Friday, October 29, 2010

Agriculture and Textiles Employ Most Indians and Pakistanis

About 60% of India's workforce is in agriculture. Textile industry is the second biggest employer, accounting for a fifth of India’s exports, and employs almost 10 percent of India’s workforce, or some 35 million people, and has the potential to add another 12 million new jobs --dwarfing the 1-2 million jobs created by the much-heralded IT and BPO sector, according to a World Bank report.

The largest number of people in other South Asian nations are also employed in the agriculture sector, followed by textile manufacturing as the second largest employer.

About 60% of India's workforce is engaged in agriculture, contributing about 16% of GDP, according to published data. Textile manufacturing claims the second largest employment and comprises 26% of manufacturing output. It accounts for a fifth of India’s exports, and employs almost 10 percent of India’s workforce, or some 35 million people, and has the potential to add another 12 million new jobs --dwarfing the 1-2 million jobs created by the much-heralded IT and BPO sector, according to a World Bank report. Even the most optimistic estimates by NASSCOM put the total direct and indirect employment in IT and ITES sectors at 10 million jobs.

The textile sector is crucial to India's economy. The textile industry contributed 4% of India's gross domestic product in the year that ended March 31, and accounted for 13.5% of Indian exports, bringing in $17.6 billion, according to the Wall Street Journal.

With the Indian rupee soaring — up 9 percent against the dollar in the last 16 months, textile exports are down 6.4 percent from a year earlier in the $10 billion Indian clothing industry, according to a recent report in the New York Times.

About 23% of the India's workforce is part of the services sector which accounted for 55% of the GDP in 2007. Within the service sector, the fastest growing segment is business services, contributing about 7% of GDP. It includes information technology enabled services (ITES), information technology (IT), business process outsourcing (BPO) etc. In 2000, it was one third of the total output of services.

Agriculture in Pakistan accounts for 19.4% of GDP and 42% of labor force, followed by services providing 53.4% of GDP and 38% employment, with the remainder 27.2% of GDP and 20% workers in manufacturing sector. Over half of Pakistan's manufacturing jobs are in the textile sector, making it the second biggest employer after agriculture.

The dire situation in India's agriculture sector has been epitomized by over 200,000 farmers' suicides in the last decade. And the rising Indian rupee is now hurting India's textile sector by making its exports more expensive in the world market.

Pakistan's agriculture and textile sectors have also suffered in the last two years. Reduced water flows from India followed by recent floods have adversely affected large swathes of Pakistan's farmland. And the current energy crisis combined with the economic slowdown have hit the textile industry particularly hard. The European Commission, the EU's executive, has recently approved tariff waivers on 75 categories of imports from Pakistan for up to three years, according to a report in the Wall Street Journal. The gesture followed an order by EU leaders wanting to demonstrate they're helping some 10 million Pakistanis left without shelter in the wake of floods.

Pakistan shipped about $4.2 billion of exports to EU last year. About 75% of Pakistani exports to EU are textiles, clothing, leather or related products, and those goods will make up a majority of the roughly $140 million in total extra trade the EU says the deal will generate from eliminating the EU tariffs.

Here is a quick comparison of different sectors of the economy in India and Pakistan in terms of employment and GDP contribution:

Country....Agri(emp/GDP)..Textiles..Other Mfg..Service(incl IT)

India........60%/16% ...........10%/4%.....7%/25%...........23%/55%


Assuming India's PPP GDP of $3.75 trillion (population 1.2 billion, nominal gdp $1.3 trillion) and Pakistan's $450 billion (population 175 million, nominal gdp $167 billion)), here is what I calculated in terms of per capita GDP in different sectors of the economy:

India vs. Pakistan: Per Capita GDP $3,125 PPP ($1,083 nom) vs. $2,570 ($955 nom)

Agriculture: $833 PPP ($288 nom) vs. $1,225 PPP ($454 nom)

Textiles: $1,242 ($433) vs. $1,714 ($636)

Non-Textile Mfg: $11,155 ($3,870) vs $5,785 ($2,142)

Services $7,246 ($2,590) vs $3,654 ($1356)

Data shows that the majority of Indians who work in agriculture and textiles are on average 50% poorer than their Pakistani counterparts, as also reflected in the under-$2 a day per capita income figures for 60% of Pakistanis and 76% of Indians.

Agriculture Value Added Per Worker in Constant 2000 US$ (Source: World Bank

It also shows that Indians in manufacturing and services sectors add almost twice as much value as Pakistanis, and produce significantly higher value goods and services than their Pakistani counterparts.

The income range in India is much wider from $883 to $11,155 accounting for the much bigger rich-poor gap relative to Pakistan's relatively narrower range from $1225 to $5,785.

The challenge for India is to improve its farmers' productivity and move some of them into higher value added sectors of the economy.

The challenge for Pakistan is to have its manufacturing and services sectors produce more goods and services of higher value, and continue to migrate more of its farmers into other sectors of the economy.

It's clear that farming and textiles continue to be the most important economic sectors with the biggest impact on the lives of the majority of ordinary citizens of India and Pakistan. And just as the US and EU look after their farmers, it is very important for South Asian governments to protect their farming and textile sectors even as they promote diversification of their economies.

Related Links:

Haq's Musings

Pakistan Textile Industry Report

Pakistan's Farmland Controversy
Peepli Live and India's Farmers' Suicides

Floods in Pakistan
Pakistan's Textile Woes

Agricultural Growth in India, Pakistan and Bangladesh

KPMG Report on Pakistan Economy 2010

India and Pakistan Contrasted
Pakistan's Major Business Sectors
Labor Laws: To Create Good Jobs, Reform Labor Regulations

Foreign Investors Buying Pakistani Farm Land
Is Leasing Agricultural Land to Foreigners a Good Idea?

Pakistan's Sugar Crisis and Dietary Habits

Wheat Research and Development in Pakistan

Pakistan's Water Crisis

Wheat Productivity, Efficiency and Sustainability

Agrarian Reform in Pakistan
Urbanization in Pakistan

Water Scarcity in Pakistan

Pakistan Agribusiness Report 2009

Pakistan to Lease 700,000 Acres to Arab States

Pakistan's Total Arable Land


AKram said...

India's exports is expected to cross USBD 2000 in 2010-11. Can you pls give a breakup of india's export. From what I read India's manufacturing exports of engineering goods like Motorcycles, scooters, Cars, Locomotives, Aircraft Parts is quite impressive.

Riaz Haq said...

Akram: "India's exports is expected to cross USBD 2000 in 2010-11."

$200 billion is the target for India's exports in 2011, according to ADB, about 20% of it in engineered goods, about the same or slightly more than India's textile exports.

Overall, India imports most of its infrastructure machinery (power, telecom, construction equipment, etc) and defense armament and runs huge trade deficits. An example is a recent $10 billion contract by Reliance Power to import power plants from China.

India’s current account deficit tripled in the June quarter as imports soared, raising the spectre of volatile currency when the tide of overseas fund flows turns, according to Times of India.

Interest rate differentials between the domestic market and the developed nations raised the external debt too as companies found it beneficial to borrow in dollars. Widening deficit may make the central bank’s job of ensuring stability in the foreign exchange market, inflation and interest rates tough, economists say.

Current account deficit in the June quarter widened to $13.7 billion, from $4.5 billion in the year earlier, a data released by RBI showed. Current account in the balance of payments measures the net position of a country’s exports and imports of goods and services.

Anonymous said...

Overall, India imports most of its infrastructure machinery (power, telecom, construction equipment, etc)

India imports most of its telecom equipment but produces most of its power,construction equipment.

India has the capacity of producing 15,000MW of power equipment per annum with 10,000 MW pa of additional capacity on line in the next 2 years,due to unexpectantly high growth(9%+)the demand for electricity has shot up and the capacity addition is now 20,000MW pa the chinese equipment import is 5000MW pa to bridge this short fall.Expect very high import tarrifs when the surplus capacity comes on line on one pretext or the other.

India is a net EXPORTER of construction equipment and the sourcing centre for both Caterpillar and Komatsu,other than few niche high end items like tunnel boring machines like the one used in delhi metro construction we are equipment surplus.

As for trade deficit as discussed in your previous funds the net flow of funds is positive which is why our FX reserves are rising.

The $300 bn+ FX reserves let us easily ride over a few quarters of occasional negative fund flow.

Due to Quantitative Easing i.e printing money going on in the West there is a huge amount of cash being pumped in to emerging markets India's problem isn't attracting FII (Sensex crossed 20,000) its restricting FII to prevent rupee appreciation.

Riaz Haq said...

Here's a 2009 SF Chronicle report about the impact of textile downturn in India:

Coimbatore, India — The trouble began far away from the leaky concrete house and stand of banana trees that Sakunthala Radhakrishnan calls home.

In 19 years as a textile worker in southern India, Radhakrishnan saved enough to buy gold jewelry. She sent money to her parents and fattened up her skinny daughter with fancy energy drinks. And she secured for her child a gift she herself never received: an English-language education.

But seven months ago, the better life her family was crawling toward got yanked out of reach. After the U.S. financial crisis erupted thousands of miles away, the textile factory where she and her husband worked closed because orders dried up and credit tightened.

"It's a distant dream since I lost my job," she said. "I suffer mental depression."

Radhakrishnan, 34, and her husband found new jobs as day laborers - she at a smaller textile factory and he as a welder. But their family income has plunged by nearly half, from $160 to $90 a month. Now they could lose their home and have to rely on the government for food.

For years, textile jobs helped tens of millions of Indians like Radhakrishnan clamber onto the bottom rungs of the nation's fast-expanding middle class. Textiles are India's second-largest source of employment, after agriculture, accounting for over 35 million jobs - far more than the 2.2 million in India's high-profile information technology sector.

Now, the global economic meltdown is pushing Radhakrishnan and many others back.

The IMF estimates that the slowdown has already driven more than 50 million people globally into extreme poverty. In India, slowing growth means at least three million people won't be lifted out of poverty this year, and some of the 200 million who live just above the official poverty line could slip below it, according to the U.N. Development Program.

Experts warn the social damage could be long-lasting, as parents scrimp on medical care and pull their children from school.

"This will affect a generation," said Ajay Chhibber, assistant secretary general of the U.N. Development Program in New York. "A girl who drops out of school will be an illiterate mother the rest of her life. ... You had a financial crisis. It's now become an economic crisis. The next phase of this in 2009 will be a social crisis."

Many in the textile belt of south India's Tamil Nadu state have seen their incomes roughly halved, to about $1.50 a day, as factories hit by declining exports and tight credit cut production, are forced to reduce payrolls and eventually close down. Distribution of government subsidized food in the area has shot up, and people are taking out loans and hocking jewelry to meet expenses.

India's public schools are notoriously poor, and many parents work hard to send their children to low-cost private schools that teach English. Now they are pulling them out, cutting off the next generation from what has been the surest ticket to a better life in India: the English language.

During the boom years, textile factories in Tamil Nadu's Coimbatore region could not get enough workers. They sent buses to nearby villages, picking up workers for thrice-daily shifts. In 2005, mills began holding recruitment fairs hundreds of miles away, in Tamil Nadu's impoverished south. Laborers poured in from poor states like Bihar and Orissa. Even on $3 or $4 a day, many built houses and put their children in private English-language schools.

Anonymous said...

Riaz I suggest you focus on the sob stories of the 20 million Pakistanis effected by floods in pakistan than the plight of people in the textiles industry of India.

Besides 2009 was the height of the slowdown of late things have improved but unless demand returns to pre crisis levels in the west ALL textiles industries of ALL countries will be affected not just India.

Anonymous said...

^^ Amen Bro

I think it is kind of an inferiority complex of Pakistan hearts of hearts they know they have failed as a people and a nation so they constantly find faults with India to feel good about themselves.

Anyway the good news is we will in all probability grow faster than China as per IMF this decade starting next year!

This is primarily due to base effect &demographic aging i.e China with per capita income $4000 vis a vis our $1200 will slow down and the dependency ratio will go up dramatically in China due to one Child policy while our dependency ratio has just begun falling.

Hopefully we can be 50% of China by 2025 which automatically makes us the world's third largest economy.

I think we should just focus on this and just ignore Pakistan.

Anonymous said...

Riaz Bhai

Sanjay said...

Your friend THomas Friedman again pimping for India.

Will anybody ever pimp for Pakistan.

Riaz Haq said...

Sanjay: "Your friend THomas Friedman again pimping for India."

Here is what an American traveler-blogger Sean Paul Kelley says about Tom Friedman's India hype:

Alrighty, so now I am in Bangalore, the IT capital of India. It is absolutely nothing like what Tom Friedman depicts in his book. I've taken a boat load of photos to prove it. I'm really beginning to think he flew here in a private jet, was picked up at the airport in a limo with blackened windows, taken to the Infosys and Tata facilities and then the golf courses and his 5 star hotel and then left, without ever once walking the streets of the city or having tea down on the corner.

But I promised not to obsess on him. So that's it for now.

I didn't make it out of Bangalore as I had hoped. Serendipity intervened and I'll be heading to Hampi tomorrow night at 1030. So, I'll make a day of it tomorrow and see what there is to see in the city and then head off to the ruined capital of the Vijayanagar Emperors. More soon.

Riaz Haq said...

Here's an Op Ed by Ananya Mukherjee-Reed on Kerala women, an Indian state with the highest social indicators in India and most of the developing world:

Some 250,000 Kudumbashree women throughout Kerala have come together to form farming collectives which jointly lease land, cultivate it, use the produce to meet their consumption needs and sell the surplus to local markets. Currently, these collectives are farming on an approximate area of 25000 hectares, spread throughout the 14 districts of Kerala. The idea is to increase the participation of women in agriculture, and in particular, to ensure that women, as producers, have control over the production, distribution and consumption of food.

This strategy for involving women in agriculture comes at a very crucial time for Kerala. As in most parts of the world, vast quantities of Kerala's agricultural land has been diverted towards residential and commercial development. At the same time, fall in agricultural prices and rising wages have made farming an unprofitable activity - leading to a continuous fall in food production in the state. It is in this context that Kerala has developed its food security strategy. Unlike the standard approaches to food security; it goes beyond the question of food distribution to the realm of food production. Indeed, as global movements like the Via Campesina have been trying to assert, unless the production of food is enhanced and the real producers of food have control over the food economy, there can be no food security.

