Since taking the reins of power almost three years ago, the coalition government in Islamabad, which is led by the Pakistan Peoples' Party, has been increasing the support prices of wheat and other agricultural commodities every year. This policy has had the following effects:
1. It is transferring the additional new income of about Rs. 300 billion in the current fiscal year alone to the ruling party's power base of landowners in small towns and villages, from those working in the urban industrial and service sectors.
2. It has driven up food prices dramatically for all Pakistanis, particularly hurting the poor people the most.
3. It has reduced government tax revenues because the agricultural income is not taxed by either the federal or the provincial governments, and resulted in growing budget deficits.
4. It has significantly increased demand for consumer and industrial goods and services in the rural areas.
5. It has forced the State Bank of Pakistan to maintain a tight monetray policy which is drying up the much-needed credit for the industries and the average consumers alike.
6. It's likely to slow rural-to-urban migration and relieve pressure on major cities and their inadequate infrastructure. 
In 2008, the 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.
The big feudal landowners have been the biggest beneficiaries of the PPP's gift of high crop prices. However, the policy has helped small farmers as well, as shown by a recent survey reported by The Nation newspaper. The survey of 300 farmers in Sind's Sukkur district was conducted by Sukkur Institute of Business Administration for the State Bank of Pakistan (SBP). It has highlighted the following about district's rural economy:
1. In Sukkur district, majority of the farmers are subsistence farmers. 31 percent of them own less than 5 acres of land, and another 34 percent own up to 12.5 acres of land.
2. They spend an average of Rs. 1,611 a month on their children's education, with some of them spending up to Rs. 12,000 a month.
3. Wheat, rice, cotton and sugarcane are the major crops being cultivated by 93 per cent, 58 percent, 37 percent and 12 percent of the respondent farmers in that order.
4. 24 percent of them are also growing fruits including dates, mangoes and bananas.
5. 22 percent of the respondent own livestock.
6. About half (49 percent) use privately purchased seeds for wheat cultivation, 33 perecent use their own retained seed and 18 perecent use the seed purchased from Public Sector Seed Corporations.
7. On average, a farmer uses 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 is Rs. 10,670.
8. All 300 farmers are using tractors for cultivation and preparing land for crops, and some are using tractors for fetching their crop produce to market.
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.
A key indicator of growing rural economy is the double digit increase in the sale of tractors. Millat Tractors Limited, the largest supplier of tractors in Pakistan, had record sales of 41,500 tractors in the calendar year 2010, an increase of nearly 11% over 37,537 tractors sold in 2009. Of these 41,500 tractors, a record 5000 tractors were sold in the month of Dec, 2010 alone, acording to The Nation newspaper. Millat sold 10,000 units under Benazir Tractor Scheme and 5,000 units under the Sindh government tractor scheme in the last fiscal year. Another 10,000 units were sold as part of the Punjab government scheme, 70 per cent of the units were sold, according to Dawn News.
Earlier, the sales of Fiat and Massey Ferguson tractors grew to 1,632 and 3,194 units in September 2010 from 537 and 3,100 in August 2010. The overall sales of these tractors rose to 13,931 during July-September 2010 as compared to 12,690 units in the same period of 2009, according to Dawn news.
Over 50 per cent of the motorcycles and 40-45 per cent of cars in Pakistan are purchased by people living in rural areas. Total car sales in July-September 2010(including Suzuki Bolan) rose by 12 per cent to 30,030 units as compared to 26,812 units in the same period of 2009, according to Pakistan Automotive Manufactureres Association PAMA). Furqan Punjani of Topline Securities said car sales are expected to reach 154,000 units by the end of June 2011.
In addition to rising demand for cars and tractors, there is also an upward trend in two-wheeler sales. The cumulative sales of motorcycles in July-September 2010 rose to 126,701 units from 105,862 units in the same period of 2009.
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.
Related Links:
Haq's Musings
Pakistan's Exports and Remittances Rise to New Highs
Sugar Crisis in Pakistan
Agricultural Growth in India, Pakistan and Bangladesh
Pakistan's Rural Economic Survey
Pakistan's KSE Outperforms BRIC Exchanges in 2010
High Cost of Failure to Aid Flood Victims
Karachi Tops Mumbai in Stock Performance
India and Pakistan Contrasted in 2010
Pakistan's Decade 1999-2009
Musharraf's Economic Legacy
World Bank Report on Rural Poverty in Pakistan
USAID Report on Pakistan Food & Agriculture
Copper, Gold Deposits Worth $500 Billion at Reko Diq, Pakistan
China's Trade and Investment in South Asia
India's Twin Deficits
Pakistan's Economy 2008-2010
Threre are more reasons to migrate to Canada
1 year ago
107 comments:
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.
We're talking about the same pakistan that's on an IMF bailout program, right?
Anon: "We're talking about the same pakistan that's on an IMF bailout program, right?"
Let me try and help you understand basic economics here.
The IMF is there to help Pakistani government deal with the public finances which are a mess.
The rural economy in Pakistan is doing well because of high food (and cther commodity) prices in Pakistan and the rest of the world.
As I say in my concluding paragraph of the post: "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."
k Mr.Riaz...
But I fail to understand that why then Pakistani mainstream newspapers are painting a doomsday scenario for your economy. Now I have read each article very carefully and they all say about immense collapse of pakistan's economy. What is the reason behind it?
And your answer that IMF is there to help the government manage public finances is non-buyable. Its there to bailout the pakistan economy because of the balance of payment crisis which started during the recent worldwide economic crisis.
Rahul:"And your answer that IMF is there to help the government manage public finances is non-buyable. Its there to bailout the pakistan economy because of the balance of payment crisis which started during the recent worldwide economic crisis."
It's true that Zardari govt initially sought IMF help to deal with the BoP crisis of 2008.
However, the problem in 2011 is now different.
Pakistan's current account balance and foreign exchange reserves have improved dramatically since 2008.
In fact, with surging remittances and exports, Pakistan had a current account surplus of $26 million for July-December 2010, compared with a deficit of $2.570 billion in the same period in 2009, according to Dawn newspaper.
The big problem Pakistan government faces now is a large and growing budget deficit that could exceed 5% of the GDP in current fiscal year, and the govt is borrowing heavily from IMF and others to fund this deficit.
This post on rural economy is to talk about the fact that booming agriculture sector should begin to pay at least a modest income tax to help balance Pakistani govt budget.
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.
Thailand is a country reputed for its tourism and agriculture; it is largest rice exporter in the world. Still its agriculture contributes just 11% of GDP while industry's share is 45%. Services sector (including tourism) contributes 44% of which the greater share will probably be of the banking and financial sector compared to tourism. Thailand was a country of very similar economic conditions to Pakistan about 20-30 years ago while we were much better off in the 60s. Now compare this to Pakistan's agriculture's contribution of only 19% to GDP, compared to the 26% from the industry and a whopping 53% from services (c.f. Karachi). When seen in the back drop of industries closing in Pakistan by the hundreds in the last 3 years, one can see the weakness of our situation. The whopping 53% from services only means that the role of industry, the organized sector, is diminishing and people are earning their subsistence through marginal petty activities in the unorganized services sector. This amply demonstrates our bad economic situation.
