country has enough sugar stocks to meet its needs over the next several months, retail prices are spiralling upwards in anticipation of the shortage. The government does not have the strategic reserves to intervene to stabilise sugar supplies and prices. Hoarders are already in for a big cut. Even if it wanted to, it would be difficult for the government to immediately import the commodity. If the TCP were to order it today, the earliest shipment would not reach Karachi before November. Earlier physical delivery would require the payment of a heavy premium on rising global sugar prices. The government missed the opportunity of importing cheaper sugar when the international market had bottomed out in May. Now desperation may force the government to take harsh administrative measures to show to the public that it is doing its bit to ensure smooth sugar supply at reasonable prices. That could prove counterproductive. We saw the commodity disappear from the market for days as a result of administrative action against sugar producers and dealers last year. It is advisable that the authorities quickly make arrangements for early imports even at higher prices to get a handle on the market.

Reviving KP's agriculture

REHABILITATION of farmers and revival of agriculture in the post-flood Khyber Pakhtunkhwa is likely to be handicapped for want of enough funds. The cash-strapped provincial government has neither received any support from the centre nor has the international community provided the required fund for the purpose. To cope with the devastation, the PK government has asked the centre to provide an initial amount of Rs10 billion. The floods have inflicted enormous devastation. Official estimates put the losses to crops, livestock and irrigation system at Rs12 billion, Rs7 billion and Rs10.6 billion respectively. Some other sub-sectors of agriculture have also suffered loss of a few billion rupees. Murad Ali Khan, president Kisan Board Pakistan, said the flash-floods have not only destroyed standing crops and orchards in Charsadda, Nowshera, Peshawar, Swat, Dir, Shangla, Dera Ismail Khan and other districts, but also made lands uncultivable due to accumulation of mud and water. In Lakpani area of Barawal in upper Dir, hundred of acres of agricultural land worth s billions of rupees have been washed away by the ravaging floodwater. This soil erosion is likely to lead to legal fights over ownership of the farmland holding up cultivation till the settlement of disputes. The destruction of irrigation infrastructure, like the Munda Headwork that irrigated around 0.3 million acres, is also a serious blow. ?With the main irrigation infrastructure destroyed and canals to remain closed for repair, there would be water scarcity for the next crops. This would mean little wheat crop,?added Ali Khan. Director Irrigation Muhammad Naeem Khan said the losses to irrigation infrastructure in all the ten major canal systems in KP amounts to Rs10.6 billion. ?The department is trying its best to do the necessary repair and cleaning work to restore water availability within a month,? addedNaeem.

Page 7 of 11

AbdurRahim Khan, secretary general of the KP chamber of agriculture, said farms will have to be cleaned from mud and leveled for cultivation. For the purpose, the government will have to provide sufficient support. That would not be an easy task keeping in view the fact that it would require sufficient funds, machinery and personnel. The floods have also damaged the livestock sector. An official of the livestock and dairy development department said the floods have killed 0.15 million heads of animals. The farmers have been deprived of an important source of income. It would also lead to shortage and increase in prices of meat and milk. ?The breaking down of he communication t system prevented farmers from transporting their farm produce to markets and these decayed in trucks on way or in fields,? Khan added. The disruption in supply of vegetables and fruit to market has also resulted in food inflation. The prices of vegetables, meat, fruit, wheat-flour and other food items have increased by about 30 to 100 per cent. An official in the KP?s ministry of agriculture said that all the affected districts are the main sources of wheat and maize, fruits, vegetables, sugarcane, rice, and livestock production. The wheat subsidy is Rs14.08 billion for this year. But it may need an increase due to a drop in local wheat production and increase in the import bill. Farmers have demand that the government should immediately restore the communication system; address the critical problem of demarcation and rehabilitation of fields and irrigation network. For this purpose, the government must arrange for tractors and other field leveling machinery to the affected farmers. The escalating debt burden of farmers also needs immediate attention. Farmers need to be provided free or subsidised agriculture inputs and fodder for their livestock. Agriculture loans of farmers should be written off or at least interest thereon should be waived. Easy farm and non-farm loans should be extended to small farmers to restart their businesses. Farmers in the flood affected areas also need exemption from riverine and abiana for a couple of years.

