Showing posts with label cotton. Show all posts
Showing posts with label cotton. Show all posts

Monday 20 March 2023

Pakistan: Agriculture Strongest Forte

Agriculture is the strongest forte of Pakistan’s economy. Over the years, the sector has played a key role in achieving food security, boosting exports and ushering foreign direct investment in the country. It provides raw material to two of the large scale manufacturing industries i.e. textiles and clothing and sugar.

The sector contributes around 20% to country’s GDP, accounts for more than 60% of total export-proceeds earned by the country and provides employment to nearly 45% of the total labour force. Pakistan ranks eighth worldwide in farm output - it is among the leading producers of Wheat (7th), Rice (11th), Cotton (4th), Sugarcane (5th) and Mango (4th).

The most important crops are wheat, sugarcane, cotton, and rice, which together account for more than 75% of the value of total crop output. Lately Pakistan joined the Club of wheat exporting countries by achieving over 25 million tons of the staple food grain per annum.

Over the years the government introduced agriculture assistance policies, including increased support prices for many agricultural commodities and expanded availability of agricultural credit.

Much of the Pakistan's agriculture output is utilized by the country's growing processed-food industry. The value of processed retail food sales has grown considerably over the years.

Lately Pakistan joined the Club of wheat exporting countries by achieving over 25 million tons of the staple food grain per annum. During the outgoing financial year Wheat output was a little below 25 million tons. Rice production was around 7.5 million tons. Maize crop size was reported around 7.3 million tons. Cotton and Sugarcane production remain below the target.

Wheat is staple food grain and many bakery products are made from it. This year due to some issues faced during wheat procurement, the quantity bought by the government remained below target. However, private sector purchased substantial quantity. It is necessary to point out that due to the shortage of modern gain storage silos; nearly 15% of the wheat produced goes stale before reaching the market.

Rice is the second main staple food crop and also another major exportable commodity. Pakistan produces different verities of rice, but Basmati enjoys a unique preference because of grain size and its aroma. Traditionally, Pakistan has been exporting rice in bulk which used to fetch lower price. Lately, many brand of rice have attained global recognition, but India continues to give tough competition in the global markets.

Red Chilli is a major crop of Pakistan as also exported in large quantity. Chilies are one of the largest traded spices in the International market. In Sindh, Chilies are mainly grown in Kunri, a small town of Umer Kot district. The area contributes around 85% of Pakistan’s red chili production and it is also known as one of the largest production centers for red chilies and also known as the red chilli capital of Asia. Export of red chilli can help in earning substantial foreign exchange.

Maize is also an important crop that can be cultivated on average quality soil. It is said that each and every part of the plant is consumed by human beings and animals. Two of the most consumed forms are oil and flour. It is also an important source of non-animal protein for chicken feed. At an average the country produces about 7 million tons of maize.

Soybean is an important source of edible oil. Seed is processed to extract oil for human consumption and its meal is a rich source of protein, primarily used as feed for poultry, dairy, beef and fish industry. Currently, soybean cultivation in Pakistan is highly negligible. Owing to its nutritional value and multiple uses, it is also called the “Golden bean”. Interestingly, all the soil and climatic conditions of all the four provinces are suitable for soybean. As the soybean can help cut edible oil imports to a significant extent, the Ministry of National Food Security and Research needs to launch a massive awareness drive at federal level in close coordination with provincial agricultural departments.

The contribution of agriculture in economy of the country can be further enhances by exercising better crop management, containing post-harvest losses by constructing modern storage and logistic facilities and achieving greater value addition. Developing a robust rural economy will also contain influx of people in search of job to cities, from rural areas.

Pakistan is among the top five largest cotton producing countries of the world. Pakistan is also known as ‘Cotton Country’. Cotton is the basic raw material for country’s largest industry, Textiles and Clothing, which contributes more than 60% to Pakistan’s total export proceeds. Bulk of the Textile and Clothing exports now comprises of value added products. Major buyers of made in Pakistan Textiles and Clothing are United States, European Union, China and some oil-rich Middle Eastern countries. Cotton seed-oil contributes a significant quantity of total edible oil produced in the country and oil-cake being used to feed mammals.

Sugarcane is the second largest cash crop of Pakistan. It is being cultivated in Punjab, Sindh and KPK. There are about 85 sugar mills operating in the country, producing over 4.2 million tons sugar annually, sufficient to meet the local demand. Two by-products of sugarcane are molasses and baggase. Bulk of the molasses is exported but lately many mills have also started producing and exporting alcohol, which is used in the production of biofuel. Baggase is commonly used in the production of chip board, an efficient alternative for wood. It is also used as fuel in brick kilns.             