As I travelled through Kerala, it seemed to me that Kudumbasree farmers are emerging as key actors in this attempt to rejuvenate the agrarian economy. They are bringing back land for agricultural production through their collective organisation. Slowly but surely, the connections between local livelihoods, local markets and local consumption are being reinvigorated. As I travelled, my intention was not so much to ‘assess' Kudumbashree, but to understand what the experiments might mean concretely to its protagonists.

For most of the 250 women I have met so far, farming is a not new vocation. But for some, this is the first time they are working for an income. For others, this marks a very important transition from their role of an agricultural labourer. "Earlier we were just labourers. Now we have hope," says Savitri, a landless dalit woman in Palakkad district. The 'hope' that she speaks of comes from her new role as a 'producer' and farmer. Now she works for herself and her group, on the land they have collectively leased. "As a labourer, I knew there was only work, only hard labour and nothing to gain at the end," she says. In Idukki district, I met several women who have given up working as wage labourers since they have taken up farming. There is much enthusiasm for expanding their farming activity, although land remains scarce.

Anonymous said...


I think as India develops farming should be concentrated in 2-3 states like Punjab and UP/Bihar.

The rest of the country should be industrializd and the agro output should be in cash crops etc from there.Farms being converted to factories is a good thing and should be celebrated.

gunam said...


Positive side of the statistics is that the service sector of india does more value added service than pakistan as in india 23% contributes 55% and 38% constitute 55%

Emerging middle class has created job opportunities for nanies and permanent house maid who in turn are getting well paid.

Riaz Haq said...

gunam: "india does more value added service than pakistan as in india 23% contributes 55% and 38% constitute 55%"

The more productive 23% in India's services sector constitute a much smaller population than the 70% of Indians in agriculture and textiles who are much less productive than their counterparts in the vast majority of Indians continue to suffer from extreme poverty, hunger and disease.

About 60% of India's workforce is in agriculture. Textile industry is the second biggest employer, accounting for a fifth of India’s exports, and employs almost 10 percent of India’s workforce, or some 35 million people, and has the potential to add another 12 million new jobs --dwarfing the 1-2 million jobs created by the much-heralded IT and BPO sector, according to a World Bank report.

The largest number of people in other South Asian nations are also employed in the agriculture sector, followed by textile manufacturing as the second largest employer.

About 60% of India's workforce is engaged in agriculture, contributing about 16% of GDP, according to published data. Textile manufacturing claims the second largest employment and comprises 26% of manufacturing output. It accounts for a fifth of India’s exports, and employs almost 10 percent of India’s workforce, or some 35 million people, and has the potential to add another 12 million new jobs --dwarfing the 1-2 million jobs created by the much-heralded IT and BPO sector, according to a World Bank report. Even the most optimistic estimates by NASSCOM put the total direct and indirect employment in IT and ITES sectors at 10 million jobs.

The textile sector is crucial to India's economy. The textile industry contributed 4% of India's gross domestic product in the year that ended March 31, and accounted for 13.5% of Indian exports, bringing in $17.6 billion, according to the Wall Street Journal.

gunam said...


India is using the funds for the benefit of poor in various government scheme but the unfortunate part is the corrupt politician

Anonymous said...

the 70% of Indians in agriculture and textiles who are much less productive than their counterparts in Pakistan...

Then how do you explain India's much higher yield/hectare(double) vis a vis Pakistan if Indians are less productive?

Anonymous said...

.so the vast majority of Indians continue to suffer from extreme poverty, hunger and disease

Even pakistan according to your statistics is only very slightly better as per 2008 data and based on past 2 years of chaos its reasonable to believe slightly worse than India right now on most if not all parameters.

Anonymous said...

gunam: "india does more value added service than pakistan as in india 23% contributes 55% and 38% constitute 55%"

You can't compare India and Pakistan with these figures riaz has put up.

That 23% of India contributes 55% of GDP vs 38% in Pakistan does not tell us anything.

Output/Input is the measure of efficiency in which our services and industry is superior to even China.The ROI from investments in India both as per profits/cap ex and appreciation of shares is 45% and 120% greater than China respectively.

Agriculture in India on the other hand is very primitive compared to China with yield/hectare 1/3 of China even though we have better quality land.Though it is still 1.5-2 times more productive than Pakistan with its Serf-Feudal rural social structure,minimal investment in hybrid seeds and low fertilizer subsidies vis a vis India.

Riaz kindly substantiate how Pakistani agriculture and textiles industry are more advanced/productive than India's????

Anonymous said...

The key is to move people from areas like agriculture to manufacturing and services industry while keeping the total output of agri same on higher. Just extrapolating from Haq's numbers,

Country..Agriculture(per capital GDP)...Textiles...Other Mfg.....Services

India........ 820.82 ......... 1,231.22 ..... 10,993.07 ........... 7,360.58

Pakistan...... 1,222.26 ........ 1,711.17 ...... 5,775.19 ........... 3,647.49

This shows that per capita GDP in Manufacturing and Services sectors in India is almost double of that in Pakistan clearly highlighting the avenues that India should target for growth and work force migration, where as in areas of Agriculture and Textiles, its higher in Pakistan.

Riaz Haq said...

anon: "Then how do you explain India's much higher yield/hectare(double) vis a vis Pakistan if Indians are less productive?"

The only way to explain your claim is that Indian farming is probably more manually intensive and employs a lot more farm workers to get the extra yield that you claim.

The average productivity data shows that Pakistani farmers averaging $1225 output per capita are about 50% more productive than average Indian farm worker producing $883 per capita.

Riaz Haq said...

anon: "The key is to move people from areas like agriculture to manufacturing and services industry while keeping the total output of agri same on higher. Just extrapolating from Haq's numbers"

I agree and I think you are pretty close in terms of per capita output in various sectors.

Assuming India's PPP GDP of $3.75 trillion (population 1.2 billion) and Pakistan's $450 billion (population 175 million), here is what I calculated in terms of per capita GDP in different sectors of the economy:

India vs. Pakistan:

Agriculture: ($833 vs. $1,225)

Textiles: ($1,242 vs. $1714)

Non-Textile Mfg ($11,155 vs $5,785)

Services ($7,246 vs $3,654)

It shows that Indians in manufacturing and services sectors add more value and produce higher value goods and services than their Pakistan counterparts.

The income range in India is much wider from $883 to $11, 155 accounting for the much bigger rich-poor gap relative to Pakistan's range from $1225 to $5,785.

Riaz Haq said...

Here's the transcript of a recent NPR radio show on how Brazil has emerged as a major exporter of food:

Next we're going to explore how Brazil became an agricultural superpower. It is the world's biggest exporter of beef, poultry, orange juice and sugar cane. And it also supplies a quarter of the worlds soybeans. The credit goes in part to Brazilian scientists who've been working since the 1970s to make what was once an agricultural wasteland bloom.

And Brazil, which elects a new leader Sunday, promises to become even more productive in years to come. NPR's Juan Forero has the story from Brazils grain belt.

JUAN FORERO: Slowly, a powerful New Holland harvester advances over rolling hills here in Brazils dry, hot savannah, the Cerrado. In the cab is farm worker Luiz Tavares, who marvels as he cuts through golden stalks of wheat.

Mr. LUIZ TAVARES: (Foreign language spoken)

FORERO: This is a wheat thats resistant to plagues, he says, a wheat that has an especially high yield and is excellent for flour. Its wheat that Brazilian scientists created for this tropical climate and acidic soil. Paulo Kramer is the owner of this farm and he gives the credit to Embrapa, the government-run agricultural research institute.

Mr. PAULO KRAMER: (Foreign language spoken)

FORERO: When we started planting here, he said, we never thought wed be planting wheat. Wheats a cold-climate crop, Kramer said, usually found in places like Iowa or Argentina.

Barely two generations ago, many considered this 1,000-mile swath of low-lying trees and scrubland good only for raising cattle. The military government that ruled Brazil then decided, with unusual foresight, to create Embrapa. The head of its international wing is Francisco Souza, a tropical seed expert.

Mr. FRANCISCO SOUZA (Embrapa): Back in the '70s, Brazil imported most of the food. We had food crisis, the government at that time decided to really invest in modern agriculture.

FORERO: The nationwide system of laboratories that made up Embrapa was entrusted with improving Brazils soils. They also work on new crop varieties and find more efficient ways to fatten up cattle and hogs. Embrapa started by developing its know-how. And it did that by sending hundreds of young scientists to earn their doctorates in American universities. Among them was Thomaz Rein.

(Soundbite of footsteps)

Rein, a soil scientist educated at Cornell University, walks through experimental fields of sugar cane and beans. He stops in a stand of corn, the leaves of which look yellow and easily crumble in his hands.

Dr. THOMAZ REIN (Soil Scientist): So you see here the bottom leaves are necrotic, already dry, at this time, so this is a sign of nitrogen deficiency.

FORERO: The corn with the greener leaves, he said, was inoculated with nitrogen-fixing bacteria. Such is the work of Embrapa scientists trying to resolve problems particular to Brazil.

Mr. REIN: So the soil are very poor in terms of nutrients that are required by the plant like phosphorus, calcium, potassium, and what are called also micronutrients. And also the soil are very acid.

FORERO: The soil in the Cerrado, in fact, is so naturally toxic that roots cant grow well. Embrapa added just the right mixture of limestone and other nutrients to make the soil fertile.�And Rein said scientists determined that gypsum helped correct the acidity, permitting roots to reach deep for water.

Embrapas advances are important well beyond Brazil - in the tropical countries of Africa, which struggle to feed their people. As wind whips through a test field, Rein said Embrapa continues to tinker.

Some of its most recent advancements come with wheat. Wheat wont ever become a big export for Brazil, Rein said. But Embrapa is always looking to find ways for all crops to bloom.

Riaz Haq said...

@ swastyk et al:

In both agriculture and textile sectors where 70% of Indians and 54% of Pakistanis work, the productivity and incomes of Pakistanis are 50% higher than their India counterparts.

Assuming India's PPP GDP of $3.75 trillion (population 1.2 billion) and Pakistan's $450 billion (population 175 million), here is what I calculated in terms of per capita GDP in different sectors of the economy:

India vs. Pakistan:

Agriculture: ($833 vs. $1,225)

Textiles: ($1,242 vs. $1714)

Non-Textile Mfg ($11,155 vs $5,785)

Services ($7,246 vs $3,654)

It shows that Indians in manufacturing and services sectors add more value and produce higher value goods and services than their Pakistan counterparts.

The income range in India is much wider from $883 to $11, 155 accounting for the much bigger rich-poor gap relative to Pakistan's range from $1225 to $5,785.

So the bottom line is that the majority of Indians are 50% poorer than their Pakistani counterparts, as also reflected in the under-$2 per capita income figures for 60% of Pakistanis and 76% of Indians.

Riaz Haq said...

Here's part 1 of a recent report titled "India: Economic Power House or Poor House?" by reporter The Star's Mary Albino that talks about how deceptive "India's Miracle" is:

India’s economic miracle is a perfect example of how appearances can be deceiving.

The dominant narrative on the country goes like this: as the fourth largest economy in the world, with a steady annual growth rate of close to 9 per cent, India is a rising economic superstar. Bangalore is the new Silicon Valley. Magazines such as Forbes and Vogue have launched Indian editions. The Mumbai skyline is decorated with posh hotels and international banks.

There are numbers to back up this narrative. The average Indian takes home $1,017 (U.S.) a year. Not much, but that’s nearly double the average five years ago and triple the annual income at independence, in 1947. The business and technology sector has grown tenfold in the past decade. Manufacturing and agriculture are expanding, and trade levels are way up.

India is also on the up and up in terms of human well-being. Life expectancy and literacy are steadily rising, while child mortality continues to decline. The poverty rate is down to 42 per cent from 60 per cent in 1981. While 42 per cent still leaves a long way to go, India’s situation seems rosy compared with that of, say, Malawi and Tanzania, which have poverty rates of 74 per cent and 88 per cent, respectively.

If we examine these statistics in real numbers, however, a different narrative emerges, one the Indian government likes less.

With a population as big as India’s, 42 per cent means there are some 475 million Indians living on less than $1.25 per day. That’s 10 times as many facing dire poverty as Malawi and Tanzania combined.

It means India is home to more poor people than any other country in the world.

To put it another way, one of every three people in the world living without basic necessities is an Indian national.

The real number is probably even larger. The recently launched Multidimensional Poverty Index (MPI), a more comprehensive measure of deprivation than the current “poverty line” of $1.25 per day, uses 10 markers of well-being, including education, health and standard of living. The MPI, developed by the Poverty & Human Development Initiative at Oxford University, puts the Indian poverty rate at 55 per cent. That’s 645 million people — double the population of the United States and nearly 20 times the population of Canada.

By this measure, India’s eight poorest states have more people living in poverty than Africa’s 26 poorest nations.

A 10-year-old living in the slums of Calcutta, raising her 5-year-old brother on garbage and scraps, and dealing with tapeworms and the threat of cholera, suffers neither more nor less than a 10-year-old living in the same conditions in the slums of Lilongwe, the capital of Malawi. But because the Indian girl lives in an “emerging economy,” slated to battle it out with China for the position of global economic superpower, and her counterpart in Lilongwe lives in a country with few resources and a bleak future, the Indian child's predicament is perceived with relatively less urgency.

One is “poor” while the other represents a “declining poverty rate.”

What’s more, in India there are huge discrepancies in poverty from one state to the next. Madhya Pradesh, for example, is comparable in population and incidence of poverty to the war-torn Democratic Republic of Congo. But the misery of the DRC is much better known than the misery of Madhya Pradesh, because sub-national regions do not appear on “poorest country” lists. If Madhya Pradesh were to seek independence from India, its dire situation would become more visible immediately.

As India demonstrates, having the largest number of poor people is not the same as being the poorest country. That’s unfortunate, because being the poorest country has advantages.

Anonymous said...

As India demonstrates, having the largest number of poor people is not the same as being the poorest country. That’s unfortunate, because being the poorest country has advantages.

Well by that logic if you take out the top 400mn of China's 1.4 billion population the bottom 1 billion have comparable per capita incomes to that of Nigeria.

Hint:They aren't found in Shanghai and other glitzy cities.


Riaz Haq said...

anon: "Well by that logic if you take out the top 400mn of China's 1.4 billion population the bottom 1 billion have comparable per capita incomes to that of Nigeria."

There is no evidence or data to support your claim about China's poverty.

