Monday, 1 December 2014

Agricultural growth picks up

GOING by the expected outputs of key crops and developments in livestock and fisheries, Pakistan’s agriculture sector looks set to grow faster during this fiscal year than in the last year.
Senior government officials say performance of these sub-sectors is good enough to help boost agricultural growth to targeted 3.3pc in FY15, up from 2.2pc in FY14.
Even if the performance of minor crops (a part of crops sub-sector) or forestry (itself a sub-sector) remains below expectations, the overall agricultural growth should remain high driven by better output of major crops, livestock and fisheries, these officials insist.
Harvesting of two major crops, sugarcane and rice is nearing completion and that of cotton is in progress. Estimates show improvement in output of all the three crops. Despite some flood-related losses, cotton production up to November 15 has crossed 10.4m bales mark, with 10pc YoY increase. Government agencies, cotton growers, ginners, traders and textile millers offer varying estimates of final output. But even the most conservative estimate (by Suparco) puts it around 14m bales, against last year’s 13.4m bales.
Sugarcane output is estimated to be around 69m tonnes, after netting off flood-related losses of 725,000 tonnes, and rice production is going to exceed 8.4m tonnes, according to Suparco’s crops’ report released this month. Last year, sugarcane and rice production was 66.5m tonnes and 6.8m tonnes respectively, official stats show.

Three sugar mills have applied for licences to set up bagasse-based captive power plants of 30MW each, bringing the total number of such licence seekers to six


This year’s wheat output target of 25m tonnes has already been met which is why the government has set a higher target of 26m tonnes for the next year.
Better performance of key crops is attributable, in large part, to higher support prices, some increase in per-acre yield and larger agricultural credit disbursement. In the last fiscal year, banks’ gross agricultural lending totaled Rs389bn, up about 17pc from Rs333bn a year ago. During first four months of the current fiscal year, banks have already lent Rs128bn to agriculture sector and bankers say they are on course to meeting the full year target of Rs500bn.
A concessional bank lending programme for the farmers hit by this year’s flood, on top of a low mark-up loaning schedule for all small farmers and value-chain contract financing scheme introduced by the SBP are also contributing to agricultural growth, besides making agro-based industries richer.
Rising incomes of agro-based industries is encouraging them to invest in such priority areas like power generation in the private sector. Recently, three sugar mills have applied for licences to set up bagasse-based captive power plants of 30MW each, bringing the total number of such licence seekers to six.
Private sector’s modest investment in farming, fish hauling and processing, livestock breeding and production of value-added dairy and meat products is also providing impetus to agriculture’s growth.
In livestock sector, not only production of milk and meat continues to grow but entry of many small and mid-sized dairy and meat processing companies is also keeping growth momentum intact. Production of packaged milk, though still below 5pc of the country’s total milk supply, is growing despite the recent hike in prices.
Poultry sector’s growth this year may be somewhat lesser than the last year’s as the floods have damaged hundreds of poultry sheds and killed thousands of poultry birds. Besides, imposition of tax on poultry feed and rising cost of electricity supply has acted as a dampener to growth momentum. But demand has so far remained strong and sales of packaged poultry meat is rising. In a sharp contrast, loss of cattle heads during this year’s floods has been minimal, so milk and meat production is expected to grow, officials say. Sales of dairy and meat products continue to get a boost also due to the ongoing expansion in superstores networks and exports are also on the rise.
Though, fisheries sector’s structural problems like over-fishing and lack of facilities at fish harbours persist, investment by fish exporting companies in processing facilities and investment in small inland fish-farms have improved fisheries performance and given boost to seafood exports.
One important issue, however, is ongoing smuggling of Tuna fish from Gwadar to the Iranian markets. Representatives of fishermen claim this is causing an annual loss of no less than $40-45m.
On balance, agriculture sector is apparently on the course of targeted growth. But keeping in view the fact that industrial sector’s performance this year has so far remained subdued (with LSM growing just 1.86pc in Q1FY15 against 6.64pc in Q1FY14), execution of agricultural growth policies and development plans need to be accelerated.
In this context, slow development spending (Rs102bn PSDP funds released till mid-November against full year target of Rs525bn) and slower transfers to the provinces from federal divisible tax pool, (down to Rs311.4bn in Q1FY15, from Rs322.7bn in Q1FY14) look quite odd as they are jeopardising development plans including those in agriculture sector.
Examples abound: construction of multi-purpose concrete and steel silos on public-private partnership is being delayed, upgrading of farm-to-market roads in Sindh and Balochistan is not progressing, inland fish farming projects there are also not being pursued vigorously and research projects for developing seed varieties and boosting per-acre yield of crops have been hit, official sources say.
Published in Dawn, Economic & Business

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