Wheat sowing may be delayed in Punjab

AS Punjab is focused on the cotton crop, and justifiably so, wheat sowing in the province might get delayed beyond prudent limits. At present, the entire attention of the Punjab Agriculture Department is riveted on saving cotton. It is still issuing repeated advisories to farmers for application of fertiliser. Cotton crop takes at lest 60 days to mature after the application of fertiliser. That means the crop would mature in the second week of November the most propitious time for wheat sowing. Its picking would take another 10 to 15 days, and then soil preparation for wheat another week or so. The sowing might thus be delayed till mid and even lateDecember, which, by no means, is desirable: after November 20, each day costs the farmer about 10 kilograms in yield. The factors forcing Punjab to save cotton as much as it can are truly compelling. The loss of every million bales deprives the rural economy of around Rs32 billion, increasing poverty correspondingly. It forces the textile industry to import thesame quantity at the cost of very precious foreign exchange. Since 60 per cent of exports depend on cotton, it is wise to save it to the last boll. To top it all, the farmers have done the hard work. They have nurtured the crop for many months and made huge investments on sowing, fertilisation and pesticides. They deserve return on their investment, and that is what the Punjab government is struggling for.

Page 8 of 11

But, the provincial government also needs to ensure that food safety is not compromised next year. The huge carry-over stocks (about six million tons at present) do provide it huge space for manoeuvering. But it maintained the stocks at a massive cost around Rs2.5 billion in per month interest payments to banks on a loan of over Rs200 billion. If it has to carry those stocks for next year s food safety, it is asking for huge financial trouble. It would thus be prudent to clear those stocks this year, and plan a better crop next year. Allowing, rather planning, delay in wheat sowing only because of substantial stocks would be a risky proposition. Another pressure that wheat crop might face this year is uncertain subsidy package for the flood-hit farmers. Though the Punjab government is preparing an elaborate package for farmers, which includes money for soil prepa ration, seed and even fertiliser, it is yet to find a donor for the money. The ambitious package would cost the provincial government around Rs10 billion an amount that it neither has nor can generate from its own sources. The donor is hard to find. The provincial government has already raised expectation by repeating range and depth of package for political mileage. If it could not find a donor in the next two to three weeks, it would end up compromising on the package, which might hit the crop at least in flood-effected areas. It has already restricted the package to flood-hit areas alone, excluding rain-effected areas. Any further, especially financial, restriction will affect wheat production next year. There are signs that wheat acreage might improve this year for a simple reason that farmers consider it the easiest crop and a sure investment, with almost ensured buyback surety by the government. It might be true that farmers in the flood-hit areas would avoid risking any new crop like canola as being advocated by the federal government. Rabi crops like potato, gram and cane might suffer to some extent in the flood-hit areas. The flood waters must have also increased fertility of the soil, which might help wheat crop to a large extent. Residual soil moisture would also be beneficial for the wheat crop, and it being a monocot crop might also escape other water problem like crust formation. The cooling down of temperatures in the country, especially during night, would help wheat grow efficiently. All these factors should make the wheat crop most favourite this season. But it still needs official patronage, which is currently drifting away from it temporarily at least. The province was able to grow around 18 million tons of wheat only when the Punjab government launched one billion rupees wheat maximisationprogramme, and literally focused all its financial, human and infrastructural resources on it. For the last two years, it has not only abolished the plan, but also was relatively ignoring the crop because of huge stocks that it could not clear from the 2007-08 yield. It reduced production last year by at least two million tons. There is still an uncertainty about the next crop, which is about availability of seed. Most of the farmers in flood -hit areas have lost seed. The food department does not separate wheat on the basis of seed. It just dumps everything together, and no one would know which seed will lead to what. The Punjab government is trying to involve federal seed institution to ensure germination strength of wheat, which the provincial food department would be providing as seed from its stocks. How these old and fumigated stocks, to be used as seed, would behave, no one knows at present. The government must realise that if there are benefits in saving cotton, there is some cost involved in delaying wheat sowing. If there are good signs for wheat crop, there are also question marks that make it uncertain. By adopting a strategy of planning a delay in wheat sowing, the provincial government would only elongate the list of uncertainties. Both crops are vital for the country, and the government must try to find a balance for the benefit of both crops.

Cotton growers seek early release of water

Page 9 of 11

LAHORE(October 09 2010): Pakistan can obtain at least one million additional bales o cotton if government releases f water in perennial canals during the current month, according to Pakistan Cotton Forum (PCF), a joint platform of growers, ginners and spinners. The forum said on Thursday that recent devastating floods might have damaged around 2.6 million bales of cotton one million bales in Punjab and 1.6 million bales in Sindh, reducing the current year s crop in the country to 10.7-11 million bales. The floods have affected a little over 13 per cent cotton growing area in Punjab and 35 per cent in Sindh, the PCF said. The government can help growers recover part of the lost crop by providing water to them during the current month, it was claimed at a meeting of the forum at the office of the All-Pakistan Textile Mills Association (Aptma). The meeting was attended by spinners, ginners, farmers, cotton scientists from the Punjab government and representatives of the Karachi Cotton Association. The damage to the cotton crop can be curtailed provided water is supplied to 61 per cent of the cotton belt having perennial canals till the end of this month, said Pakistan Farmer Association office -bearer FarooqBajwa. He said it would add one million bales to the crop. Punjab government expert DrAbidMehmood said that conditions for the cotton crop had improved in September and if a favourable weather might see additional production in the next three months. PCF chairman Mohammad Akber said cotton was in short supply worldwide, therefore, government should announce measures to improve productivity of standing cotton crop. He said water released for cotton this month could be adjusted in the next crop. It will save the country over billion dollars in foreign exchange, he added. Aptma chairman GoharEjaz warned of negative consequences of imp lementation of reformed general sales tax (RGST) on entire textile sector, saying it would ruin the entire industry. He said spinners would have to pay over Rs60 billion on purchase of cotton during October -December period. He warned that the trade concessions offered by the European Union would go waste if textile industry is brought under the ambit of the value-added tax. If the tax has to be imposed, it should be imposed only at the finishing stage, he said.