OPHI 2010 country briefings on India and Pakistan contain the following comparisons of multi-dimensional (MPI) and income poverty figures:

MPI= 55%,Under$1.25=42%,Under$2=76%,India_BPL=29%


Lesotho MPI=48%,Under$1.25=43%,Under$2=62%,Lesotho_BPL=68%


Among other South Asian nations, MPI index measures poverty in Bangladesh at 58 per cent and 65 per cent in Nepal.

Nigeria's poverty figures are MPI=64%, Under$1.25=64%, Under$2=84%, Nigeria_BPL=34%

Clearly, the poverty situation in Nigeria is worse than China or India or Pakistan.

Riaz Haq said...

Here is a news report on UNDP findings released today:

India lags behind its neighbours, Pakistan and Bangladesh, on human development indices like life expectancy at birth and mean or average years of schooling, a United Nations Development Programme (UNDP) report released Thursday said.

Titled "Real Wealth of Nations: Pathways to Human Development", the report had a global launch and was released at the UN in New York by UN secretary general Ban Ki-moon.

While India is ranked 119 on the Human Development Index (HDI) among 169 countries -- above Pakistan and Bangladesh which are ranked 125 and 129, respectively -- it lags behind the two on certain development indices.

According to the report, life expectancy at birth in India is 64.4 years, while in Pakistan it is 67.2 years. In Bangladesh, life expectancy is 66.9 years.

Similarly, mean years of schooling in India is 4.4 years while in Pakistan and Bangladesh it is 4.9 and 4.8 years respectively.

Sri Lanka, which is ranked above India on HDI at 91, also fares better than India on the two indices. Its life expectancy at birth is 74.4 years and mean years of schooling is 8.2 years.

On some positive note, in terms of growth of income, India is considered one of the top 10 countries. China is on the top position in this index.

Finance Ministrys chief economic advisor Kaushik Basu, who was present at the India launch of the report, said: "India has a lot of catching up to do. There is scope to do so much better."

Riaz Haq said...

Here is an excerpt fom an interesting Op Ed by a Korean commentator Ha-Joon Chang published in the Guadian that exposes the hypocisy of "Washington Consensus" pushed by the West and IFIs like the IMF on developing nations:

An obvious place to look for inspiration is the recent history of the host country. In my lifetime Korea has lived through one of the greatest development miracles – half a century ago, its annual per capita income was around £50, less than half that of Ghana at the time. Today, it stands at £12,000, putting it on a par with Portugal and Slovenia. How was this possible?

Korea of course did things that most people agree are important for economic development, such as investment in infrastructure, health and education. But on top of that, it also practised many policies that are now supposed to be bad for economic development: extensive use of selective industrial policy, combining protectionism with export subsidies; tough regulations on foreign direct investment; active, if not particularly extensive, use of state-owned enterprises; lax protection of patents and other intellectual property rights; heavy regulation of both domestic and international finance.

The G7 was always remarkably reluctant to recommend these "heterodox" policies and insisted that the "Washington consensus" package of opening up, deregulation and privatisation was the right recipe for everyone. When confronted with the Korean case, Washington consensus supporters tried to brush it off as an exception. However, the history of take-offs in most of the G7 countries – especially Britain, the US, Germany, France and Japan – is far closer to the Korean model than is commonly thought. The "unorthodox" policies used by Korea and almost all of today's rich countries need to be seriously considered in any discussion on development options.

Will things change with the launch of the G20 development agenda? An examination of the Korean government's proposals suggests we can only muster cautious optimism. Korea today wants the G20 to focus on a lengthy shopping list of development issues: infrastructure; private investment and job creation; education; greater access to rich country markets by poor countries; more inclusive finance; building resilience to financial or weather shocks; food security; governance. That is a pretty good start. The Koreans reject the "one size fits all" approach of previous decades in favour of what they call a "dynamic iPhone model" – a set of development apps for every occasion, drawn from successful approaches in different countries.

Riaz Haq said...

Here are excerpts from a recent NY Times report on persistently high levels of poverty in India:

In Mumbai on Nov. 7, President Barack Obama told a group of students that India was no longer a “rising power,” but rather an “already risen” power. He celebrated an economy that “has risen at a breathtaking rate.”

Three days earlier, in New York, the United Nations released the 20th edition of its Human Development Report, a publication that has in many ways become the authoritative measure of poverty and deprivation.

India ranked 119th of 169 countries. The nation’s eight poorest states contain as many poor as the 26 poorest African countries combined. In terms of life expectancy and even gender inequality, India rates below its neighbors of Bangladesh and Pakistan.

After nearly two decades of economic changes that were to have ushered in an era of prosperity, it is clear that in some ways the nation has been naïve: high growth rates alone cannot cure poverty.

The problem, as Anirudh Krishna, a political scientist at Duke University in North Carolina, and the author of a remarkable new study on poverty, put it to me, is that “poverty in India has become very resilient. The numbers hardly budge.”

Indeed, while official estimates suggest that poverty has declined since the advent of reforms, other recent studies suggest that it is in fact far more widespread than had been thought.

At least three government committees have been formed to count the poor in India. The variance in their findings — ranging from 37.2 percent to 77 percent — suggests not only the prevalence of poverty, but also that its very nature is misunderstood. For all the attention directed at the issue, poverty remains something of a mystery.

Mr. Krishna’s study, published in September as “One Illness Away: Why People Become Poor and How They Escape Poverty,” is in large part an effort to peel away the layers of this mystery. The outcome of a decade of work in five countries, and the result of conversations and surveys with more than 35,000 families, one of its chief goals — and accomplishments — is to flesh out our understanding of economic deprivation.

There are several insights in this book, but one of Mr. Krishna’s more important is that, as he writes, “poverty is not an undifferentiated mass living beneath some theoretical or statistical line.” It is, rather, a constantly churning pool of deprivation, with those who escape being replenished by a new population that has fallen from relative prosperity.

In a 25-year study he conducted in Andhra Pradesh State, for example, Mr. Krishna found that while 14 percent of households escaped poverty, another 12 percent became poor. Overall, there was a 2 percent reduction in the poverty rate, but 26 percent of households had seen their status change.

This understanding of poverty as nonstatic, always in flux, has policy implications. It suggests that welfare programs need to be designed not just to raise people out of poverty, but also to prevent those who are not poor — and thus perhaps off the radar of such programs — from descending into poverty.

In particular, Mr. Krishna’s research highlights the major role played by illness in pushing people over the edge. He writes about “chains of negative events” that lead, through costly hospital bills, unemployment and debt, into economic hardship.

“I am fully convinced that we can’t reduce poverty in India without first doing something about health care,” he said.

Mr. Krishna’s ideas for alleviating poverty are generally convincing. But what is most persuasive about this book is less the policy prescriptions than the nuanced and rich portrait of poverty that informs those prescriptions.

Riaz Haq said...

Here are some exerpts of a review by Ashok Mitra of Amit Bhaduri's "The Face You Were Afraid to See" as published in Calcutta's Telegraph:

Surely Amit Bhaduri is dead wrong. His recent book bears the title, The Face You Were Afraid to See. The “face” he has in mind is the stark reality of destitution, malnutrition, illiteracy and joblessness which is still the fate of a huge lot of citizens in independent India. The “you” Bhaduri addresses his epistle to are the roughly 10 — at most 15 — per cent of the nation at the top of the social ladder who, thanks to economic liberalization, had never had it so good: industrial tycoons, financial conglomerates, ruling politicians and assorted hangers-on of each of these species, including the media and the so-called intelligentsia. These latter categories, Bhaduri seems to assume, are scared to come face to face with the other India, the India of progressive immiserization and ruthless exploitation. Quite the contrary. For the first time since the British left, the richer layer of society has come to acquire an extraordinary self-confidence. The lurid contrast between how, on the one hand, its members are indulging themselves at spas, shopping malls, five star hotels and golf links and, on the other, the fact that at least 300 million of their countrymen exist at subhuman levels and, perhaps another 300 million or thereabouts, while not exactly starving, are bereft of a minimum of housing, education and healthcare, does not disturb them. The bizarre combination of happenings like India slipping down every year in the human development index constructed by the United Nations even as it attains the dubious distinction of having the largest number of billionaires after the United States of America is taken in its stride. More than half of Mumbai’s population lives in ramshackle jhoparpattys; awareness of this grim fact does not deter a tycoon from building in the city the obscenity of a mansion costing more than Rs 5,000 crore as his residential abode. Consider yet another instance. The loss to the national exchequer because of the 2G spectrum shenanigan, the comptroller and auditor general has estimated, is around Rs 1,80,000 crore. A public distribution programme covering the entire national population, which could reach food to each and every starving citizen of this country, would cost only one-half of that sum. But the powers that be are unwilling to endorse the programme; they even have the effrontery to suggest that public distribution reeks of corruption...
Bhaduri unravels these complex themes with an equal measure of acuity and elegance in The Face You Were Afraid to See. As one who identifies himself with the bottom 90 per cent of the community, he is, however, not satisfied with mere analysis; he is, so to say, stripped for action. And he has his own ideas regarding what activism should consist of. The established political parties, Bhaduri is convinced, are in cohorts with the ruling hegemony. He has equal contempt for the organized trade unions; these are, in his view, interested only in their own narrow interests and ignore such issues as the plight of villagers dispossessed of their cultivable land. He apparently forgets that the trade union movement, too, is itself a victim of the Machiavellian growth model fathered by economic liberalization. Any way, salvation, Bhaduri suggests, lies only in initiatives on the part of civil society groups in different spheres; these will then come together and accomplish the heroic task of smashing to smithereens the conspiracy hatched by corporate bosses and their crony politicians.

Riaz Haq said...

In 2008, the PPP government pushed the procurement price of wheat up from Rs. 625 per 40 kg to Rs. 950 per 40 kg. This action immediately triggered inflationary pressures that have continued to persist as food accounts for just over 40% of Pakistan's consumer price index. According to State Bank of Pakistan (SBP) analysis, cumulative price of wheat surged by 120 per cent since 2008, far higher than the 40 per cent between 2003 and 2007. it is also many times greater than the international market price increase of 22 per cent for wheat in the same period. Similarly, sugar prices have surged 184 per cent higher since 2008, compared with 46 per cent increase during 2003-07.

The transfer of additional Rs. 300 billion to Pakistan's agriculture sector during the current fiscal year 2010-2011 by higher prices of agriculture produce and direct flood compensation to 1.6 million affected families at the rate of one hundred thousands rupees each will boost economic confidence in the countryside. It will generate rural demand for consumer items including consumer durables such as fans, TVs, motorcycles, cars, refrigerators, etc.

Already, the upside of the government policy is that Pakistan's rural economy is being spurred by high crop prices that may help the GDP growth this year and next. Increased farm incomes are whetting the rural households' appetite for industrial and consumer goods in 2011 and beyond.

While it is good to see Pakistan's rural farm economy perk up, it is also important to recognize that the overall national economic outlook can not improve significantly unless the growing budget deficits and rising inflation are brought under control. And this will require the ruling feudal elite to pitch in by paying their fair share of income tax on their rising farm incomes. It is time for them to lead by example.

Riaz Haq said...

Here's an agriculture survey in Pakistan, as reported by The Nation newspaper:

According to details, the total sample size was 300 respondents, five farmers were selected randomly from each village to collect their responses on the survey questions; at some villages 4 or 6 farmers were selected randomly. In district Sukkur, majority of the farmers comprise subsistence farmers as 31pc farmers of district are those who own less than 5 acres of land, while about 34pc farmers holding up to 12.5 acres of land.
Farmers, studied during survey, spend around Rs.1,611 monthly on their children education, with the maximum amount of Rs. 12,000.
Farming is a major component of the district's rural economy as almost all the respondents were engaged in farming. Wheat, rice, cotton and sugarcane are the major crops being cultivated by 93pc, 58pc, 37pc and 12pc of the respondent farmers.
Around 24pc of the respondent farmers are also cultivating fruits including dates, mangoes and bananas. Only 22pc of the respondent farmers are rearing animal (livestock).
Almost half (49pc) of the farmers used privately purchased seeds for wheat cultivation, 33pc of the farmers used their own retained seed and 18pc of the farmers used the seed purchased from Public Sector Seed Corporations.
On the average, a farmer used 96.73 Kg chemical fertilizer per acre with the maximum and minimum of 350 Kg and 40 Kg respectively. The average per acre cost of wheat production was Rs. 10,670/-, based upon the average figures of cost given by respondents of the survey.
All the respondent farmers are using tractor for cultivation and preparing land for crops and few are using tractor for fetching their crop produce to market.

Riaz Haq said...

Here are some interesting highlights from a paper "Land-use Changes and Agricultural Growth in India, Pakistan, and Bangladesh, 1901-2004" by Takashi Kurosaki:

1. In India and Pakistan, the area under forests and under cultivation increased substantially throughout the post-independence period. The annual growth rates were higher in Pakistan than in India: the forest area increased at an annual growth rate of 1.91% and 0.75% in Pakistan, well above the figures of British India before independence. In India, the growth rates were lower than in Pakistan but comparable to rates recorde before independence.

2. During post-independence period, output (Q) in Pakistan grew at 3.5 percent per annum while Output/Area (Q/A) increased at 2.3 percent. Therefore, the major contribution to agri growth after independence came from increase in land productivity.

3. The level of growth was highest in Pakistan, followed by India, with Bangladesh at the bottom.

4. In all three countries, the growth rate of land productivity was not high enough to cancel the negative growth of land availability per capita. But the output per capita growth in Pakistan continues to be higher than in India and Bangladesh.

Riaz Haq said...

Thousands of Indian illegal immigrants are slipping into Texas from Mexico, according to LA Times:

Reporting from Harlingen, Texas — Thousands of immigrants from India have crossed into the United States illegally at the southern tip of Texas in the last year, part of a mysterious and rapidly growing human-smuggling pipeline that is backing up court dockets, filling detention centers and triggering investigations.

The immigrants, mostly young men from poor villages, say they are fleeing religious and political persecution. More than 1,600 Indians have been caught since the influx began here early last year, while an undetermined number, perhaps thousands, are believed to have sneaked through undetected, according to U.S. border authorities.

Hundreds have been released on their own recognizance or after posting bond. They catch buses or go to local Indian-run motels before flying north for the final leg of their months-long journeys.

"It was long … dangerous, very dangerous," said one young man wearing a turban outside the bus station in the Rio Grande Valley town of Harlingen.

The Indian migration in some ways mirrors the journeys of previous waves of immigrants from far-flung places, such as China and Brazil, who have illegally crossed the U.S. border here. But the suddenness and still-undetermined cause of the Indian migration baffles many border authorities and judges.

