Attock Petroleum to post robust results

Attock Petroleum, Pakistan's rather small oil marketing company,  is scheduled to announce third quarter results on Thursday. Analysts forecast robust earnings growth. What is there for you? Visit shkazmipk.com to see details of forecast.

Pakistan: New Vistas in Agriculture

Pakistan is among the top producers of cotton, rice, sugarcane, wheat, mango, kinnow (tangerine) and some other crops. The country is also among the top ten largest producers of milk. However, nearly 10 percent of food grains and up to 40 percent of fruits produced goes stale before reaching the market. Only 5 percent of total milk produced in the country is packed in tetra packs. This on one hand deprives growers of their rightful return and on the other hand does not allow the country to earn foreign exchange, needed most desperately for the economic growth.

 

In an attempt to help the farmers boost production and yield, the State Bank of Pakistan (central bank) embarked upon ambitious agri lending program. Now the annual disbursement to farmers is inching close to Rs400 billion or US$4 billion. The endeavor is fully supported by insurance companies operating in the country. This initiative has helped Pakistan in joining ‘club of wheat exporting countries’. At the close of current sugarcane crushing season, refined sugar output is likely to touch 4.7 million tons with exportable surplus of 0.5 million tons. The country is also likely to get nearly 13.5 million bales of cotton. Pakistan is already exporting huge quantity of rice, especially ‘Basmati’, with unique aroma. However it continues to import edible oil worth US$2 billion annually.

To further reinforce support to farmers the central bank offers loans for construction of modern warehouses on concessional interest rate. The need for warehousing facilities can be gauged from the fact that Pakistan produces nearly 40 million tons of different cereals, out of this wheat alone accounts for 25 million tons. As against this, the country has warehousing capacity of around 5 million tons. Storage of grains in ‘technical not fit warehouses’ is the single biggest reason of nearly 10 per cent going stale and not being suitable for human consumption.

In yet another initiative the central bank has formed a working group for developing ‘Warehouse Receipt Financing’. The working group will have representatives from leading commercial banks, Islamic banks, International Finance Corporation (IFC). The central bank aims at working closely with Pakistan Mercantile Exchange (PMEX), financial institutions, farmers and other stakeholders to structure and rollout system of warehouse receipt financing in the country on fast track basis. 

Deputy Governor of the SBP, Saeed Ahmad recently chaired a meeting on formulation of the Group. Talking to the representatives of different stakeholders, he said “Adoption of warehouse receipt financing system would facilitate development of efficient and accessible rural financial system. Development of physical trade and marketing system of commodities would improve performance of the agricultural sector. Financial institutions would find it profitable to lend money for the construction of new warehouses”.

This initiative offers tremendous opportunities to companies involved in this trade around the globe. These entities can form joint ventures with Pakistani entrepreneurs by involving IFC; mobilize funds globally or by listing the companies at the Karachi Stock Exchange. Central bank already has a plan for extending soft-term loans for the construction of warehouses. Those interested in construction of warehouses can also approach National Bank of Pakistan enjoying the largest share in lending to farmers for inputs and developmental work.

For details contact Shabbir Kazmi at shkazmipk@gmail.com or call 92-300-8980112

Pakistan awaits foreign investment in sugar industry

Pakistan is an agrarian society and two of its large scale industries, textiles and sugar, are agro based. While textile and clothing industry contributes around 60% to country’s exports, sugar industry remains the driving engine of rural economy.
Two of the leading sugar producing countries, Brazil and India, are likely to face substantial reduction in sugarcane output due to drought like situation this year. As against this Pakistan is expected to get bumper sugarcane crop, especially in Sindh. Historically, the province has been producing sugar much above the demand and also has the potential to export sugar as well as molasses.
It is important to note that Pakistan has an installed capacity to produce 9 million tons sugar annually as against an estimated demand of around 4 million tons. However, the mills have been working at around 50% capacity utilization due to shortfall in sugarcane production.
Pakistan looks forward to those foreign investors who can help in achieving higher sugarcane production by boosting yield. At present the country gets around 55,000tons/per hectare, which is low as compared to the global average. While recovery in Sindh ranges from 8.5% to over 10.5%, recovery in Punjab hovers from 7.5% to around 10.5%.
Ideally, Pakistani millers intend to produce more molasses for export because its local consumption is relatively low. The added advantage is that if the country succeeds in boosting production of molasses and ethanol. Popularizing E-10 use will also enable the mills to crush more sugarcane, which will improve production of sugar in the country. Better capacity utilization will help in optimizing cost of sugar production.
Pakistan also faces acute shortage of electricity and sugar mills can collectively deliver more than 3,000MW electricity. If this option is used not only income of mills will improve but earnings of mills as well as farmers will also improve.