Now coming to agriculture itself. In the developed and real developing countries, this is now a highly industrialized activity. Mostly it is organized on corporate basis, attracting big finances and utilizing industrial resources; more like industrialized agriculture. Land productivity with primitive and industrialized agriculture varies a lot. On a scale of 1:10, Pakistan stands on 1, while India has gone up to 3. The developed and really developing world ranks at 6-10. South American countries, the most advanced of the developing world in terms of agriculture, would rank in the 6-10 range.
Collating all the above factors, purchase of over 50 per cent of the motorcycles and 40-45 per cent of cars by people living in rural areas represents a pathetic situation. This means that with very low land productivity by international standards, the rural population is the biggest consumer of vehicles. You can well imagine the decimating state of our industrial and services sectors which still contribute 79% of our GDP, compared to only 19% of agriculture.
Suhail,
I agree that improved governance is the key to increased economic growth in Pakistan.
But, since this post is about rural economy, let me share with you some anecdotal evidence as well as research and data that shows that agriculture sector Pakistan has done better than India and Bangladesh, offering a more appropriate regional comparison than with Thailand.
First, India has had lower productivity and higher poverty in its rural areas than Pakistan, as can be seen in terms of hundreds of thousands of farmers' suicides in the last decade. Over 17000 Indian farmers killed themselves in 2009 alone, according to Indian govt data. Over 75% of Indians live on less than $2 a day versus 60% of Pakistanis.
A recent satirical Indian film "Peepli Live" has amply shown how the Indian politicians and bureaucracy have bugled the situation of farmers.
Second, 60% of India's workforce produces 16% of Inda's GDP in agriculture. Compare that with 42% of Pakistani workforce in agriculture contributing 19.4% of GDP. 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.
Third, 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.
In terms of export potential, California argriculture industry offers a model for developing nations.
Take almonds for example.
After making big investments in almonds in the past few years, California farmers are seeing their efforts pay off with predictions their recent harvest will be a record 1.65 billion pounds or more, according to Businessweek.
The big harvest comes amid strong worldwide demand and relatively high prices. Exports to China have increased eight times in the past five years, and India and Pakistan doubled their almond consumption in that time. Even with a record harvest, there's no risk California, the world's No. 1 almond producer, will saturate the market, industry experts said.
The Golden State has seen a big growth in almond orchards in the past five years as farmers shifted from less profitable vegetables to lucrative nuts. California now has 810,000 acres planted in almonds -- a 25 percent increase from a decade ago -- and produces 80 percent of the world's supply. Spain is the second-biggest producer, but its harvest is only a fraction of California's.
The state's most recent crop appeared uncertain after cold wind and rain last spring partially disrupted pollination of the trees' pink and white blooms. But recent forecasts from the U.S. Department of Agriculture predicted a record crop with at least a 17 percent increase from the previous year.
"The nut crops in general are looking good in California," said John Edstrom, who recently retired after 26 years as a Colusa County farm advisor. The market is generating "cautious optimism" among walnut, pistachio and pecan growers as well, he said.
California farmers began shifting to almonds when increases in fertilizer and other costs made it harder to make money on row crops, such as tomatoes and onions. When almond prices spiked to more than $2.80 per pound in 2006, growers leapt to plant 49,000 acres of new trees. After five years, those trees are now bearing significant fruit, contributing to the record 2010 harvest.
Improved agricultural techniques used by California's 6,000 almond growers, such as planting trees closer together, cutting back on pruning and knocking hollow shells off trees during winter to control a debilitating pest called the navel orangeworm, also have helped boost production, said Bruce Lampinen, an almond specialist at the University of California, Davis.
Farmers said they are concerned about a loss of bees with major die-offs in recent years. UC Davis apiculturist Eric Mussen said bees are still available, though they are more expensive. The cost of renting them has doubled to $150 per acre over the past five years.
Water shortages also have been a concern for some, although Almond Board chairman Mike Mason said they haven't been so bad as to affect the whole industry.
This is bad for the Pakistan economy. Higher food prices for evryone else - farm workers, factory workers, small farners teachers and office workers - except the rich farmers and industrialists. Politicians do this to stay in power. Economy will suffer because inflation will be higher and rupee will be wort less!
Here are some interesting excepts from a piece on Pakistan by Nancy Birdsall of Center for Global Development:
------------U.S. policymakers should note well this series of events and remember a simple lesson. Billions of dollars of U.S. assistance-and a sustained diplomatic focus on the reform agenda-have not given the United States the ability to dictate the outcomes of Pakistan's political process. This is inconvenient for the United States, but not surprising. For the United States and for other major donors in Pakistan, money has never brought leverage.
Pakistan's energy sector demonstrates the difficulty in achieving the kind of influence donor countries would like to have. For decades, the World Bank and the Asian Development Bank-armed with sums greater than the current Kerry-Lugar-Berman U.S. aid package-have urged the Government of Pakistan to finally reduce the price subsidies on electricity, to no avail. Time and again, project documents cite the same problems, the donors recommend the same solutions, the government of Pakistan promises to implement the same reform, the government breaks (and donors lament) the same promises. Meanwhile, the basic politics maintaining the status quo have not changed-there are too many reaping the benefits of subsidized power, and ordinary consumers feel they aren't getting service that warrants paying more.
When Vice President Biden visited Islamabad this week, he promised that the United States would "keep the entire commitment" of the pledged $7.5 billion in Kerry-Lugar assistance. This assurance will surely be welcomed by Pakistan, and it's a fair reflection of Pakistan's short-term and long-term importance to U.S. interests. Adjusting where and how aid is spent-including by taking the requests of the Pakistani government into account-is necessary to respond to the real needs on the ground. (On that note, we applaud the decision to put $190 million into direct smartcard grants to help Pakistani flood victims rebuild their lives). But U.S. policymakers should not expect the aid money to give the United States greater influence on economic reforms in Islamabad. This is not the point, nor the potential, of U.S. aid.
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The key point is that certain aid projects can carry both direct benefits (better services and infrastructure for the people of Pakistan) and indirect benefits (incentives for the Pakistani political system to achieve greater results with their existing resources). Here are a few examples to consider: U.S. investments in energy generation and transmission capacity can be linked to public commitments to raise electricity tariffs only when brownouts have been reduced below an announced benchmark. In this grand bargain, as service quality improves, tariffs would go up, and another round of aid investments would be delivered. In another case, U.S.-financed tools can be deployed to help Pakistani citizens hold their government accountable-with regular reports on simple indicators of development, for example, or an easily accessible database of all development projects funded from internal or external resources. Or a pilot Cash on Delivery aid contract in one or more Pakistani provinces could put levers in the hands of education reformers and help their ideas gain traction.