The trend has caught the attention of anti-terrorism officials because of the pipeline's efficiency in delivering to America's doorstep large numbers of people from a troubled region. Authorities interview the immigrants, most of whom arrive with no documents, to ensure that people from neighboring Pakistan or Middle Eastern countries are not slipping through.

There is no evidence that terrorists are using the smuggling pipeline, FBI and Department of Homeland Security officials said.

The influx shows signs of accelerating: About 650 Indians were arrested in southern Texas in the last three months of 2010 alone. Indians are now the largest group of immigrants other than Latin Americans being caught at the Southwest border.

Riaz Haq said...

Here are a few excerpts from a NY Times story on lagging agriculture in India:

BAMNOD, India — The 50-year-old farmer knew from experience that his onion crop was doomed when torrential rains pounded his fields throughout September, a month when the Indian monsoon normally peters out.
Mr. Talele’s misfortune, and that of many other farmers here, is a grim reminder of a persistent fact: India, despite its ambitions as an emerging economic giant, still struggles to feed its 1.1 billion people.

Four decades after the Green Revolution seemed to be solving India’s food problems, nearly half of Indian children age 5 or younger are malnourished. And soaring food prices, a problem around the world, are especially acute in India.
Critics say Indian policy makers have failed to follow up on the country’s investments in agricultural technology of the 1960s and ’70s, as they focused on more glamorous, urban industries like information technology, financial services and construction.
Food inflation hits especially hard here because Indians — most of whom live on less than $2 a day — spend a bigger portion of their disposable incomes on food than people in other big, developing economies like China and Brazil.

“This is the worst form of taxation on the poorest of the poor,” said Ashok Gulati, Asia director for the International Food Policy Research Institute.
But experts say the widening gap between agriculture’s anemic supply and the rising demand for food calls for fundamental changes in farming policies.

During the Green Revolution the government invested heavily in rural agriculture, with an emphasis on hybrid seeds, fertilizers and irrigation canals.

And rural India has far too few temperature-controlled warehouses that could help farmers and the nation build up reserves as a hedge against poor growing seasons.

When Mr. Talele’s vegetables are ready for harvest he immediately takes them to wholesale markets, which are controlled by committees of local traders. “Whatever the market decides, that’s the price we get,” he said.

Indian officials acknowledge that the country needs to increase investment in irrigation, encourage competition in wholesale and retail markets, and provide targeted food subsidies to the poor. And they also have to provide more education and jobs to villagers, so fewer people are forced to live off the land.

Experts say India needs to make changes like some of the ones China made, beginning in the late 1970s, when it started investing heavily in agriculture and eased regulations on farming.


Riaz Haq said...

With rising cotton and yarn prices, Pakistan has the potential to export $50 billion in textiles, according to a report in Gulf Today:

KARACHI: Pakistan has a potential of at least $50 billion in value-added textile exports if human resource in this sector is fully developed, said Textile Commissioner Muhammad Idrees.

Addressing the closing ceremony of 9th round of apparel manufacturing and management training programme at the Readymade Garments Technical Training Institute, the official said that the present volume of exports was not at all satisfactory.

The stakeholders could easily double this volume by improving skills of workers and through compliance with the standards of buyers, he added.

The skills development programme comprised one-month training, which covered cutting, sewing, production management, industrial engineering and quality control. Experts and consultants from Technopak, a world renowned consultancy firm, were hired for the training.

Thirty-one master trainers or middle management professionals from Artistic Milliners, Naz Textiles, Rajby Industries and Selimpex International and Soorty Enterprises attended the ninth round of training project.

The training project has so far been successfully implemented in 30 factories in Sindh and has trained 279 master trainers/middle management professionals and 3,693 workers.

The project delivered complete training system, course curriculum, manuals and consulting guidelines to the factories. Training manuals are also translated into Urdu language to transfer appropriate knowledge and skills to workers.

Pakistan’s textile sector is optimistic about meeting the annual export target, as high cotton prices in domestic and international markets have caused an increase in prices of value-added textile products, industry people say.

The government had fixed the textile export target at $14 billion for the current fiscal year. Members of the textile sector are of the view that achieving the target is possible, as exports of highly value-added items such as knitwear and garments have increased in terms of value.

Statistics released by the Federal Bureau of Statistics (FBS) show the textile sector has performed well in the first half (July to December) of the current fiscal year, as its exports increased by 25.79 per cent as compared to the corresponding period of the previous year.

The industry, however, believes they would need to import up to five million bales of cotton because the 11 million bales produced so far in the country will not meet the requirements as some of the crop has been destroyed by flood.

The industrialists also expressed reservations about gas shortage in the country that has already caused a huge loss to the industry, particularly in Punjab. All Pakistan Textile Processing Mills Association Chairman Maqsood Ahmad Butt stressed that cotton prices reached Rs13,000 per maund (37.324 kg) and the sector may face a shortage of cotton in June if India did not lift the ban on exports.

“There is a possibility that exports will cross $14 billion target if cotton shortages are met and gas supply is restored,” he opined.

Riaz Haq said...

Rising crop prices in the US are helping economic recovery in the farm belt and lifting the value of farmland in the Midwest, according to the Wall Street Journal:

Farmland values in much of the Midwest are climbing at their fastest rates since the 2008 boom, the Federal Reserve Bank of Kansas City said Tuesday.

Fueled by rising crop prices, the value of irrigated and nonirrigated cropland across the region known as the 10th District jumped 14.8% and 12.9%, respectively, in the fourth quarter, compared with a year earlier.

The bank's quarterly survey of the region, which covers western Missouri, Nebraska, Kansas, Oklahoma, Wyoming, Colorado and northern New Mexico, found that farmland prices rose for the fifth consecutive quarter since a drop in the third quarter of 2009, when the livestock sector was contracting amid the recession.

The Federal Reserve's regional banks closely track farm real-estate prices because they are a key indicator of the health of U.S. farming, which uses about half of the nation's land. Land is farming's largest asset and source of collateral, which means any increase in value lifts farmers' borrowing power.

The Federal Reserve Banks in Chicago and Minneapolis have yet to issue their quarterly surveys, but their reports are also expected to show that the farm belt is continuing to rebound from the recession more quickly than the general economy, which has been hobbled by high unemployment rates and weak home values.

Farmland prices in the 10th District are generating their biggest gains since the third quarter of 2008, when prices of irrigated farmland jumped 23.4% and prices of nonirrigated farmland rose 21.2%.

Still, it's not clear how long farmland prices can continue to climb so sharply. The Federal Deposit Insurance Corp. has already said it's watching for whether an asset bubble is building. One red flag in Tuesday's report is that cash rental rates for cropland across the 10th District rose only about 6% in the fourth quarter, far too little to justify such a big increase in land prices.

As a result, some farm bankers across the region are beginning to tighten their standards on real estate loans.

"Bankers in the survey were starting to raise questions about the sustainability of farmland values" and "paying closer attention to their loan-to-value ratios," said Brian Briggeman, an economist at the Omaha branch of the Kansas City Fed.

Farmland prices are heavily influenced by crop prices, which were climbing until the financial crisis and recession popped the commodity-price bubble in late 2008. Led by wheat, U.S. crop prices resumed their upward climb in June 2010 amid harvest problems in places such as Russia, and then the U.S. corn belt, as demand was recovering in the world's emerging economies.

The prices of corn and wheat grown in the Midwest are about double what they were a year ago, while cotton prices are up 155%. Soybean prices have climbed 50%. Those high commodity prices are giving farmers more money to spend on land, as well as attracting the interest of outside investors looking for an inflation hedge at a time when the cost of borrowing money for buying real estate is low.

The U.S. Agriculture Department said Monday that it expects net farm income, a widely followed barometer of the U.S. agriculture sector's profitability, to climb 19.8% this year to $94.7 billion, which would be the second-highest inflation-adjusted figure for net farm income in 35 years.

Riaz Haq said...

Here's some UNCTAD data on cotton production and consumption in the world:

In 2007, cotton was grown in 90 countries. In 2006/07, the four main producing countries were China, India, the USA and Pakistan and accounted for approximately three quarters of world output. If we added Uzbekistan and Brasil, six countries would account for 83% of world cotton production. This concentration in cotton production, which appears to increase for several years, has to be put into perspective by considering the impact of domestic policy reforms in the largest cotton producing countries, as well as climatic and sanitary contingencies.

The main cotton producing economies also account for a large part of consumption. According to ICAC data, China, the United States, India, and Pakistan as a whole have accounted for approximately more than 55% of global cotton consumption over the period 1980 to 2008. Their overall consumption has risen considerably in volume (see figure below). For example, consumption multiplied by 3 in China and by more than 3 in India. Pakistan has had the largest increase in volume (which multiplied by 6 between 1980 and 2008) in order to responde to export-driven demand for textiles.

Riaz Haq said...

Here are some excepts from a recent Wall Street Journal story titled "In India, Doubts Gather Over Rising Giant's Course":

These days, India often is held up as an example of how a democracy in Asia can mirror the spectacular growth of authoritarian China. In the year ending March 31, India's economy is expected to expand by about 8.5%.

Other important gauges of national well-being paint a more troubling picture. "What has globalization and industrialization done for India?" asks Mr. Venkatesan, Microsoft's former India chairman. "About 400 million people have seen benefits, and 800 million haven't."
Calorie consumption by the bottom 50% of the population has been declining since 1987, according to the 2009-10 economic survey conducted by India's Ministry of Finance, even as those at the top of society struggle with rising obesity. Mainly because of malnutrition, around 46% of children younger than 3 years old are too small for their age, according to UNICEF.

Infrastructure in cities and the countryside remains woefully inadequate: In recent years, China has added, on average, more than 10 times as much power as India to its electricity grid each year.

Data from McKinsey & Co. show that the number of households in the highest-earning income bracket, making more than $34,000 a year, has risen to 2.5 million, from 1 million in 2005. But the ranks of those at the bottom, making less than $3,000 a year, also have grown, to 111 million, from 101 million in 2005.
India's modernization was expected to prompt a mass movement of workers from farms to factory floors—a critical component in the transformation of China, South Korea and other Asian nations. But manufacturing as a share of India's economy stood at 16% in 2009, the same as in 1991, according to the World Bank.

Services have increased dramatically as a proportion of gross domestic product, rising to 55% in 2009, from 45% in 1991, according to the World Bank, becoming the chief engine of India's economic strength. But many of the fastest-growing areas, such as finance and technology, employ relatively few and rely heavily on skilled employees. The entire software and technology-services sector, including call centers and outsourcing, directly employs just 2.5 million workers, a tiny fraction of the overall work force.
Agriculture's share of the economy, meanwhile, has declined to about 17% in 2009, from 30% in 1991. But the number of people working in agriculture hasn't dropped commensurately, according to Arvind Panagariya, a professor of Indian political economy at Columbia University in New York. "The dependence on agriculture remains incredibly high when you compare India's high-growth phase with others," he says. "The potential of the country is to grow at 11% to 12%, and it's growing only at 8% to 9%."

Frustration over the economic miracle's limited trickle-down is fueling political movements around the country. Most base their appeal, in part, on the idea that the poor are being ill-served in the new India.

Riaz Haq said...

Here's blog post from today's Dawn newspaper:

GLORIOUS countryside lies between Rahim Yar Khan and Bahawalpur. Travelling across six districts in Punjab, before a blazing summer sets in, I experienced endless fields of wheat waiting to turn golden, of freshly harvested mustard, acres of ripe sugarcane and sprawling mango orchards.

Far from the drudge and gloom of metropolitan Pakistan, economic privation, traffic snarls, extreme religion and the cricket World Cup agony, this is another Pakistan. Over a quarter of a century after the green revolution ended the rural economy is back in boom, this time on the back of rising prices. The feel-good factor is all around.
Alongside the cash economy, the place is also brimming with ideas, and with an entrepreneurial spirit. A young man I meet at Rahim Yar Khan’s chamber of commerce has an IT degree and owns an ice cream distribution business spawning an elaborate cold chain across three districts. He tells me that sales are surging because rural society is transitioning to modern desserts which are now more affordable than traditional sweets like mithai and khoya.

Meanwhile, he’s toying with the bigger vision of an electronic marketplace for agricultural produce. Live connectivity to grain mandis and markets for fresh produce and milk will empower farmers to obtain prices online and through their cellphones. He wants to materialise this and wants tips. I give him my two cents worth: study similar models, write a concept paper, galvanise partners around it, put in seed money and get the venture to mezzanine level.

For now the agricultural economy is growing more in value than in volume. As it does, it pulls in a rising demand for inputs. Fertiliser and agrochemical companies, some listed on the stock exchange are making record profits. Still, few find time to complain about rising input prices. With a population of 400,000, Rahim Yar Khan sports showrooms displaying cars, motorcycles and generators, fast food outlets and even private healthcare clinics.

Even then, not all the cash would appear to go into consumption. Pakistan now ranks amongst the world’s top 10 markets for tractors. Alongside, and despite constrained credit to agriculture, farmers are investing in agricultural implements, irrigation channels and farm modernisation.
“Simple”, he explains, “this year the ginners got together with the local utility company, Mepco. We’ve instituted a system whereby instead of intermittent hours of loadshedding we get it in one block of 12 hours. This way we can run the factory on one shift per day”. With that problem behind him he now wanted to move on; that is, to a pasteurised milk business.

As the green revolution tapered off, a poultry revolution began; in the late 1970s. Ever since, Pakistan has been gnawing away
at broiler chicken and there’s no turning back. Today a dairy revolution is sweeping Pakistan. As the world’s fifth largest milk producer, the country can only process three per cent of its milk production. Sitting in his factory office in Khanpur — one could have been in any plush office in a metropolis — we open his wireless notebook and download a pre-feasibility study for a milk pasteurising business from Smeda’s website. We glean through it, and at a Rs160m capital outlay it looks doable for him.
In 2009, an NGO distributed young cattle on micro-credit to 1,000 small farmers and built an apex organisation to collect and market milk from these grass-roots. The Dutch consultant for the NGO informs me that a modern farmers’ cooperative model is now evolving. Such models have long been in vogue in Europe and indeed in several developing countries. Usually the extended supply chain ends at farmer-owned retail outlets — co-ops. Why hasn’t this concept gained traction in Pakistan?
And so Pakistan prepares to harvest another bumper wheat crop in 2011.

Riaz Haq said...