 

 

 

Sunday 5 March 2023

Pakistan must get ready to import cotton

Cotton arrival in Pakistan decreased 34.5%YoY shows data released by the Pakistan Cotton Ginner’s Association (PCGA). The Government of Pakistan must announce ‘Cotton Import Policy’ at the earliest.

It may be recalled that in the past cotton import was allowed from India, but last minute change in policy causes serious problems for the millers and also plunged export of textiles and clothing from Pakistan.

According to the report, cotton arrival in Pakistan declined to 4.875 million bales as of March 01, 2023 as compared to 7.442 million bales during the same period last year, a fall of 2.567 million bales or 34.5%.

The decline in cotton arrival is attributed to the flash floods in Pakistan, which devastated large swathes of agricultural land in the country, especially in Sindh and Baluchistan.

Cotton is an essential raw material for the country’s textile sector and the situation is alarming for Pakistan’s cash-strapped economy, which is already facing depleting foreign exchange reserves.

As per the PCGA data, cotton arrival reported a steep fall in Sindh. Cotton arrival in the province was reported at 1.879 million bales.

Similarly, cotton arrival in Punjab was reported at 2.996 million bales as compared to 3.929 million bales a year ago.

Industrialists have expressed concern over the ongoing slump in the textile sector. All Pakistan Textile Mills Association (APTMA) has urged the federal government for a level playing field by implementing a uniform gas price of US$7 per MMBtu for the export industry across the country.

APTMA also warned that the decision of the government to suspend the regionally competitive energy tariff (RCET) of electricity for Export Oriented Units (EOUs) will hurt the textile industry, particularly in Punjab.

 

Tuesday 13 December 2016

A wake up call for ruling junta of Pakistan

Pakistan has an agro-based economy and the country is heavily dependent on imported energy products. As country’s trade deficit is mounting there is need to revisit government policies. The other alarming factors are: 1) extensive borrowing to meet the budget deficit and 2) deceleration in remittances. The added problem is that with the commencement of winter industrial units, particularly textiles units are likely to be a major sufferer and exports of textiles and clothing destined to plunge.
As stated earlier, Pakistan is heavily dependent on imported energy products; any hike in crude oil prices does not bode well for the country, though capital market analysts term the hike good for E&P and downstream companies listed at Pakistan Stock Exchange (PSX). A stronger dollar is likely to keep commodity prices in check, but also expected to make imported commodities more expensive.
Pakistan Steel is closed for months and there are no signs of its commencing production in the near future. Its price has posted 16.4%MoM increase in November, as Chinese producers re-align supply and the government implements a policy of curtailing supply.  This is likely to cause further hike in steel price, which does not bode well for Pakistan
Pakistan is a major user of coal, in cement industry. Coal price drop on Chinese relaxation on mining controls: After reaching a 5-year high, coal price has fallen to US$83.5/ton as the government asked the coal miners to lift up output till the end of end of winter heating season to counter the surging price. The coal price decline has remained slower as the Chinese coal producers were unable to ramp up production quickly due to medium-to-long term supply contracts and time to bring back coal mines into production. Nonetheless, normalizing of seasonal demand post-winters, will likely witness further fall in coal price as China will continue its policy to do away with coal based energy.
Fertilizer is one of the major industries of Pakistan and currently suffers from poor capacity utilization. Added to this is, extremely low international prices of urea, affecting the earnings of local manufacturers. In November its prices rose to US$224/tons as compared to US$201/tons a month ago.  While continuing to recover from lows of US$172/ton seen in July 2015, urea prices remain down 8%YoY as oversupply and weak demand continue. On the domestic front, recovery in international prices is likely to enhance pricing power of local manufacturers, who are already plagued by lower off-take. However, further recovery in off-take remains more likely to be a product of price reduction.
Global cotton prices during November remained higher as compared to last year (up 14%YoY) on the back of continued price recovery. The monthly USDA report featured an increase in global annual production up to 103.3 million bales and virtually no change to world mill-use, resulting in additions to global stocks. Following the global trend, prices in the domestic market remained on the higher side in November. Despite higher-than-expected phutti arrivals, prices of quality cotton move higher because of sustained buying by mills and spinners. Moreover, temporary ban on cotton import from India kept demand of local cotton robust.
This year Pakistan is likely get another bumper crop of wheat but of no benefit. While the surplus can’t be exported, post harvest losses are feared to increase due to inadequate storage facilities. Lack of supporting policies has failed in attracting investors to construct modern warehouses and collateral management companies. Absence of modern silos results in up to 20 percent post harvest losses. Saving this could boost income of farmers and also bring down price of staple grain n the country.