Here are excerpts from a piece by Christine Fair on "What Pakistan Did Right" in 2010 floods:
Arguably, the Pakistan Meteorological Department (PMD) is one of the most important reasons why the floods claimed relatively fewer lives than may have been expected, given the scale of the event. In January, I met with the Director General Arif Mahmood and his team in Islamabad. They walked me through, in painstakingly scientific detail, how their organization saved lives in 2010, as they had done before and as they will continue to do in the future.
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Some six months have passed since the onset of the floods. Surprisingly, many of the predicted disasters did not happen. Pakistan did not have the predicted second wave of deaths in the camps for the millions of internally displaced persons. Astonishingly, none of the predicted epidemics (such as cholera) took place. Pakistan has even managed to stave off the expected food insecurity.
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Pakistan's National Disaster Management Agency (NDMA), headed by Major General (Ret.) Nadeem Ahmed is part of the reason these catastrophes were prevented. The NDMA, along with the four Provincial Disaster Management Agencies, coordinated the massive effort to rescue flood victims, establish camps for internally displaced people, provide the victims with shelter, water and sanitation facilities, food and other logistical requirements. The NDMA coordinates with international donors and maintains a situation room where staff track calls and resolve problems. In a country that routinely sustains criticism for organizations that that underperform, NDMA excels.
Some of the worst fears about lost crops have not materialized. While many of Pakistan's fields have not been properly prepared for planting this year, NDMA working with its domestic and international partners was able to provide seeds to many cultivators. In many cases, they simply flung the seed into the land once the water receded. Many of these efforts are resulting in bumper crops. This was not expected in September of 2010. To be sure, this is only the beginning and much more needs to be done. But measures of this type helped stave off some of the gravest outcomes expected.
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There are still challenges. Complaints persist about corruption with the pre-paid ATM cards (Watan cards) distributed to IDPs. In Sindh, serious charges of corruption persist regarding the purchase of tents, blankets, medicines and food for the flood-affected people. Reports continue that food supplies are languishing in depots while IDPs go without in Sindh. Indeed, the IDP camp I visited in near the office of the District Coordination Officer for Dadu, was saddening. The residents and the camp administrator claimed that there had been no food distributed in a month.
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Nonetheless, half a year after the floods devastated the country and after most of the media has left the story behind, 20 million Pakistanis still need help -- and they need help now. While Pakistan must expand its own tax net to contribute to the long-term costs of rebuilding its infrastructure and preparing for future disasters, the international community should also continue to support immediate needs such as winterization, food support and rehabilitation of the flood victims.
I'll agree on the 1991-2004 situation but let's analyze the causes. During this period Pakistan was mostly under Musharraf and Nawaz Sharif governments whose policies were industry friendly and against agricultural subsidies. I personally know from farmer friends in the 2001-2005 period that they adopted the following measures to increase their revenues:
- switched to more productive crops, vegetables etc.
- increased cultivation on their lands to utilize it to the maximum.
- increased livestock farming
Since yields from wheat were lower, switching to high value crops did result in wheat shortages but then the country had enough funds to import wheat.
Going further back into history, the real breakthrough in Pakistani agriculture came in the 1960s when the policies were heavily industry friendly; this is still called the green revolution. The reason being that when pressed for funds, the farmers have no option but to improve revenues from their land holdings by increasing land productivity.
The rot set in around 2007 when the rural elites exploited the pro-democracy wave and finally triumphed in 2008. Agriculture is now heavily subsidized and while obviously this has resulted in more money supply to the rural population thus more consumer spending, the disadvantages are manifold, such as:
1- The subsidy is being funded by loans from the State Bank thus resulting in weakening of the currency.
2- The subsidy is funded by the industry and service sectors as they're the only tax payers; agriculture remains out of tax net. This has greatly weakened these sectors which should have been the engines of national economic growth, and were up to around 2006. Industry is fast going out of business resulting in growing unemployment. The maximum no. of tax payers in Pakistan reached 2.7 million around 2006-7; this figure has now gone down to 2 million. With continuing of the present policies, subsidies will further increase and tax base will further narrow down. So you can see the snowball effect that is taking the economy to destruction.
3- Wheat production, being the most subsidized, has increased sharply which must be at the expenses of other high value crops. The current situation is that wheat purchased and available with the government is double the storage capacity available in the country. This surplus wheat is rotting and most of it will go waste.
In the long run, our agricultural productivity will be going down, because the "farmer friendly" policies take out whatever efficiency is developed in the agricultural sector.
Riaz Sahib,
Do you support agriculture subsidies like the one documented in your article?
krash: "Do you support agriculture subsidies like the one documented in your article?"
Ag subsidies are a fact of life around the world...particularly in US and Europe.
Farmers' lobbies are very strong in most democracies, and they use their power and influence in the government to get favorable policies to enrich farmers.
Riazbhai
Pakistani people suffer a lot but, we are better than India. Like you have said all their economy
is fraud because Indians are suffering more now than before.
I think Indian economy is a big fraud and RAW is behind the printing the wrong numbers in the media. RAW has an agenda to make Pakistan look bad by making India look good and they are trying to match with China!
When we were in school in Islamabad 30 years ago everyone knew that we were stronger than India in ecomomics. India has more people so ofcourse economy will be bigger. Riazbhai, per each person Pakistan is definitely stronger in economy.
SK: "I think Indian economy is a big fraud and RAW is behind the printing the wrong numbers in the media. RAW has an agenda to make Pakistan look bad by making India look good and they are trying to match with China!"
I disagree with you.
I think Indian economy is doing well, certainly much better than Pakistan's, although its comparisons with China are just nonsense.
The problems in Indian economy stem mainly from deep inequities that have produced 50 billionaires in the midst of widespread abject poverty and extreme hunger.
Inequities exist in Pakistan as well, but such inequities are not as stark and as shocking as those in India.
Indian economy
Strenght:
-Advanced industrial base
-Advanced regulatory framework
-Elitist but high quality education system
-Excellent relations with West,Russia and Japan
Weakness:
-Massive social inequality
-MAss education system of poor quality
-Adversarial/cold war type relation with China likely to be world's largest economy in 2020.
-Unstable Pakistan next door
-Inefficient legal system
On the whole this decade will decide whether the strenghts triumph over the weaknesses...
Pakistan suffered a decline in FDI inflow in July-Dec 2010 of 15.5 per cent to $828.5 million from $968.9 million in the same period last year, according to The Nation newspaper.
Increased exports and remittances still helped Pakistan achieve a small current account surplus of $26 million in July-Dec 2010 period, according to Dawn News.