Here's an interesting 2004 ADB assessment of Pakistan's rural economy:

Despite recent good macroeconomic performance, Pakistan continues to have high levels of poverty. Poverty estimates of 2000-2001, indicate that around one third of the population lives at or below the poverty line, with poverty being concentrated in rural areas. Available international literature indicates a strong and clear-cut relationship between agricultural growth and poverty reduction. The agricultural sector is a major determinant of the overall economic growth and well being in Pakistan, contributing 23 percent of total GDP; employing 42% of the total employed labor force; and accounting for nearly 9 percent of the country's export earnings. Thus, high agricultural growth is essential for significant poverty reduction in Pakistan.

However, in addition to the direct impact of agriculture growth on poverty reduction, there is also a much larger indirect effect through the linkages between agriculture and non-farm growth in rural areas. Non-farm growth is closely linked with agricultural growth since peasant farmers spend a large portion of their incremental income on locally produced non-agricultural goods thus generating employment and incomes in the adjoining areas. The increased demand for non-farm goods leads to a much larger increase in employment, which is a key vehicle for poverty reduction. Available information also points to the increasing importance of non-farm incomes for rural households. The five major sources of income in rural Pakistan are wages/salaries, transfer income, crop income, rental income and livestock income. Livestock is a particularly important source of income for the poor with a majority of poor households, especially the landless and small landowners, dependent on this sector.

In the light of increasingly limited income generating opportunities in the on-farm sector, poor households are increasingly turning to the non-farm sector as a key source of livelihood. In addition, there appears to be a higher incidence of vulnerability to falling into and remaining in poverty, among households which are dependent solely on agriculture. Rural areas that are well connected with the urban areas seem to be more prosperous, in part because the lack of employment opportunities in rural areas results either in labor reallocation or migration. In both cases, human capital plays a positive and significant role and the poorest of the poor neither possess the human capital nor have the resources to migrate. This vulnerable group needs special attention.

Pakistan's Poverty Reduction Strategy Paper outlines four pillars for accelerating growth and reducing poverty. Pillar One focuses on accelerating economic growth, pillar Two on improving governance and devolution, Pillar Three on investing in human capital, and Pillar Four on targeting the poor and vulnerable. Pillars One and Four focus on generating employment, especially in the rural areas, small and medium industries and micro-finance. There are also very strong linkages between income poverty and the other two PRSP Pillars. For example, access to justice, successful devolution, increasing the human capital of the poor, and ensuring effective safety nets are also central factors for increasing the incomes of poor people.
To increase incomes of poor households and build social capital, the ADB is funding a Micro-Finance Sector Development Program. As part of its objective to efficiently provide financial and social services to the poor, the ADB assisted with the establishment of the Khushali Bank, a public-private enterprise in partnership with NGOs, under this program. The ADB is also engaged in several rural development projects such as the Malakand, Federally Administered Tribal Areas, Bahawalpur, and Dera Ghazi Khan Rural Development Projects, to enhance household incomes, particularly for the smallholder and tenant farmers, and the landless.....

Riaz Haq said...

Overview of Livestock, Dairy, Fisheries & Poultry Sectors in Pakistan:

1 Dairy Sector
With an estimated 33 billion litres of annual milk production from 50 million animals, managed by
over 8 million farming households, Pakistan is the 5th largest milk producing country in the world
Livestock sector contributed approximately 53.2 percent of the agriculture value added and 11.4
percent to national GDP during 2009 – 10
The milk economy in terms of value is over 27% of the total Agriculture sector
Additional potential of 3 billion litres of milk, with a growth rate faster than any other sector
Of the total 33 billion litres of milk produced, 71% is rural based and 29% is urban based
Of the total production, around 3% is processed and marketed through formal channels
40% Supply and Demand gap exists in Pakistan.

2 Livestock Sector
Livestock sector contributed approximately 53.2 percent of the agriculture value added and 11.4
percent to national GDP during 2009?10.
Gross value addition of livestock at current factor cost has increased from Rs. 1304.6 billion
(2008?09) to Rs. 1537.5 billion (2009?10) showing an increase of 17.8 percent as compared to the
previous year.
The population growth, increase in per capita income and export revenue is fuelling the demand for
livestock and livestock products.
Pakistan earned USD717 million from leather exports in FY09 and a meagre USD96 million from meat
Poultry sector is one of the organized and vibrant segments of agriculture industry of Pakistan.
This sector generates employment (direct/indirect) and income for about 1.5 million people.
Poultry meat contributes 23.8 percent of the total meat production in the country
The meat demand for Pakistan Domestic market is growing at a rate of 2.73% for Beef, 2.90 % for
mutton and 6.10 % for poultry.
This domestic demand is growing to meet the population growth, human need for protein and
calcium, migration of population from rural to urban and the fluctuating growth due to per capita rise
in income.
3 Fisheries Sector

During the period July?March 2009?10 the total marine and inland fish production was estimated
952,735 Million tons out which 667,762 Million tons were marine production and the remaining catch
come from inland waters.
A number of sites have been earmarked on an area of 20,000 acres of land in Districts Thatta &
Badin along the coast.
Immense potential exists to start commercial scale fish/shrimp farming in Sindh.

4 Poultry Sector
Poultry is an important sub – sector of agriculture and has contributed enormously to food production by
playing a vital role in the domestic economy.
Poultry industry can broadly be divided into three
groups, viz. hatchery, poultry farming and feed sectors. This sector generates employment and income
for about 1.5 million people in Pakistan. Its contribution in agriculture growth is 4.81% and in Livestock
growth is 9.84%, whereas, the total poultry meat contributes to 23.8% of the total meat production in
the country.
Pakistan, with a population of 170 Million people, has gone through a sizeable growth in the production
of poultry meat and eggs. Per capita availability went up from 23 in 1991 to 46 eggs in 2009 and poultry
meat availability increased from 1.48kg to 2.88 kg during the same period. In our Country per capita
consumption of meat is only 7 KG and 60-65 eggs annually. Whereas developed world is consuming 41
KG meat and over 300 Eggs per capita per year. According to Industry sources there is capacity of 5,000
Environmental Control Houses in Pakistan and currently only 2,500 houses are working.
The total Poultry population in Pakistan is approximately 610 Million.

Riaz Haq said...

Here are some excerpts from an Op Ed in The Hindu on growing disconnect between mass media and mass reality:

•The mass reality in India (which has over 70 per cent of its people living in the rural areas), is that rural India is in the midst of the worst agrarian crisis in four decades. Millions of livelihoods in the rural areas have been damaged or destroyed in the last 15 years as a result of this crisis, because of the predatory commercialisation of the countryside and the reduction of all human values to exchange value. As a result, lakhs of farmers have committed suicide and millions of people have migrated, and are migrating, from the rural areas to the cities and towns in search of jobs that are not there. They have moved towards a status that is neither that of a ‘worker' nor that of a ‘farmer.' Many of them end up as domestic labourers, or even criminals. We have been pushed towards corporate farming, a process in which farming is taken out of the hands of the farmers and put in the hands of corporates. This process is not being achieved with guns, tanks, bulldozers or lathis. It is done by making farming unviable for the millions of small family farm-holders, due to the high cost of inputs such as seed, fertilizer and power, and uneconomical prices.
•India was ranked fourth in the list of countries with the most number of dollar billionaires, but 126th in human development. This means it is better to be a poor person in Bolivia (the poorest nation in South America) or Guatemala or Gabon rather than in India. Here, some 83.6 crore people (of a total of 110-120 crore) in India survive on less than Rs.20 a day.
•Eight Indian States in India are economically poorer than African states, said a recent Oxford University study. Life expectancy in India is lower than in Bolivia, Kazakhstan and Mongolia.
•According to the National Sample Survey Organisation, the average monthly per capita expenditure of the Indian farm household is Rs.503. Of that, some 55 per cent is spent on food, 18 per cent on fuel, clothing and footwear, leaving precious little to be spent on education or health.
•A report of the Food and Agriculture Organisation of the United Nations shows that between 1995-97 and 1999-2001, India added more newly hungry millions than the rest of the world taken together. The average rural family is consuming 100 kg less of food than it was consuming earlier. Indebtedness has doubled in the past decade. Cultivation costs have increased exorbitantly and farming incomes have collapsed, leading to wide-scale suicides by farmers.
•While there were 512 accredited journalists covering the Lakme India Fashion Week event, there were only six journalists to cover farmer suicides in Vidharbha. In that Fashion Week programme, the models were displaying cotton garments, while the men and women who grew that cotton were killing themselves at a distance of an hour's flight from Nagpur in the Vidharbha region. Nobody told that story except one or two journalists, locally.
Is this a responsible way for the Indian media to function? Should the media turn a Nelson's eye to the harsh economic realities facing over 75 per cent of our people, and concentrate on some ‘Potemkin villages' where all is glamour and show business? Are not the Indian media behaving much like Queen Marie Antoinette, who famously said that if people had no bread, they should eat cake.
No doubt, sometimes the media mention farmers' suicides, the rise in the price of essential commodities and so on, but such coverage is at most 5 to 10 per cent of the total. The bulk of the coverage goes to showing cricket, the life of film stars, pop music, fashion parades, astrology…

Riaz Haq said...

Here's the intro to an interview of Smita Narula, faculty director of the Center for Human Rights and Global Justice at New York University Law School, co-author of the report, "Every Thirty Minutes: Farmer Suicides, Human Rights and the Agrarian Crisis in India" as published by Democracy Now on Indian farmers plight:

A quarter of a million Indian farmers have committed suicide in the last 16 years—an average of one suicide every 30 minutes. The crisis has ballooned with economic liberalization that has removed agricultural subsidies and opened Indian agriculture to the global market. Small farmers are often trapped in a cycle of insurmountable debt, leading many to take their lives out of sheer desperation. We speak with Smita Narula of the Center for Human Rights and Global Justice at New York University Law School, co-author of a new report on farmer suicides in India.
SMITA NARULA: Good morning.

AMY GOODMAN: Talk about this report that you are just releasing today.

SMITA NARULA: Our major finding for this report is that all the issues that you just described are major human rights issues. And what we’re faced with in India is a human rights crisis of epic proportions. The crisis affects the human rights of Indian farmers and their family members in extremely profound ways. We found that their rights to life, to water, food and adequate standard of living, and their right to an effective remedy, is extremely affected by this crisis. Additionally, the government has hard human rights legal obligations to respond to the crisis, but we’ve found that it has failed, by and large, to take any effective measures to address the suicides that are taking place.

AMY GOODMAN: I mean, this number is unbelievable. Thirty—every 30 minutes, an Indian farmer commits suicide?

SMITA NARULA: And that’s been going on for years and years. And what these intense numbers don’t reveal are two things. One is that the numbers themselves are failing to capture the enormity of the problem. In what we call a failure of information on the part of the Indian government, entire categories of farmers are completely left out of the purview of farm suicide statistics, because they don’t formally own title to land. This includes women farmers, Dalit, or so-called lower caste farmers, as well as Adivasi, or tribal community farmers. In addition, the government’s programs and the relief programs that they’ve offered fail to capture not only this broad category, but also fail to provide timely debt relief and compensation or address broader structural issues that are leading to these suicides in the country....

Riaz Haq said...

Pakistan harvests bumper crop of wheat in spite of floods, reports Dawn:

ISLAMABAD: Pakistan is expected to produce at least 25 million tonnes of wheat in its 2010/11 crop, Finance Minister Hafiz Shaikh said on Friday, higher than the initial estimate.

“We are expecting that our wheat crop this year will cross 25 million tonnes,” he told reporters.

Industry officials had earlier feared the output would fall to 23.5 million tonnes against a target 25 million tonnes, after a decline in the area under wheat cultivation because of massive floods in 2010 and fertiliser shortages.

A food ministry official said good output was expected because of increased fertility in wheat-growing areas after the floods.

Pakistan produced a bumper crop of 23.8 million tonnes of wheat last year. The country consumes about 22 million tonnes a year. Harvesting of the 2010/11 crop is underway.

Asia’s third-largest wheat producer, Pakistan resumed wheat exports in January for the first time in three years after the government lifted a ban in December.

The three-year ban was lifted when the 2009/10 crop and carryover from the previous stocks led to market surplus.

Traders earlier hoped to export up to three million tones of wheat this year, but the quantity may now exceed that following new wheat output estimates.

The country had already exported or contracted to sell about 1.5 million tonnes of wheat so far.

Riaz Haq said...

Agriculturists expect substantial crop growth in financial year 2011/12 because of timely availability of water, according to The News:

General Secretary Sindh Abadgar Board, Syed Mehmood Nawaz Shah, told The News on Thursday that contrary to outgoing financial year, all crops are likely to record bumper output in 2011-2012 thanks to timely and sufficient availability of water.

He said that the problem is management of the upcoming bumper crops and they fear decline in prices as prices of cotton have gone down in the international market.

Pakistan Central Cotton Committee has set a target of 15 million bales this year. Cotton has a share of 6.9 percent in agriculture and 1.4 percent in GDP.

In 2010/11, major crops declined by four percent and farm sector recorded a modest growth of 1.2 percent.

Cotton and rice production remained low because of floods and rain, but wheat and sugarcane recorded growth, which saved the agriculture sector from negative growth.

Economic Survey of Pakistan 2010-11 said cotton was cultivated on an area of 2,689 thousand hectares, 13.4 percent less than last year (3,106 thousand hectares). The production is estimated at 11.5 million bales, lower by 11.3 percent over the last year’s production of 12.9 million bales and 17.9 percent less than the target of 14 million bales.

The reasons for decrease in production is loss in area under cultivation due to floods, rains, widespread attack of Cotton Leaf Curl Virus (CLCV) and sucking pest in core and non-core area, shortage of water due to canal closure during flood.

Shah said that CLCV attacked cotton in Punjab in the end of June, so this year they have sown early crop, whose results are still not known.

Sugarcane was cultivated on an area of 988,000 hectares, 4.8 percent higher than last year’s level of 943,000 hectares.

Sugarcane production for the year 2010-11 is estimated at 55.3 million tons as against production of 49.3 million tons last year, a rise of 12 percent.

Sugarcane is a major raw material for the production of white sugar and gur and is also a cash crop. Its share in value-added sector of agriculture and GDP is 3.6 percent and 0.8 percent, respectively.

Sources say that better market prices and timely payments by sugar mills encouraged farmers to grow more crop.

Area sown for rice is estimated at 2,365,000 hectares, 17.9 percent less than last year (2,883,000 hectares).

Rice has a share of 4.4 percent in agriculture and 0.9 percent in GDP. Pakistan grows high quality rice to meet both domestic demand and exports.