Flawed cane policy

THE Sindh government has again fixed November 1 for mills to start sugarcane crushing that will delay cane harvesting and wheat sowing. The delay in harvesting also affects the quality of cane and results in financial losses to growers. The cane starts losing weight after its period of maturity which is usually 9-10 months and the millers make unfair deductions in cane prices. According to Secretary Agriculture Sindh Agha Jan Akhtar, the Sindh government has fixed sugarcane price at Rs127 per 40kg for this year. Cane production is likely to be the same size as of last year although areas in upper Sindh s katcha belt and right bank of Indus have been hit by flood. The contribution of these areas in cane production, however, is not that big. Growers say as sugarcane area has increased by 10 per cent this year, cane production would have an edge over last year s production. The left bank sugarcane producing areas have been benefited by rains. Page 10 of 11

Sugarcane in Matiari district is ready for harvest. Even cultivation of ratoon crop is un way while sowing for next der year s cane crop has also started. The most serious aspect of the issue is the non-availability of land for wheat sowing due to delay in cane harvest. For wheat sowing mid-November is the most ideal time. For this, lands should be free from sugarcane at least 20 days before November starts for land preparations. But most millers ignite their boilers after November or by mid December, ignoring government instruction. If the Sugar Factories Control Act is anything to go by, crushing should start by October 1. Post mid-November sowing of wheat means 15 kg per acre per day loss in yield. Then comes January 15, sugarcane starts loosing its weight which means another loss to growers though millers would get more sucrose, argues cane grower from Matiari Haji Nadeem Shah.

Figures available with the Cane Commissioner Sindh office show that 32, out of 33 sugar mills crushed in 2009-10, 11.43 metric tons of cane to produce over 11,01,882 metric tons of sugar. The agriculture department s statistic 2009-10 show that cane was sown on 578,000 acres against 652,000 acres in 2008-09. But an agriculture department official fears that cane production this year would drop due to floods. Sugarcane needs 67 inches per acre of water. It is a cash crop that gives by -products like gur, molasses, chipboard, alcohol, paper and confectionary. It provides raw material for chemicals, plastic, paints, synthetics, insecticides, detergents. Pakistan is ranked fifth in world cane acreage and 15th in sugar production. A high delta crop, sugarcane is grown in perennial and non-perennial areas of Sindh and takes full one year to mature. Delay in harvesting requires additional supply of water for two to three months and growers have to divert the water towards the crop which would otherwise have been used for wheat cultivation. Land in Sindh has the potential to produce 1,850 maunds per acre but the average yield remains around 468 -507 maunds. Historically per acre yield has been recorded up to 2,350 maunds per acre but that was in the 1950s when the first sugar mill of the country was set-up in Tando Mohammad Khan. During that period 700 to 900 maunds of cane per acre used to be produced on an average because at that time the land was very fertile and the cost of inputs was within growers reach. Sugar consumption in the country is expected to be around 4.5 million tons this year, with a need to import around 1.2 1.4 million tons. The cultivators feel that with a fair price fixation mechanism, sugar import is avoidable. Pakistan, recalled Sindh Abadgar Board (SAB) president Abdul MajeedNizamani, had exported sugar in the past. The government should fix a fair price for cane after taking into consideration sugar prices of previous three years. It should also ensure that growers get the procurement price without any hassle, he said. The indifferent attitude of mill owners is forcing growers to opt for other crops and since 2007 -08, due to cane s payment problem, production is on the decline, argues Mehmood Nawaz Shah, general secretary SAB. He said varieties with better recovery rate should be promoted but it would only be possible when the government pursues a transparent sugar policy, safeguarding growers interests and increasing productivity. The growers future remains in jeopardy as they are exploited by middlemen to whom they have to sell their crop at a low price. The mills don t issue them indent for cane s supply. Growers emphasis is that cane payment receipt (CPR) should be treated as a valid financial instrument and should be acceptable by banks as cheque with 10 per cent margin. The idea is in the implementation stage in Punjab but the Sindh based growers demand is falling on deaf ears.

Page 11 of 11