Pakistan wasn't the only developing nation in South Asia to see FDI decline. India suffered 31.5% decline in FDI in 2010, according to UNCTAD.
FDI inflow in India declined from $34.6 billion in 2009 to $23.7 billion in 2010.
With decline in FDI, India is now running a huge current account deficit of over 3.0% of its GDP for July-Dec, 2010, according to Trading Economics.
Templeton Asset Management Ltd. is buying shares in Pakistan, the worst-performing stock market globally this month (August 2010), after the nation’s worst-ever floods prompted a sell-off, investor Mark Mobius told Businessweek:
About 1,600 people have been killed and 20 million lost homes, farms and livelihoods as heavy monsoon rains sent flood waters across the South Asian nation. The disaster may cut Pakistan’s economic growth in half, Finance Secretary Salman Siddique said Aug. 13, with expansion falling as much as 2.5 percentage points short of a 4.5 percent target.
“There will be an impact on growth but company valuations are very, very attractive now and therefore we continue to invest in Pakistan despite all the negatives,” Mobius said in an interview in Singapore yesterday. “The bottom line is that Pakistan is not going to go away. We want to buy stocks that look cheap as prices come down as a result of the flood.”
The Karachi Stock Exchange 100 Index has dropped 8.7 percent this month, the most among 93 benchmark indexes tracked by Bloomberg globally. The gauge is valued at 7.1 times this year’s estimated earnings, making it cheaper than any other Asian or emerging-market benchmark index tracked by Bloomberg.
The Karachi index climbed as much as 1.2 percent, the most in a month, and traded 0.7 percent higher to 9,604.65 as of 11:37 a.m. local time on speculation that recent losses were excessive. The gauge plunged 2.9 percent yesterday, the most in more than two months.
‘Oversold’
“The market was oversold from yesterday and news of Mark Mobius’s plans to buy Pakistani Stocks because of their attractive valuations supported overall market sentiments,” said Khurram Schehzad, head of research at Invest Capital & Securities Ltd., in Karachi. “Local investors are encouraged and realize the prospect of future gains.”
The World Bank yesterday pledged $900 million in financial support to Pakistan, joining the United Nations, the U.S. and other countries in providing aid.
Mobius, who oversees about $34 billion in developing-nation assets as executive chairman of Templeton’s emerging markets group, said the investment company favors banks and energy companies within Pakistan. He didn’t identify any companies.
Templeton owned more than 5 percent of MCB Bank Ltd., the nation’s biggest lender by market value, as of June 30, according to data compiled by Bloomberg.
MCB gained 1.7 percent to 185.50 rupees today, trimming losses for the year to 7.1 percent. Oil & Gas Development Co., Pakistan’s biggest energy explorer, rose 1.3 percent, extending its 2010 gains to 23 percent.
riaz jee
youe been warning Indians about hot money flows.
Templeton/m mobius is hot money par excellence.
Anon: "Templeton/m mobius is hot money par excellence."
Yes, it is. But a small amount of FII (about $500 million in a $180 billion economy) can be healthy in providing liquidity.
It only becomes a problem when it's a torrent, as it is in Indian stock markets.
In fact, as India's FDI has dropped by 31.5% last year, India is relying heavily on FII to fund its growing balance of payment deficit of over 3% of GDP.
Pakistan has resumed wheat export after a bumper crop last year, according to Tribune Express:
SINGAPORE: Pakistan has resumed wheat exports for the first time in three years, selling cargoes to Bangladesh and Myanmar and more deals are likely as the nation takes advantage of rising global prices and surplus stocks at home, following last year’s bumper harvest.
The deals come as fears of global food inflation grow, with devastating floods damaging crops in Australia, forecasts of US corn inventories sliding to uncomfortable levels and dry weather hampering production in Argentina.
Asia’s third largest wheat producer, Pakistan has sold 200,000-500,000 tonnes mainly to Bangladesh and Myanmar and international traders are taking positions for more deals after Islamabad lifted a ban on overseas sales last month.
“Pakistani wheat is now competitive, they are actively selling cargoes for the last one week or 10 days,” said one trader with an international trading company in Singapore.
“Traders are taking positions in the domestic market to corner more supplies for exports.”
The benchmark US wheat and corn climbed nearly 50 per cent in 2010 on tightening supplies of grains and recent price surge have stoked worries over food inflation, already in double digits in Asia’s top consumers China and India.
On Thursday, Chicago corn rose 1 per cent to its highest in 2-1/2 years, while soybeans were steady after 4 per cent gains in the previous session, buoyed by a surprisingly steep reduction in global supply of grains and oilseeds forecast by the US government. Wheat has risen nearly 2 per cent in as many trading sessions.
Uncomfortable stocks, rising prices
US stockpiles of corn and soybeans will be drawn down to uncomfortably thin levels this year, according to a government report on Wednesday that sent grain prices soaring and added to concerns over surging world food prices.
But Pakistan decided to allow the private sector to export wheat last month, lifting a three-year ban after a bumper crop led to a market surplus.
Pakistan in August deferred earlier plans to export 2 million tonnes of surplus wheat after summer floods washed away at least 725,000 tonnes of the grain.
Traders have said that despite damages from summer floods, Pakistan still has a surplus for export after a bumper crop of 23.86 million tonnes in 2009/10 added to a carryover of 4.2 million tonnes from the previous crop.
A Karachi-based trader said Pakistan has booked orders for about 500,000 tonnes of wheat and shipments had already started.
“Our traders have made deals for about 500,000 tonnes for January-March shipment, and we expect more orders,” Javed Thara said. “Most of our wheat went to Bangladesh.”
He said Pakistan could export more than 2 million tonnes of wheat in the coming months.
Another Singapore dealer confirming the news, said deals for Pakistani wheat were signed around $350-$370 a tonne, including cost and freight. “It is 11.0 to 11.5 per cent protein content, perfect for Bangladesh and Myanmar markets,” he said.
The sowing for the next crop in Pakistan has almost completed and harvesting will begin in April. The government has set an output target of 24 million tonnes for the 2010//11 crop.
very stupid move!
The revenue earned by wheat exports is negligible.
OTOH there is almost sure to be chronic under invoicing by wheat producers in pakistan given the massive difference between international and domestic prices and thus create artificial shortages at home leading to more unrest.
The hunger situation in Sindh here and now is like Chad.
http://www.dawn.com/2011/01/28/stalked-by-hunger.html
http://www.guardian.co.uk/world/2011/jan/27/pakistan-flood-crisis-african-famines
Anon: "The hunger situation in Sindh here and now is like Chad."
First, there is no famine in any part of Pakistan, including the flood-hit areas of Sind, which is a temporary malnutition crisis that needs to be highlighted and addressed.