Rice production is likely to decline by 26 percent to 5 million tons in 2010-11 from 6.8 million tons last year, said a market source.

Rice export from Pakistan would be 2.6 million tons in FY2010-11 as compared with 3.8 million tons in 2009-10.

Rice productivity in Pakistan increased from the 1960s to the 1990s. Since then, it has seen a fall of about one percent per year. Therefore, it could not keep up the pace with growing demand, Ahmad Jawad, CEO of Harvest Trading told The News.

Major reasons for fall in rice production were floods and low market prices last year. Floods attacked mostly paddy growing areas in Sindh.

Area and production target of wheat for 2010-11 had been set at 9,045,000 hectares and 25 million tons, respectively. Wheat was cultivated on 8,805,000 hectares, showing a decrease of 3.6 percent over last year’s area of 9,132,000 hectares. However, a bumper wheat crop of 24.2 million tons has been estimated with 3.9 percent increase over the last year’s crop of 23.3 million tons.

Production of wheat increased due to timely fertiliser use and rainfall during pre-harvesting period.

Wheat is the main staple food for most of the population and largest grain source of the country. It contributes 13.1 percent to the value-added sector of agriculture and 2.7 percent to GDP.

Riaz Haq said...

Some 5,800 peasants in Sindh province are set to receive farmland previously designated as government-owned flood runoff. By the end of March, some 92,000 acres will be allotted to women only, according to Christian Science Monitor:

.....When the fields are cleared, Nimat Khatoon, a 50-something peasant farmer who has worked for the wealthy owner of these fields since her childhood has something worth the wait: a four-acre slice of land to call her own.

"It's something I couldn't dream of seeing in my lifetime. We're so happy," she says with a toothy grin, as her children play around her home made of wooden slats and a thatched roof.

Ms. Khatoon is one of some 5,800 peasants in the province of Sindh to receive farmland, previously designated as government-owned flood runoff, from the provincial government over the past two years. A total of 95,000 acres has already been doled out, and in March another 92,000 acres are to be allotted to women only.

The land allocations could help break the cycle of debt accrued by landless peasants, and serve as a jump-start to those whose livelihood was threatened even after the floods receded.

"Land is the main source of wealth in rural Pakistan," explains Amil Khan, a spokesman for the charity Oxfam, which is assisting the government with the project. "If you have no land you don't have a stake in the system."
Cycle of debt

Indeed, seeds and fertilizers are provided by landlords to tenants who are then forced into high interest rates when repaying their debt. What's more, it has become the norm for landless farmers to receive far less than half the profit from the crops, and use most of that to begin paying their never-ending debt.

The government of Sindh – a province home to Pakistan's biggest landlords – embarked on this project in an effort to redress this widening imbalance. But it has taken on a special significance after the 2010 floods, which destroyed 2 million hectares of crops, pushing landless tenants deeper into debt.
Khatoon's family still owes some 40,000 rupees ($470) to the landlord her family has worked under for generations – a princely sum, which could still take another year to clear – though thanks to her newly acquired land, she's hopeful that for the first time ever, the cycle of debt won't begin afresh next year.
After the floods

It's a rare piece of good news to come out of Pakistan after the floods. According to the United Nations World Food Program, hundreds of thousands of flood victims are still living in temporary camps or shelters, while analysts warn of Middle-East style unrest if food inflation, which has soared to some 64 percent in the past three years, continues to rise as the government prints money to finance its deficits.
Food insecurity continues, she explains, because "the livelihoods of the lowest strata are not being addressed. First, they are still beholden to debt cycles." Second, the low-interest loans from the government favor large landowners, she explains, because small-scale farmers usually don't use the banking system.

Dr. Habib says these policies came about because of the influence of feudal landowners in Pakistan's parliament, who have held sway since the country gained independence from Britain in 1947. But the move away from that to the new program is a key step toward undercutting that influence.

The Sindh government initiative distributes high-risk government land that runs alongside rivers and tributaries. This land was previously designated as government-owned flood runoff, but was used by local landlords. Rich landlords have struck back by filing legal challenges via local peasants in their employ, to wrest back land that was in their de facto control.

Riaz Haq said...

Here's a piece by Soutik Biswas of the BBC on challenges of reform in India:

The reforms also unleashed the entrepreneurial spirits of the "caged" Indian. The new economy has thrived - software has become a powerhouse industry. Most importantly, a substantial middle class has come into being between what one political scientist called a "small elite and a large impoverished mass". The newly confident middle class have gleefully abandoned Gandhian austerity for hearty consumerism, splurging on goods and services. India has produced the cheapest car, and offers the cheapest telephone calls, as well as heart and eye surgeries. It weathered the recession gamely, clocking nearly 7% growth during the worst of the downturn. Domestic savings remain robust.

That is where the India reform story comes to a halt, may say. These days, the world's 10th largest economy - which aspires to become the world's third largest by 2030 - is hobbled by what many call "policy paralysis", runaway inflation (nearly double the government's own "tolerable" estimate of 5%-6%) and is snowed under an avalanche of corruption scandals which smack of crony capitalism. Rising oil prices haven't helped matters. Interest rates have risen nearly a dozen times in almost an equal number of months. Spending is down.

But the bigger challenges lie ahead. Many believe that they will eventually decide whether India becomes a highly iniquitous and restive society or a more inclusive, stable one. How fast will the country be able to lift its poorest of the poor - mainly its tribespeople and Dalits (formerly untouchables) - out of poverty? Or will India continue to be a land where there are people "who sell newspapers they will never read, sew clothes they cannot wear, polish cars they will never own and construct buildings where they will never live", as Eduardo Galeano had once said evocatively, writing on a Latin American city.

A third of Indians still live below the poverty line, according to various estimates. A study by C Ravi of the Centre for Economic and Social Studies in Hyderabad actually found that poverty levels in 2009-2010 were 32%, an increase over 2007-2008, possibly due to the recession and severe drought. Other estimates point to a modest drop in poverty in recent years. Even the chief of India's Planning Commission, Montek Singh Ahluwalia, agrees that the drop in poverty is well below the government's own targets.

There are more worries. Half of Indians earn most from their farms, where growth has slowed down worryingly. Lack of access to basic services remains the most worrisome malaise, dragging down India's social indicators. Some 40% of children are suffering from severe malnutrition, more than 45% of them are not fully vaccinated and 41% of women are unable to deliver their children safely. There are worries, too, over the quality of education, with 43% of children dropping out of elementary school by their early teens, according to figures for 2007-2008. More than a third of 8-9 year-olds in villages cannot pass simple tests in reading and arithmetic. So the picture of inclusiveness, in the words of Montek Singh Ahluwalia, remains "mixed". He concedes that "both the extent of poverty and the lack of access to the essential services remain a serious problem".

Riaz Haq said...

Here's a Washington Post report on rising suicides in India:

NEW DELHI — Ram Babu’s last days were typical in India’s growing rash of suicides.

The poor farmer’s crop failed and he defaulted on the $6,000 loan he had taken to buy a tractor. The bank’s collectors hounded him, even hiring drummers to go round the village drawing attention to his shame.

“My father found it unbearable. He was an honorable man and he couldn’t take the humiliation. The next day he hanged himself from a tree on his farm,” his son Ram Gulam said Friday.

Babu’s suicide went unreported in local newspapers, just another statistic in a country where more than 15 people kill themselves every hour, according to a new government report.

The report released late Thursday said nearly 135,000 people killed themselves in the country of 1.2 billion last year, a 5.9 percent jump in the number of suicides over the past year.

The suicide rate increased to 11.4 per 100,000 people in 2010 from 10.9 the year before, according to the statistics from the National Crime Records Bureau.

Financial difficulties and debts led to most of the male suicides while women were driven to take their lives because of domestic pressures, including physical and mental abuse and demands for dowry.

A 2008 World Health Organization report ranked India 41st for its suicide rate, but because of its huge population it accounted for 20 percent of global suicides.

The largest numbers of suicides were reported from the southern Indian states of Kerala, Tamil Nadu, Andhra Pradesh and Karnataka, where tens of thousands of impoverished farmers have killed themselves after suffering under insurmountable debts.

The loans — from banks and loan sharks — were often used to buy seeds and farm equipment, or to pay large dowries to get their daughters married. But a bad harvest could plunge the farmer over the edge.

Sociologists say the rapid rise in incomes in India’s booming economy has resulted in a surge in aspirations as well among the lower and middle classes, and the failure to attain material success can trigger young people to suicide.

“The support that traditionally large Indian families and village communities offered no longer exists in urban situations. Young men and women move to the cities and find they have no one to turn to for succor in times of distress,” said Abhilasha Kumari, a sociology professor in New Delhi.

Riaz Haq said...

Here's a report on Huntsman's investment in dye and chemicals plant in Pakistan:

Huntsman Textile Effects, a Singapore-based global provider of high-quality dyes and chemicals to the textile and related industries, has opened its 13th Formulation & Distribution Center, in Karachi, Pakistan.

The 43,000-square-foot facility boasts state-of-the-art equipment and new technology to bolster Huntsman TE’s competitiveness and presence in the Pakistan market. The center is located at the Landhi Industrial Area. Pakistan represents a fast-growing market of increasing importance for Huntsman TE and the launch of this facility strengthens the firm’s commitment to it.

“With the opening of our new, low-cost production facility for formulated chemicals in Karachi to meet increasing local demand, we will considerably increase our competitiveness and flexibility in textile chemicals in this key Asian textile market,” said Paul Hulme, president of Huntsman TE. “Our well-established partner, Swisstex, will continue to provide enhanced sales activities, enabling us to concentrate on all formulation and production aspects using our cutting-edge technology to develop innovative products and technologies, market solutions with intelligent effects to this growing market."

Huntsman specializes in products and technologies with intelligent effects, such as built-in freshness, sun protection or dyes to reduce water and energy consumption. It has operations in 110 countries. The company had 2010 revenues of more than $9 billion.

Riaz Haq said...

Here's a Daily Times story on Pakistani Punjab's participation at an Ag exhibit in Germany:

Diplomats, international economic experts and investors in Berlin, Germany have termed the exhibition of agriculture items of Pakistan in Berlin as a great success of Punjab and Pakistan. As many as 21 different products and agriculture items have been displayed in the exhibition by Pakistani farmers and industrialists.

Addressing a function held in connection with the exhibition, Punjab Chief Minister Shahbaz Sharif said that he was thankful to political leadership and senior officials of Germany for the warm welcome extended to him and his entourage.

A large number of European investors, diplomats, Pakistani citizens and farmers attended the function. The chief minister expressed the confidence that his visit would help promote export of agriculture items of Pakistan and strengthening of Pak-German relations. He praised that the hospitality extended by German government and said he would always remember the people there.

Former MPA Chaudhry Arshad Jutt, who was also a member of the delegation, apprised the audience that the exhibition was the result of the chief minister and his colleagues’ efforts. He said that the chief minister and his colleagues paid all expenses from their own pockets for participating in it. Agriculture Secretary Arif Nadeem said that the Punjab government had allocated Rs 2 billion for promoting export of agriculture items to foreign countries. He said that due to the steps taken for this purpose, now farmers had to pay only 30 percent whereas the remaining 70 percent expenses would be borne by Punjab government.

The Livestock secretary said that besides export of high quality meat to European countries and setting up of modern slaughterhouses in Punjab, production of livestock was also being increased. Punjab Investment Board Vice Chairman Muftah Ismael said that Punjab government had sent teams to various countries for the promotion of exports.

Earlier, the chief minister and his team attended a reception arranged by the head of multinational company Metro. Shahbaz said that he and his government were thankful of the Metro International for the assistance provided for the exhibition of agriculture items in Germany.

Expressing his views regarding exhibition, Metro International chairman said that the chief minister and his government had taken a bold initiative through this exhibition. Dr Andreas Kohler, member parliament and president chamber of law, said that this exhibition would play an important role in dispelling the impression of extremism and terrorism about Pakistan existing in the western world. He said that Germany was ready for extending all kind of cooperation to Punjab in arranging more such exhibitions.

Shahbaz also visited a modern slaughterhouse in East Berlin. He evinced keen interest in various sections of the slaughterhouse. He said that similar slaughterhouses were being set up in Punjab for increasing the production and export of meat. The chief minister further said that like fruit and vegetables, Punjab government is also taking extraordinary measures for promotion of livestock.\01\23\story_23-1-2012_pg7_23

Riaz Haq said...

Here's an FT story on EU trade concessions for Pakistan textile exports to Europe:

... the proposal has been held up in a series of negotiations at the World Trade Organisation, which must approve the exemptions.

EU officials are optimistic that countries that had raised objections – including India, Bangladesh, Brazil, Indonesia and Vietnam – are now prepared to endorse the measures at a series of WTO meetings in February. France, Italy and Portugal had also initially been wary of the deal, fearing it might hurt their domestic textile industries.

With the WTO hurdles cleared, the EU could enshrine the trade terms as soon as April or May, said Lars-Gunnar Wigemark, the EU ambassador to Pakistan.

“We are hopeful these trade concessions will finally be approved by the WTO, and then adopted into law by the European Union,” Mr Wigemark told the Financial Times on Monday. “It looks very positive.”

The EU hopes the concessions – which are due to last at least two years – will buttress a broader drive by Brussels to improve relations at a time when Pakistan’s ties with the US are at their most strained in a decade.

Pakistan has long lobbied western countries for greater access for its textiles – which account for some 60 per cent of its exports – with limited success.

Under the deal, the EU will remove tariffs on a list of more than 70 items, mainly textile products but also some ethanol.

India, Pakistan’s regional rival, had been one of the first countries to oppose the plan, but shelved its objections last year as both sides began to take steps to improve ties. EU officials have lobbied other countries who had raised objections to follow suit.

The prospect of EU concessions is a ray of light for Pakistan’s battered economy. The country of 180m people achieved robust growth in the first half of the last decade, but expansion has slowed significantly in more recent years due to in part to energy shortages, floods and militant violence.

The central bank warned at the weekend that it would be difficult for Pakistan to achieve its target of 4.2 per cent GDP growth in the 2012 financial year as global prices for its farm exports softened and chronic gas shortages persisted.

Suleman Maniya, an analyst at IGI Securities in Karachi, the commercial capital, believes the EU trade package could generate $100m-$300m of additional textile export earnings a year. Pakistan exported about $13bn of textile products last year, he said. “It’s not a game-changer, but it’s still a welcome boost,” he said of the EU deal.

Pakistan’s textile industry is in the throes of a consolidation that has seen severe shortages of electricity and natural gas force smaller, family-run businesses to close, while the biggest players record healthy profits.

Mr Maniya believes the EU concessions will largely benefit major textile concerns such as Nishat Mills or Gadoon because he says many of the tariff exemptions apply to products such as yarn or cloth that such companies produce in large quantities.

Riaz Haq said...

Here's a Daily Times story on Karachi Textile Expo 2012:

The textile sector is likely to fetch more than $45 million export orders during three-day 9th Textile Asia 2012 International Exhibition, textile experts said Saturday.
During previous international event in 2011, Pakistan fetched more than $31 million worth of orders for different categories of textile products, they added.
Adviser to Prime Minister on Textile Dr Mirza Ikhtiar Baig inaugurated the 9th Textile Asia 2012 event at Karachi Expo Centre.
It is the largest annual textile and garment machinery show of textile industry of Pakistan.
This year more than 276 exhibitors from 39 countries representing 369 international brands are participating in the event.
Besides a large number of textile sector’s representatives along with 271 foreign delegates are attending the exhibition.
The demand for textiles in the world is around $18 trillion, which is likely to be increased by 6.5 percent. China is the leading textile exporter of the world’s total exports of $400 billion.
Export of China stands at $55 billion, Hong Kong $38 billion, Korea $35 billion, Taiwan $16 billion, and Indonesia and Pakistan $14 billion.
Pakistan has emerged as one of the major cotton textile product suppliers in the world market with a share of world yarn trade of about 30 percent and cotton fabric about 8.0 percent, having total export of $13.8 billion, which accounts for only 1.2 percent of the overall share. Out of this cotton fabric is 0.02 percent, made-ups 0.18 percent and garments is 0.15 percent.
Textile sector is the backbone of the country’s economy having 56 percent of total exports and 38 percent job creation in the manufacturing sector. Nearly all the world-renowned brands are manufactured in Pakistan keeping high standard of international quality and competitiveness.
Pakistan is the fourth largest producer of cotton yarn and cloth in the world after China, which is number one besides, Pakistan ranks second in export of yarn and third in export of cloth and fourth largest producer and consumer of raw cotton.
The textile sector in 2011 has registered an impressive growth of 38 percent and it was expected after European Union’s (EU) duty free export of 75 products from Pakistan out of which 65 are textile products, the sector would fetch more than $25 billion export target. The EU facility is initially for two years, extendable for third year after which Pakistan would quality for Generalised System of Preferences (GSP) plus status to export duty free to EU as per revised criteria agreed with EU.\03\11\story_11-3-2012_pg5_12

Riaz Haq said...

Cotton availability in Pakistan rises 25% YoY, reports fiber2fashion:

There has been a substantial increase of more than 25 percent in arrival of cotton in Pakistan markets this season compared to last season.

Besides, there has also been a significant rise of 77 percent year-on-year in cotton exports from Pakistan this season.

Citing figures from Pakistan Cotton Ginners Association (PCGA), Mr. Muhammad Azam, Secretary-General and Chief Operating Officer of All Pakistan Textile Mills Association (APTMA), told fibre2fashion, “Compared to total arrivals of 11,502,408 cotton bales of 170 kg each during 2010-11 season up to March 1, 2011, a total of 14,378,962 bales have arrived in market this season up to March 1, 2012. Thus, there has been an increase of 2,876,534 bales or 25.01 percent over the previous season.”

Informing about the number of cotton bales pressed by various ginneries across Pakistan, he says, “Up to March 1, 2012, this season, 14,301,516 bales were pressed at various ginneries. In comparison, 11,467,821 bales were pressed during the same period in 2010-11 season. Thus, 2,833,695 bales or 24.71 percent more bales have been pressed this season.”

Talking about cotton exports, he says, “The exports have boomed 77.89 percent this season. Pakistan exported 920,706 bales up to March 1 this season, against exports of 517,567 bales registered during the same period last season. Thus, 403,139 more bales have been exported this season.”

“The textile mills in Pakistan have consumed only 17.68 percent or 1,871,840 more bales this season compared to previous season. Up to March 1, 2012, textile mills in Pakistan purchased 12,462,112 cotton bales, against their purchase of 10,590,272 bales during the same period in 2010-11 season,” he mentions.

Riaz Haq said...

Here's an ET report on falling Lotte profits because of oversupply, lower demand and lower prices of polyester:


After making more than Rs2 billion in the same quarter last year, Lotte Pakistan PTA profits nosedived 93% to Rs151 million amid falling prices of its primary product during January to March 2012.

The massive decline was on account of reduced primary margins amid oversupply of the product emerging in the Asian PTA (purified terephthalic acid) industry.

PTA is widely used in making polyester fibres along with food and beverage containers. Polyester fibres are used to make fabrics for apparel and home furnishings such as bed sheets and curtains. It is also spun together with natural fibres such as cotton to produce a cloth with improved properties such as wrinkle resistance.

Demand from the PSF sector has shifted towards cotton amid bumper crop and lower prices.

The result is still better than market expectation as analysts expected the company to post a loss. The stock value increased by Rs0.16 to Rs8.79 at the Karachi Stock Exchange on Tuesday.

PTA prices fell 18% to average $1,190 per ton in the review period compared with US$1,457 per ton in the same quarter last year.

Overall gross margins dipped to 2% compared with 24% in the same quarter last year.

Reduced earnings also attributed to 52% decline in interest income to Rs130 million against Rs272 million in the period under review. The company’s cash balance has declined due to capital expenditure associated with its power project.

Riaz Haq said...

Here's Fiber2Fashion report on value-addition by Pakistani yarn spinners:

everal cotton spinning companies in Pakistan are investing in value-addition as well as in compact yarns to beat the economic downtrend and to survive.

The excessive power and gas shortages is also forcing the high power consuming spinning industry to go for innovative value-added products that consume less energy.

Mr. Abid Farooq, Managing Director of Ali Akbar Spinning Mills and former chairman of APTMA, told fibre2fashion, “A lot spinning units are investing hugely into compact spinning nowadays and every conventional non-compact spinning mill is investing some money in compact yarns.”

Explaining the reason, he says, “Pakistan has a certain share in world yarn market, which is not likely to increase in near future. There is too much competition and the spinners cannot increase their capacity to export as the yarn export market is limited.”

“On the other hand, there is still a lot of room for the value-added yarn products to get higher market share compared to yarn. So, that is one reason for several spinners diversifying into manufacturing of downstream products. They have invested in value-addition to get a greater share in the Chinese and the European markets,” he adds.

Pakistan is facing a huge shortage of power, electricity and gas, which prevents addition of new capacities in spinning industry. Spinning machines require a lot of energy, so spinners are moving into value-added areas that need less energy.

As Mr. Farooq says, “Making new investments for manufacturing of value-added downstream products is another form of survival for the Pakistan spinning industry because spinning in itself is a very competitive industry and it is very technical. So, most of the new investments are going into value-addition.”

Talking about the knitwear sector, he avers, “The knitwear sector is coming back to life from a very bad slump a few years ago. Several knitwear units that had closed down are being revived again. The increase in dyeing and finishing capacities is also helping the sector.”

Riaz Haq said...

Telenor to offer agri info to farers via its wireless telephone network, reports newstribe:

Telenor Pakistan, in partnership with the Government of Khyber-Pakhtunkhwa, will provide agriculture and livestock information to farmers in the province.

In addition, farmers will be offered the Easypaisa platform to trade in agricultural commodities. Information will be provided via push SMS, voice recordings and small community gatherings.

The aim is to benefit farmers — especially small farmers — by providing them relevant and timely information, and the ability to carry out related mobile transactions on their handsets. All information will be provided by the Government of Khyber-Pakhtunkhawa while Telenor Pakistan will act as the distribution channel of the information. A pilot project will initially be run in Mardan district.

To mark the occasion an MoU signing ceremony was arranged at a local hotel. Arbab Muhammad Ayub Jan, Minister for Agriculture, Khyber Pakhtunkhwa was the chief guest. The MoU was signed by Roar Bjaerum, Vice President Financial Services, Telenor Pakistan and Arbab Muhammad Ayub Jan, Minister for Agriculture, Khyber-Pakhtunkhwa.

Roar Bjaerum, in his comments, highlighted the benefits the project will bring to the farmers of the province. “We will provide farmers the information they need to grow better crops and to raise hardy livestock. By doing so, we want to help them make more informed decisions when it comes to agriculture and livestock planning and trading. This way we hope to contribute toward alleviating poverty and empowering farmers economically. We will also offer mobile branchless banking solutions to enable farmers to carry out transactions right on their mobile phones through Easypaisa.”

Ayub Jan in his remarks spoke about the partnership between Telenor Pakistan and the Government of Khyber Pakhtunkhwa’s Agriculture, Livestock and Cooperative Department (ALCD). He said: “The Department has the mandate of promoting the interests of agriculture and livestock farmers in the province of Khyber Pakhtunkhwa. It has undertaken various initiatives to modernize the sector, and to augment the dissemination of relevant information to farmers to help increase production. Our partnership with Telenor Pakistan is another step in this direction. We are ready to offer all the support it needs to achieve its goals for this project.”

Small farmers, living in far-flung areas, are usually isolated from market information which may help them in dealing with commodity whole sellers (‘beopari’ and ‘arthis). They also do not have immediate access to information about best practices in agriculture and livestock rearing.

Telenor Pakistan’s project will help farmers in getting the information they need to increase yield through access to best quality commodities, latest agri trends, information on judicious use of pesticides and fertilizers, best breed of livestock, new methods of disease control, and quality feed and fodder.

Riaz Haq said...

Here's Daily times report on cotton & textile industry in Pakistan:

All Pakistan Textile Mills Association (APTMA), with over 50 percent ($14.8 billion) contribution to the total national exports ($25 billion) and 78 percent share in the textile exports of the country, is the largest trade union of Pakistan as well as contributor to the national economy of the country.

Due to effective policies and leadership of APTMA, this year cotton production increased to 15 million bales despite two million bales lost due to floodwaters, as compared to the last year’s 11.7 million bales, thus making Pakistan self-sufficient in cotton sector for the first time in 10 years.

To rid the country of energy crisis, the association is actively engaged with various stakeholders, including the Sui Northern Gas Pipeline Limited (SNGPL), Petroleum and Gas Ministry and standing committees of the National Assembly. Out of 300 days, gas remained closed for 156 days causing loss of $5 billion cotton to production capacity of the country. Advocating the case effectively with the government, the association ensured five days a week gas supply to the industry, besides getting electricity load shedding exemption.

The association’s proposal of levying gas surcharge for gas exploration and laying of new pipelines was accepted. The APTMA leadership and members are also advocating for the Vision 2020 to resolve the gas crisis and sustainable growth of the energy sector, while clarifying how much energy is going to be produced from hydel, coal and other sources besides gas exploration. The association believes that only a futuristic vision can ensure affordable energy for the industry as well as domestic sector of the country.

APTMA group leader Gohar Ejaz said their strong advocacy for the free market mechanism during 2010-11 helped transfer Rs 400 million to Pakistani cotton farmers, equal to their income of eight years, and in the wake of price increase in the international market, remained the biggest contribution of APTMA for the welfare of the stakeholders. He said farmers got prosperity, which resulted in value addition to the crop and an increase of $5 billion export. While in 2011-12, resolving the energy crisis for the Punjab industry remained one of the biggest contributions of APTMA, he said.
Research and development is the key to survival and growth of any industry. Realising this aspect, APTMA has made it a law to collect Rs 20 per cotton bale from the mills to spend this amount on research through Pakistan Central Cotton Committee (PCCC), a semi-autonomous body, with the federal minister for textile industry as its president. Last year, APTMA contributed Rs 300 million, as collected against the production of 15 million cotton bales in the country.

APTMA is also fulfilling its corporate social responsibility towards promotion of textile education in Pakistan. The association established textile colleges in Faisalabad, Karachi and other cities, which were later handed over to the government.

Established since 1957, APTMA is the premier textile industry association having 350 member mills and offices in Lahore, Karachi, Islamabad and Peshawar. Although textile sector has a total 14 associations of various stakeholders, APTMA is the only body, which is taking up the case of whole sector to provincial, national and international level for the growth of the sector – from farmer to exporters.

Textile industry contributes 8.5 percent of the GDP, while APTMA is 50 percent of 8.5 percent textile contribution towards GDP. APTMA provides direct employment to one million workforce as well as three million indirect jobs.

Pakistan is the fourth largest cotton producer in the world as 98 percent of 15 million cotton bales produced in Pakistan are consumed by APTMA members.\05\07\story_7-5-2012_pg7_5

Riaz Haq said...

Here's Fiber2Fashion story on Pak textile manufacturers diversifying into retail brands:

For long, several globally renowned apparel brands have been sourcing their fabric and clothing requirements from Pakistan. But, there have been very few Pakistani companies with brands of their own.

However, some companies that are engaged in export-oriented textile manufacturing are now diversifying into retailing through setting up their own apparel brands.

One such example is the Karachi-based ZK Industries, which ventured into retailing of its own branded garments four years ago.

Explaining the reason for his company’s diversification into retail segment, Mr. Younus Muhammad Bashir, Managing Director of ZK Industries, told fibre2fashion, “When we manufactured for others, we were just vendors. As time passed, competition increased and we thought that when we can manufacture for other brands we can have our own brand as well.”

“Till 2008, we were just vendors and we entered into the retail business in January 2009 by opening our first outlet in Karachi. Today, we have seven outlets – six in Pakistan and one in Dubai – and there are few more stores coming up soon,” he informs.

ZK Industries’ retail business is doing well and the company plans to launch more new products. Although the firm’s main business is fabrics, it is venturing into retailing of ready-to-wear garments.

Comparing manufacturing with retail, Mr. Bashir says, “Manufacturing business has a big volume while retail does not have such a volume. Manufacturing has a limited market and you meet limited set of people, and there is no direct interaction with the end consumers.”

“On the other hand, retail has its own charm. Whatever you sell in retail, you are paid immediately in cash for it. Moreover, being in the market and meeting new people everyday aids better idea generation. Being in direct touch with the consumers gives a better understanding of the consumer choices and preferences. The emergence of social media has made retailing even more interesting,” he concludes.

Riaz Haq said...

Here is a News story on Pakistan's textile-based exports:

Leading economists and entrepreneurs from other sectors at a discussion program titled ‘What is wrong with Pakistan’s economy?’, regretted the textile-specific approach of Pakistan’s economic planners that had led to the exclusion of other more lucrative sectors like engineering, information technology, mining and fuel, and agricultural products.