Second, unfortunately, high levels of malnutrition exist in South Asia under normal circumstances. The 2010 floods in Pakistan have just made the situation worse.
But the malnutrition rate among Indian children is 45.6 percent in normal times, according to India Family Health Survey.
At 45.6 percent, the Indian children malnutrition is twice as high as the 23% malnutrition in Pakistan's flood-hit areas as reported in the links you have shared.
This is a fact that has long been recognized by Indian government.
India is worse than Bangladesh and Pakistan when it comes to nourishment and is showing little improvement in the area despite big money being spent on it, says Planning Commission member Syeda Hameed.
"I should not compare. But countries like Bangladesh, Pakistan and Sri Lanka are better," Indian Planing Commission member Syeda Hamed has said.
According to India's National Family Health Survey, almost 46 percent of children are undernourished - an improvement of just one percent in the last seven years.
Riaz bhai
Parts of Pakistan were known as Switzerland of Asia. Whenever I go there it is always beautiful and gettin prosperous. Many Pakistani dont have to pay tax so government does not know how much you make like IRS here.
To the government economy is not good but people are doing well. Before they had no TV and only bicycle and now they have TV cellphone and motorcycle. They work hard overthere and save a lot.
I have heard India poverty is very very high compared to Pakistan and water is not available or food. No one take care of roads which in Pakistan is similar to american freeways. Some of the pictures on your site even show people in India without clothes and lot of beggars. Pakistan is much better.
For Pakistani they suffer but they work hard and still do well without government and bad politicians. India has democracy but they are not as good.
Here are a couple of reports on flood recovery in Pakistan:
World Food Program Report: "Six months after Pakistan was hit by devastating monsoon flooding, the recovery is at different stages in different parts of the country. In the north and central Pakistan, most families have been able to return to their homes, rebuild their houses, plant crops and take back their former lives.
But in a few areas of the southern province of Sindh, many communities are still surrounded by floodwaters. Thousands of families in Balochistan, in the southwest, are also unable to return to their homes. Between the two provinces, some 600,000 flood victims are still living in temporary camps and for these people recovery seems some way off."
BBC Report: " A village in Pakistan devastated by flooding has been renamed Midlands after a West Midlands charity raised money to help rebuild it.
Walsall-based Midland International Aid Trust raised £113,000 to help the 20 million people thought to be affected by the monsoon floods last year.
The village of Lal Pir, now named Midlands, had been cut off by water.
Mohammed Aslam MBE, the trust's founder, has been visiting the country to oversee how the aid is spent.
Mr Aslam, 71, originally from Kashmir, said he wanted to make sure every penny of aid went to the people living in the region.
He said in August he could only reach Lal Pir by boat.
Now all 36 homes which were destroyed have been rebuilt, at a cost of £2,000 each, after the charity provided the villagers with materials and tools.
The floods struck the north of the country in August. At least 1,500 died in the deluge."
Here's a story about the promise of Danish Schools, a series of boarding schools being set up in Pakistani Punjab by the provincial govt of chief minister Sahbaz Sharif for the poor as an alteranative to the madrassa system:
Outside the window, a Pakistani flag flutters, inside, a teacher asks a group of 6th-grader girls and boys, “Who can make a food chain?” A girl comes up to the board and uses a pen as a mouse to click and drag an animated plant to the first box, a worm to the second and a bird to the third. “Excellent,” Says the teacher. She goes and sits down with a smile on her face.
This is not an ordinary board, it’s a smart board, the first of its kind in Pakistan, and this is no ordinary school. Inaugurated January 18th, The Danish School System at Rahim Yar Khan stands in stark contrast to the rural terrain of this Southern Punjab city. Children enrolled in this school have to fit a certain criteria, not just that they have to pass an entry test, but they have to either have a missing parent, or both parents, they have to have an illiterate parent and they must have a monthly income of less than USD 100 - they must belong in short to the forgotten class of Pakistan’s poor and minorities.
This is affirmative action, giving the underprivileged a chance to have a level playing field. But how real is it? For one, it has the clear support of the government of Punjab which has faced severe criticism from all quarters about the surge of 25 billion rupees invested in a series of these purpose-built campuses for both girls and boys all over Punjab. These critics claim that money could have been better spent elsewhere on better alternatives like building roads or canals.
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The Danish Schools stands as an alternative to madrassa education because the school provides free lodging and boarding to all its students. It not only gives students a rounded education in the sciences and the arts but also provides social and extracurricular exposure. An on call psychologist also monitors each of the student’s behavior and has counseling sessions with the children and their parent or gurdian for a smooth transition into boarding life.
Despite the challenges, there is a certain spark and energy in the entire Danish school core committee headed by LUMS Provost, Dr Zafar Iqbal Qureshi, and the teachers and students. At the inaugural ceremony, one child danced on Shakira’s Waka Waka, another child, Aasia Allah-Wasiah told a 500 odd gathering the story of her life, how she became an orphan and how Danish school was her only hope for a future.
Not all parents were this easily convinced of Danish School’s objectives. One asked the girls’ school principle, “Why would you give me back my child after giving her clothes and shoes and spending so much on her? I know this is a conspiracy to buy our children from us.”
Other parents objected to there being non-Muslim students eating in the same utensils. The management responded by saying “we all eat in the same plates as any Hindu or Christian boy because this school is for everyone equally.” Needless to say that Rahim Yar Khan, despite scattered industrial units is largely agrarian and the people are deeply influenced by the exclusivist brand of Wahabism.
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With a meager amount of the GDP being spent on education, it is a positive sign to have politicians finally focus on this sector to secure their vote bank. With time the criticism towards these initiatives, such as the importance of Danish schools adopting the O-Levels system, may fine tune the programs into being more effective for the people. And especially those people who don’t have a voice.
There seems to be consensus developing among Pakistani economists that "prompt measures needed to control rising inflation", according to a report in Daily Times:
LAHORE: Pakistan is fast heading towards higher inflation and to overcome this grim scenario; improvement in governance coupled with a drastic cut in expenditure and revenue generation is crucial.
The doom and gloom scenario needs an urgent handling. Good governance, good policies, good institutions, good macroeconomic management are the drivers of economic growth that have gone dormant for quite some time. This was the crux of the speeches delivered at Economic Dialogue 2011 held at Lahore Chamber of Commerce and Industry on Tuesday. Senior economist Dr Akmal Hussain said the country is facing its gravest economic crisis in history after 1971. He said the economy is in deep recession, poverty along with high inflation is a recipe for disaster.
Unfortunately, he added, the government has zero fiscal space. He warned that Pakistan was heading towards higher inflation if immediate improvement in governance is not accompanied with cut in expenditure and substantial increase in revenue.