“Pakistan should look beyond textiles to ensure sustained exports and economic growth,” they claimed “as textiles, with only a 5.6 percent share in the total global trade, limit the opportunities for broad based growth. And textiles are also the first casualty in a recession.” Engineering entrepreneur Almas Hyder appealed to the government to have a wider vision and make a paradigm shift in its industrial policy. He said that attention should now be focused on sunrise industries like engineering, chemicals, bio-technology, IT, agriculture-livestock and pharmaceuticals.

Almas said that the government should realign its economy as well as its resource allocation to ensure uninterrupted growth. If these sectors had been given equal importance as that given to textiles, it would have shielded the economy from the ups and downs in a global economy. He said that in a recession, the first expense that people cut down on is of clothing, which is the reason that the textile trade has always come under stress in case of a global or regional recession, as the one being witnessed in Europe these days.

Senior Economist Naveed Anwar Khan pointed out that manufacturing and engineering goods account for 67.50 percent of the total global trade, while mining and fuel account for over 12 percent, agricultural products 10 percent and non-ferrous metals 1.8 percent. Instead of giving attention to around 94 percent of the global trade, Pakistan was only concentrating on the 5.6 percent textile’s trade.

He averred that this preference and attention bestowed on this sector, in the form of energy and power, has not paid any dividends as Pakistan’s share in the total global textile trade remained less than 2 percent. And that even Bangladesh, which had entered the textile sector in the early 1990s, had higher textile exports than Pakistan. He summed up that while the textile sector should be facilitated by the state, other sectors should also be given equal importance.

“Value addition in engineering goods is much higher than the value addition in textiles” stated Iftikhar Ali Malik, former president Federation of Pakistan Chambers of Commerce and Industry. He elaborated that auto parts made from plastic, steel or even cardboard fetched a much higher price than the cost of their raw materials. While 70 percent of the input cost was cotton in yarn manufacturing, in a car filter or a plastic or steel auto part, the cost of the card board, plastic or steel was10-20 percent and the value addition was high.

He regretted the fact that the engineering goods manufacturers were not facilitated by the state in the same way as textiles were by them. The added that the engineering industry has a long gestation period and is more entitled to concessional credit than textiles.

Riaz Haq said...

Here's a Wall Street Journal piece on India's drought hurting the economy:

The specter of a drought hanging over major tracts of farmland across India isn't just bad news for crops but also could pour sand into one Indian economic engine that has been a big driver of growth: rural consumer spending.

That spending has been a major boon to consumer-goods companies in the past decade, and a big reason India's economy has seen unprecedented growth rates of above 8% in recent years despite global uncertainties.

But the lackluster monsoon has added to the clouds gathering over India's economy, which grew 5.3% in the first three months of 2012, its slowest rate in almost a decade.

"Not only will there be an impact on the performance of the agricultural sector, but also on other sectors through the effect on rural incomes," said Chandrajit Banerjee, director general of the Confederation of Indian Industry, the leading industry association.

More than 50% of India's overall consumption comes from rural areas, which account for about 70% of the population. Agriculture accounts for about 17% of India's gross domestic product.

The weak monsoon will have "a significant indirect impact on the economy, and industry would be affected due to fall in rural demand," said Sunil Kant Munjal, joint managing director of Hero MotoCorp Ltd., the country's largest two-wheeler company by sales, in a written response to questions.

Mr. Munjal said sales of two-wheelers such as motorcycles and scooters would "certainly be affected" as 45% of sales come from rural areas. He added that lower-than-usual food crops could also raise food prices, hitting spending power even more.
Anil Kumar Mittal, whose Ludhiana shop sells pesticides and fertilizers, says farmers have used up their cash reserves on diesel to drive pumps to draw groundwater in the absence of rain.

"Last year around this time, business was so brisk that I would barely have time to talk, except for business," he said.

Half of the revenue in the fast-moving consumer-goods industry comes from rural areas. Usually, sales of such items as TVs, radios and processed food rise immediately after the harvest in October of summer-sown crops like rice, as that also coincides with the season of gift-heavy festivals such as Diwali.

But the season may not bring much cheer this year.

"A weak monsoon may impact sales of consumer electronic products in the semiurban or rural markets of India," said Mahesh Krishnan, vice president of Samsung India, in a written response.

Riaz Haq said...

Here's Wall Street Journal story on Indian farmers' dependence on rain:

The southwest monsoon arrives over India mainly via winds from the Arabian Sea. It usually hits the mainland through the southern state of Kerala by late May or early June and then gradually moves north to cover the entire country by mid-July.

The timing, distribution and quantity of monsoon rains are vital to India's agriculture sector and economy. Nearly two-thirds of the country's farmlands are rain-fed, and about 600 million people are dependent directly or indirectly on agriculture. Agriculture accounts for 17% of gross domestic product.

This year, the monsoon arrived late over Kerala. Its progress over the rest of India has been sporadic, and rains have failed to pick up over eastern and northwestern parts of the country.

To date, rainfall is about 17% below the 50-year average, But in northwestern grain bowl states such as Punjab, Haryana and Rajasthan the deficiency has been much worse, with rainfall of 60%-70% below average.

Parts of the western states of Gujarat and Maharashtra and the southern state of Karnataka have also been affected with the rainfall deficiency ranging from 30% to 70%.

How the monsoon gathers momentum as it progresses toward India's mainland varies from year to year. D.S Pai, head of long-range forecasting in the India Meteorological Department, said this year, the build-up of moisture-laden monsoon winds from the Arabian Sea had been weak and had shifted toward the eastern half of the country from the west due to the play of certain sea winds.

El Niño, a weather phenomenon that usually disrupts rainfall in India, is also expected to emerge in September and could further deepen the crisis. Recently, the India Meteorological Department said that rainfall through the monsoon season is likely to be 85% of the long-period average.

Riaz Haq said...

Here's Express Tribune of disproportionate impact of energy crisis on small textile mills:

The energy crisis has hit Pakistan’s textile industry badly, but not all textile companies are hurt: the largest players are doing just fine, relying on a combination of the advantages of their economies of scale but also government-sanctioned privileges not available to smaller industrial players.

At least part of the reason why the bigger companies are doing better than the smaller ones appears to be the natural advantages that come with being a larger player, such as having a vertically integrated business model.

Kamal Yousaf, CEO of the Kamal Group of Industries, a textile conglomerate based in Faisalabad, says that part of his group’s advantage over smaller rivals in their ability to harness synergies within the group. The weaving, processing and dyeing, garment manufacturing, and trading arms all work as a unit, helping the group weather price hikes in raw material or other issues.

The Nishat Group, meanwhile, benefits from the fact that it owns the fourth-largest bank in the country – MCB Bank – allowing it to avoid cash flow issues and raise capital for efficiency improvement projects. Nishat Textile, therefore, never has a problem in paying wages to its employees and was able to raise Rs1 billion to invest in a 6.2-megawatt power generation unit that runs on biomass. Electricity produced in this manner is expected to be about 6% more expensive than that provided by the grid, but is far more reliable at a time when Punjab’s industry is especially hampered by severe power outages that last several hours a day.

And many larger textile mills are able to purchase large stocks of raw materials that insulate them from price shocks. More than half the cost of producing a piece of clothing is often still the cost of cotton, even for some of the largest players.

Yet at least part of the advantage appears to be built in by the government. One of the biggest reasons why larger textile mills, particularly in Punjab, have been able to do well is that most have installed captive power plants that – despite operating at one-third the efficiency of the grid’s power station – are getting gas supplies to produce power at a marginally lower cost than what they would get from the grid.

However, these captive plants have been getting gas even at the expense of the rest of the grid, meaning that even while the largest and richest textile exporters save a few pennies on their production costs (power accounts for 3% of all costs for the larger firms), all of Punjab is going through massive power outages because the power plants that supply electricity to ordinary citizens and smaller industries are getting less gas, sometimes even no gas.

Meanwhile, smaller textile players have less reliable power from the grid, a supply that is made more intermittent by the fact that the fuel for the grid’s power goes to their larger textile rivals. At the same time, banks charge the smaller players higher interest rates, since they are viewed as bigger risks for not having their own captive power supply.

“The smaller guys cannot afford to run their factories on diesel generators,” said Muzammil Aslam, managing director at Emerging Economics Research....

Riaz Haq said...

Here's a PakistanToday report on raising wheat yield in Pakistan:

American scientists and Pakistani wheat experts are collaborating to increase Pakistan’s wheat harvest and ensure greater prosperity to farmers nationwide.
A bi-national team of scientists, sponsored by the US Department of Agriculture (USDA), met in Faisalabad last week to evaluate wheat varieties for disease-resistance, according to a statement issued by the US Embassy.
In order to determine which wheat varieties will perform best in Pakistan’s unique ecosystem, US and Pakistani researchers studied the effects of heat and other types of environmental stress on the different varieties of wheat that can be planted in Pakistan.
USDA, through its Wheat Productivity Enhancement Project (WPEP), currently helps evaluate 60 wheat varieties planted in 115 wheat trials throughout Pakistan. In order to increase the quality of this joint research, last week USDA also provided Pakistani research institutions specialized wheat planting and harvesting equipment. The new machines, which replaced equipment over 25 years old, will allow scientists to study more wheat varieties each year and more rapidly improve Pakistani farmers’ harvest yields.
“Wheat is critical to the food security of both Pakistan and the United States,” said USDA Plant Health Advisor Ian Winborne after a ceremony at Ayub Agricultural Research Institute (AARI) celebrating the handover of the new equipment. He added, “Lasting links between Pakistani and US scientists can help improve and protect agricultural harvests in both our countries.”
WPEP facilitates scientific collaboration between USDA, the International Maize and Wheat Improvement Center (CIMMYT), and Pakistan’s national wheat programs. WPEP funds scientific exchanges to develop, introduce, and test disease-resistant wheat varieties; improve agronomic practices; and upgrade research capacity in Pakistan.
This initiative is just one part of a comprehensive US economic growth assistance program which includes expanding irrigation by more than 200,000 acres near the Gomal Zam and Satpara dams; constructing more than 1,000 km of roads to connect communities and facilitate trade; modernizing dairy farms in Punjab; and launching private equity investment funds to help small and medium businesses grow.

Riaz Haq said...

From The Economist Mag: A robotic sewing machine could throw garment workers in low-cost countries out of a job

HUMAN hands are extremely good at making clothes. While many manufacturing processes have been automated, stitching together garments remains a job for millions of people around the world. As with most labour-intensive tasks, much of the work has migrated to low-wage countries, especially in Asia. Factory conditions can be gruelling. As nations develop and wages rise, the trade moves on to the next cheapest location: from China, to Bangladesh and, now that it is opening up, Myanmar. Could that migration be about to end with the development of a robotic sewing machine?

There have been many attempts to automate sewing. Some processes can now be carried out autonomously: the cutting of fabric, for instance, and sometimes sewing buttons or pockets. But it is devilishly difficult to make a machine in which fabric goes in one end and finished garments, such as jeans and T-shirts, come out the other. The particularly tricky bit is stitching two pieces of material together. This involves aligning the material correctly to the sewing head, feeding it through and constantly adjusting the fabric to prevent it slipping and buckling, while all the time keeping the stitches neat and the thread at the right tension. Nimble fingers invariably prove better at this than cogs, wheels and servo motors.

“The distortion of the fabric is no longer an issue. That’s what prevented automatic sewing in the past,” says Steve Dickerson, the founder of SoftWear Automation, a textile-equipment manufacturer based in Atlanta, where Dr Dickerson was a professor at the Georgia Institute of Technology.

The company is developing machines which tackle the problems of automated sewing in a number of ways. They use cameras linked to a computer to track the stitching. Researchers have tried using machine vision before, for instance by having cameras detect the edge of a piece of fabric to work out where to stitch.

The Atlanta team, however, have greatly increased accuracy by using high-speed photography to capture up to 1,000 frames per second. These images are then manipulated by software to produce a higher level of contrast. This more vivid image allows the computer to pick out individual threads in the fabric. Instead of measuring the fabric the robotic sewing machine counts the number of threads to determine the stitching position. As a consequence, any distortion to the fabric made by each punch of the needle can be measured extremely accurately. These measurements also allow the “feed dog”, which gently pulls fabric through the machine, to make constant tiny adjustments to keep things smooth and even.


Shoemakers are already using 3D printers, which build up material additively, to make prototypes of shoes. Exotic clothing and shoes made with 3D printers are becoming regulars on the catwalks at many of the world’s leading fashion shows, although the materials they are printed from tend to be various sorts of plastic, which can make the garments somewhat clunky and shoes a bit clog-like. However, researchers are working on ways to print more flexible materials. One such project involves a collaboration between Disney, Cornell University and Carnegie Mellon University. Their 3D printer uses layers of off-the-shelf fabric to make soft objects, such as cuddly toys.

Riaz Haq said...

From United Nations Industrial Development Organization (UNIDO):

Pakistan Manufacturing Value Added (MVA):

MVA per capita at constant 2005 prices increased from US$135.03 in 2005 to $143.84 in 2014

MVA as percentage of GDP at constant 2005 prices in US$ decreased from 18.05% in 2005 to 17.41% in 2014

India Manufacturing Value Added (MVA):

MVA per capita at constant 2005 prices increased from US$155.73 in 2005 to $168.42 in 2014

MVA as percentage of GDP at constant 2005 prices in US$ decreased from 15.10% in 2005 to 13.85% in 2014

China tops the list of world's 10 largest industrial producers. It is followed by the US, Japan, Germany and South Korea, according to United Nations Industrial Organization (UNIDO).

India ranks 6th in the world in terms of total manufacturing output in 2013, up from 9th place in 2008,

India's manufacturing value added (MVA) per capita of 161.7 in 2013 is among the lowest in the world. It's up from 131.9 in 2008.

In fact India's 2008 MVA per capita of 131.9 was lower than Pakistan's 141.1. Since 2008, Pakistan's MVA per capita has slipped to 139.1 in 2013 while India's has increased to 161.7 in this period.

Bangladesh's MVA per capita has jumped from 82.2 in 2008 to 118.3 in 2013.

On UNIDO’s industrial competitiveness index, most industrialized countries lost ground in the last three years. Among the five most competitive are four high-income countries (Germany, Japan, the Republic of Korea and the United States), along with China ranking fifth. The four are among the world’s most industrialized countries and, with China, account for 59 percent of world MVA.