The former WB Executive Abid Hassan said that the institutional decay has now started taking its toll and the government should take appropriate measures on emergent basis to stop this decay. He said that with every passing day the country is going deeper and deeper into the economic mire. “Today we have reached a situation where even an economic stimulus would not work. The government should concentrate on tax collection and controlling unnecessary expenditures. Unless and until these two measures are not taken, the economy would not be able to be back on rails,” he said. The PIDE Vice Chancellor Dr Rashid Amjad said that the present day doom and gloom scenario could be changed by overcoming the acute energy shortage being witnessed by the country. The issue of circular debt needs to be taken care of by those sitting at the helm of affairs. “PSDP has a multiplier effect on the employment and economy. It should not be cut,” he said.
Former chief Economist Planning Commission Dr Pervaiz Tahir blamed the political chaos for our economic woes and termed the dictatorship democracy cycle as mother of all ills.
Energy sector expert Munawar Baseer, ex Executive committee member Almas Hyder and LCCI President Shahzad Ali Malik while appreciating the input provided by the economists said that most of the issues and challenges faced by the country are more of political. The political leadership while realizing the sensitivity of the situation should come up with a solid solution with close coordination with the chambers. “The policies are being made in isolation without the consultation of real stakeholders and that’s why the economic situation today has become more complex and directionless,” he said. The speakers said that the business community should be involved for the sake of correct decision-making.
They urged the government to evolve a more realistic and pragmatic framework by putting an end to inter-provincial disparity and the disparities within the province. The government should re-do its priority list and concentrate on the few areas that come on the top of that priority list.
It is very unfortunate, the speakers said, that the country has become the most inhospitable for both the local and the foreign investors for security reasons.
“Our inability to reach a consensus on water issue and inability to tap hydrocarbon potential of Balochistan has virtually pushed us to the wall,” they said. staff report
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.
Here's an interesting assessment of Pakistan's economy in 2H-2010:
...“The country’s exports, money sent by overseas Pakistanis, balance-of-payments position and foreign exchange reserves have reflected an encouraging growth during July-December FY11, showing strong signs of improvement in the economy,” Saad-bin-Naseer, CEO of Pearl Capital, told Central Asia Online January 28. Pakistan’s exports were $10.97 billion, an increase of US $1.88 billion, in the first six months of FY11.
That 21% increase was a very positive sign for the growth of export-oriented industry and the national economy, he said.
In FY11 exports could cross the $22 billion mark for the first time because of a significant increase in the value of Pakistani products on world markets, Naseer added.
“The textile industry had taken the lead by fetching $1.28 billion in additional foreign exchange through exports,” Anisul Haq, secretary of All Pakistan Textile Mills, told Central Asia Online.“The textile industry had taken the lead by fetching $1.28 billion in additional foreign exchange through exports,” Anisul Haq, secretary of All Pakistan Textile Mills, told Central Asia Online by telephone from Lahore. “From July-December FY11 textile exports increased to $6.28 billion” compared to 2010 figures.
Total annual textile exports could exceed $13 billion for the first time, he added. In 2009-10, they totalled $10.5 billion.
“The textile industry had taken the lead by fetching $1.28 billion in additional foreign exchange through exports,” Anisul Haq, secretary of All Pakistan Textile Mills, told Central Asia Online.
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Another pillar of the economy is remittances from overseas Pakistanis. The money they sent home increased by $780m in the first half of FY11, to $5.3 billion, Haq said.
“We hope the country would receive $11 billion from overseas Pakistanis in 2010-11 with major increase in inflows from Pakistanis staying in Arab countries and other western countries,” Haq said.
Foreign aid from institutions and countries, not just individuals, helped. The disbursement of $633m in coalition support and the extension that the IMF gave the government for imposing the Reformed General Sales Tax (RGST) helped improve some of the major economic indicators, Naseer said.
The picture did much to bolster Pakistan’s balance sheet, which has had its ups and downs. Pakistan recorded a current account surplus in the first six months of the fiscal year, which enabled growth in foreign exchange reserves and stabilised the dollar-rupee exchange rate, Pearl Capital’s Naseer added.
In 2009-10, the country incurred a $2.5 billion current account deficit from July-December, but for the same period in 2010-11 it enjoyed a surplus of $26m – a dazzling switch from red ink to black, he said.
The robust performance of exports and remittances enabled Pakistan to accrue a record $17.3 billion in foreign exchange reserves by January 21, he said.
Investor confidence has grown in response to these positive indicators. The stock market capitalisation grew to $36 billion in January 2011 from $32 billion in October 2010, he said, adding that such growth would encourage foreign and local investment.
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warned.
Islamabad, which still hasn’t imposed the RGST the IMF wants, doesn’t collect enough taxes, Khan said. It levies only about 9% of GDP against the required international standard of a minimum 15% tax-to-GDP ratio, Khan said.
The government must implement tax reform, reduce reliance on borrowing from the IMF and generate its own resources to enhance tax revenues and to bolster economic growth, he added.
Serious efforts to solve chronic gas and power shortages are also imperative, he 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.
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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.
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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.
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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.
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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.
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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.
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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.
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.
Here's a report in The News on how Pakistan's Engro company sees the economy:
KARACHI: Engro Corporation remains unsure about Pakistan’s economic trajectory as the country battles militants and tries to contain a growing fiscal deficit, a top company official said on Tuesday.
“Nobody knows what will happen in the coming months,” said Ruhail Mohammad, Engro’s Chief Financial Officer. “I have my numbers worked out. I know where sales and profit will be. But things are changing so fast that being sure remains almost impossible.”
Political and economic events of the past six months that saw the government retreating on key reforms such as raising taxes and cutting borrowing from the central bank have left businesses without a firm outlook, he said.
Although Engro posted a 79 percent rise in yearly profit to Rs6.8 billion in 2010, it continues to face problems, he said. “The policy of gas curtailment to fertiliser-makers is unjustified. The government has given us a commitment for uninterrupted supply, especially for the new plant.”
Expansion of Engro’s flagship fertiliser plant completed last year. The corporation can now produce 2.3 million tons of urea annually.
Mohammad, who was briefing journalists a day after the announcement of corporation’s financial results, said that Engro has no problem with increase in the price of gas that is used for making fertilisers. “The government must increase the price of fertiliser. We have been saying it for the last two years,” he said. “The agricultural products such as cotton, rice and wheat have seen a substantial increase in price. Farmers have the capacity to absorb rise in cost of urea.”
He, however, said that contractual obligations must not be breached once it comes to the additional capacity of 1.3 million tons, which the corporation has recently added. “For this project, we were offered gas at concessional rates for making the investment.”
The price of feedstock gas, which is used for making fertiliser, is subsidised by the government through a controversial method of making textile and other industries pay a higher price for the fuel. This has been a bone of contention for years.
“The government will be giving Rs37 billion in subsidy on urea in 2011,” he said. “There is no justification for this at all.”
On the other hand, curtailment of gas, which is basically a raw material for fertiliser, brings down production and leaves the manufacturers with no option but to raise prices to make up for the lost sales, he said.
He said the corporation plans to list Engro Foods, Engro Energy and Fertilisers at the stock exchange this year.
Mohammad said that work on Engro Energy’s venture into mining of coal at Tharparkar, Sindh, for power generation continues. “China is showing a lot of interest in the project. Financing won’t be an issue.”
The corporation will need between $300 million and $350 million for the Thar project by the end of 2012, he said.
“We have been cited as a heavily indebted group but if you look at the books closely we generate Rs35 cash for every Rs100 of debt. I think that gives us a lot of room to easily pay off the loans.”
Pakistan govt has distributed Rs 28.6 billion among flood victims, according to Daily Times:
ISLAMABAD: Government of Pakistan has distributed Rs 28.6 billion among 1.483 million flood-affected families through NADRA’s Watan Card — each card has Rs 20000 cash assistance.
Deputy Chairman NADRA, Tariq Malik stated this while briefing the UN delegation headed by Margareta Wahlstrom, Special representative of the Secretary General for Disaster Risk Reduction who visited NADRA Headquarters today for briefing on Flood Relief System.
Tariq Malik while elaborating the overall progress said that in Punjab, 608,824 flood-hit families received Rs 11.96 billion while in Sindh 558,997 families received Rs 10.11 billion. In Baluchistan
Rs 1.85 billion have been distributed among 102,945 families and Rs 3.8 billion were disbursed among 199,414 families in the province of Khyber Pakhtunkhwa. He said in AJK and Gilgit Baltistan
Rs 188,450,000 distributed among 10,173 families and Rs 61,626,000 given to 3,263 families respectively.
He said the selection of beneficiaries is one of the most contentious aspects of any post disaster cash transfer programs in various countries. “NADRA walked extra miles as our aim was to protect the most vulnerable among the flood victims like women household, widows, special persons and minorities,” he told.
He told 120,081 Watan Cards were given to the households headed by women folks in the remotest areas of Pakistan — and 11,746 Watan Cards were given to minorities notified by the provinces.
Emphasising on Grievances Redressal System, Tariq Malik explained that 3.2 million people visited Watan Card centers, 335,044 complaints were received and NADRA has verified that 167,063 were eligible of Watan Cards of which around 155,000 have been given Watan Cards.
Fifty percent (50%) of the complaints were not genuine as these included people who already had received Watan Cards or their family member had received Watan Card. “We are not closing complaints redressal system, and would like to entertain all complaints on case to case basis,” he added.
He urged the media, international donor agencies and NGOs to focus on facts and real data, not on anecdotes or stereotypes or politically motivated press reports aiming generalisation based on isolated incidents.
Neva Khan, Country Director Oxfam, Madhavi Malagoda ARIYABANDU, Regional Programme Officer, UN International Strategy for Disaster Reduction were among the members of delegation.
News about 2010-2011 budgets in South Asia:
The BBC is reporting that "the budget deficit has reduced to 5.1% of GDP this fiscal year, down from more than 6%. The plan is to cut this to 4.6% next year".
Pakistan's budget deficit for first six months of 2010-2011 stood at 2.9%, up from 2.7% last year, according to CNBC and Reuters.
KARACHI, Feb 28 (Reuters) - Pakistan's budget deficit for the first six months of the 2010/11 fiscal year (July-June) was 2.9 percent of gross domestic product, the Finance Ministry said on its Web site (www.finance.gov.pk) on Monday. This compared with a deficit of 2.7 percent in the same period last year. In the October-December quarter, the deficit eased to 1.3 percent from 1.6 percent in the preceding quarter. Analysts said the lower second-quarter deficit was largely due to payments by the United States for logistical support provided by Pakistan in the war against Islamist militants. In November 2010, Pakistan agreed with the International Monetary Fund (IMF) that it would keep the country's budget deficit at 4.7 percent for the 2010/11 fiscal year. However, analysts agree Pakistan will likely overshoot this figure. Some forecast the deficit to be around 8 percent, higher than the central bank's prediction of between 6.0 and 6.5 percent, if fiscal reforms are not implemented. The original target of 4 percent was revised following the devastating summer floods, which caused around $10 billion in damages.
The Obama administration has proposed $3.1 billion in the 2012 budget allocation for Pakistan, according to The Express Tribune:
The administration’s spending for Pakistan is broken into two parts, the “enduring core part” – meaning long-term assistance programs – and the Overseas Contingency Operations (OCO), an administration official said at a briefing on President Barack Obama’s budget proposals for the fiscal year 2012, beginning October 1, 2011.
As part of the long-term economic and security assistance, President Obama is seeking $1.9 billion in the year 2012. The amount will also cover the cost of American aid operations and diplomatic presence.
Of the $1.9 billion, around $1.5 billion is annual money to be allocated under the Kerry-Lugar-Berman five-year aid measure.
It also includes $350 million in foreign military financing programs, which is part of the five-year agreement between the two countries.
Under the Kerry-Lugar-Berman initiative, the US funds a number of programs including development of democracy and wide-ranging infrastructure projects to assist Pakistan’s economic progress.
On the OCO side of the budget, the administration has proposed $1.2 billion, out of which $146 million is for operational expenditure.
Under the OCO, $1.1 billion is to be devoted to the Pakistan Counterinsurgency Capability Fund (PCCF). The PCCF seeks to train Pakistani forces for a more effective fight against insurgents along the country’s western border with Afghanistan.
Pakistan could replace India as the biggest recipient of British bilateral aid, according to the Guardian newspaper:
Britain is to stop sending direct aid to Burundi and Niger, two of the world's poorest countries, the government announced as it unveiled plans to rebalance the £8.4bn international development budget.
The two African nations, which are ranked second and fourth respectively in a World Bank list of the world's poorest states, are among 16 countries that will no longer receive bilateral aid from Britain by 2016. Direct aid will also be halted to Lesotho which is ranked 28th on the World Bank list.
Burundi, a landlocked country in the unstable Great Lakes region of Africa, is still suffering from the consequences of the Hutu-Tutsi massacres in the 1990s when 200,000 of its citizens died. Niger, a landlocked country in west Africa, depends on foreign aid for half of the government's budget.
The cuts were outlined to MPs by Andrew Mitchell, the international development secretary, as he unveiled the conclusions of two reviews into Britain's bilateral and multilateral aid programmes. Cutting aid to the 16 countries would allow Britain to concentrate its resources on 27 countries which include Afghanistan, Pakistan and South Africa.
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Ethiopia will become the biggest recipient of bilateral aid over the next two years. Pakistan could become the biggest recipient of British aid within three years, with a major focus on education, British officials in Islamabad said, but only if the government reduces chronic corruption.
Just 56% of Pakistani children between five and nine years' old attend primary school, a rate that British officials want to boost to the world average of 87%. But the school system is chronically dysfunctional due to political interference, "ghost schools" and unqualified teachers. "It's an education emergency," said one official.
As well as reducing graft, British officials want to see Pakistan increase its tax collection, currrently at a disastrously low rate of nine per cent of GDP with many parliamentarians paying little tax. The Pakistani government has vowed to improve education spending from two per cent GDP to seven per cent.
British officials said they recognised that British aid was a "drop in the bucket" in a country of 180 million people, but hoped that a targeted aid programme could "catalyse change" in critical areas like education.
Direct financial transfers to the Pakistani exchequer, which amounted to £120 million over four years under the last aid programme, are likely to be scrapped, officials said.
Here's the Express Tribune on small increase in overall literacy led by rural female literacy:
ISLAMABAD: The quest for knowledge in rural areas, particularly in females, compensated for the declining trend of getting an education in cities, according to the Pakistan Labour Force survey.
In 2009-10 the literacy rate in Pakistan marginally increased to 57.7 per cent due to an increase in the literacy ratio of females in rural areas. During the preceding year the literacy rate was 57.4 per cent. The male literacy rate stood at 69.5 per cent while it was 45.2 per cent for females.
According to the official definition, the literacy rate is that percentage of the population ten years and above which is able to read and write in any language.
Though more than half of the rural population is illiterate, the ratio improved by over half a percentage point to 49.2 per cent by June 30, 2010 due to an increasing number of women and girls who can read and write. The female literacy ratio improved to 34.2 per cent, a progress of 0.8 per cent in a year. In rural areas, the 63.6 per cent male literacy rate improved by only 0.4 per cent in comparison. The literacy rate in urban areas marginally declined due to a dip in the number of men who qualify as literate. The urban literacy ratio decreased 0.1 per cent to 73.2 per cent, due to a fractional reduction in the male literacy rate. At present more than eight out of ten urban males are educated but the ratio is below that of 2008-09.
The provincial literacy rates also depict interesting trends. In Punjab and Khyber-Pakhtunkhwa, the number of educated people increased, while it decreased in Sindh. The figure remained stagnant in Balochistan at 51.5 per cent. Punjab turned out to be the most educated province, followed by Sindh, Balochistan and Khyber -Pakhtunkhwa.
In Sindh the percentage of educated people dropped by one per cent to 58.2 per cent in 2009-10. The declining ratios were witnessed across the divide, rural, urban, females and males. Contrary to that in Punjab the literacy rate increased to 59.6 per cent. Over half of the rural population is literate and the urban literacy ratio stood at almost three-fourth in the province.
In Khyber-Pakhtunkhwa the literacy rate increased to 50.9 per cent, a progress of almost one per cent. The rural literacy rate increased to 48.4 per cent but the urban literacy dipped by 0.4 per cent. The urban literacy rate increased while the rural literacy rate declined.
In terms of level of education, near four out of ten literate people are not even matriculates. Another one out of ten is below intermediate, the survey reveals. Only 4.7 per cent of the total literate population has cleared intermediate but not bachelor’s and just 4.3 per cent have a bachelor’s or above. Even today over four out of ten Pakistanis are illiterate according to official figures.
World Food Program Pakistan director says food prices too high in Pakistan, according to AFP:
GENEVA — Pakistan's government has pushed food prices too high for an impoverished population, as malnutrition levels rise despite the recovery of crops after devastating floods, a UN food relief official said Wednesday.
Wolfgang Herbinger, director for the World Food Programme (WFP) in Pakistan, said food crops especially wheat in the southern flood-hit plains were recovering fast with the prospect of decent crops over the coming weeks.
"The crop outlook is not bad but the food security situation remains difficult because prices remain so high," he told journalists one the sidelines of humanitarian meetings in Geneva.
"The government is the biggest buyer of wheat in Pakistan they are setting the farm gate price and they dominate market," Herbinger explained.
"That's why the wheat price in Pakistan didn't adjust when, for example, in 2009 and early 2010 the wheat price had gone back a lot, it stayed high to the detriment of local consumers."
Now ordinary consumers pay double the price for wheat compared to three years ago and the food security situation has "changed dramatically," the WFP official added.
Malnutrition levels in the southern province of Sindh have reached 21 to 23 percent, according to the agency.
"That is well above African standards. The emergency standard is 15 percent," the WFP official said.
A recent survey found that in some flood-hit areas 70 percent of people were taking out loans and even using them to pay for food.
Herbinger admitted that the WFP was "struggling a bit" to bring the message across to authorities.
"You may have the country full with food but people are too poor to buy it," he explained.
"We are working a lot with the Ministry of Agriculture to explain to the minister that it is not enough to have enough production in the country if people can't afford it."
"Maybe for political reasons he doesn't always understand it, that it's one thing to be nice to the farmers but if your consumers can't afford it then... there's something wrong with agricultural policy," Herbinger added.
Massive floods caused by monsoon rains in July and August 2010 killed thousands, destroyed 1.7 million homes and damaged 5.4 million acres of arable land, experts have said.
Here's Pakistan PPP govt's defense of high wheat prices in Pakistan, as reported by the BBC:
Lowering wheat prices would create food shortages in Pakistan and encourage smuggling, officials say, responding to criticism from the UN.
On Wednesday the UN's food relief agency said the government set prices too high and malnutrition was rising.
But an official at Pakistan's food ministry told the BBC farmers would simply switch to more lucrative crops if wheat prices went down.
Devastating floods across Pakistan in 2010 damaged acres of arable land.
Although crop yields in 2011 are projected to be healthy, prices are too high for an impoverished population, the director of the UN's World Food Programme told journalists on the sidelines of humanitarian meetings in Geneva on Wednesday.
"The crop outlook is not bad but the food security situation remains difficult because prices remain so high," Wolfgang Herbinger said.
Smuggling risk
Malnutrition levels in the southern province of Sindh had reached 21% to 23%, according to the WFP.
Continue reading the main story
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It is nearly impossible to stop smuggling across the Afghan border, which is extremely porous”
End Quote Food and Agriculture ministry spokesman
"That is well above African standards. The emergency standard is 15%," Mr Herbinger said.
But lowering prices would do little to help the situation, an official at the food and agriculture ministry, who wished to remain unnamed, said.
He also warned that much of the crop would end up in the hands of smugglers.
"Low farm-gate prices lead to lower acreage of wheat crop as farmers switch to other crops and it works as an incentive for smugglers seeking international prices in the neighbourhood.
"It is nearly impossible to stop smuggling across the Afghan border, which is extremely porous," he said.
So if prices are lowered, the official said, the risk is that they would eventually rise to even higher than the level they are currently set at.
In the 1990s and between 2007 and 2009 there were severe wheat shortages across Pakistan, leading to extremely high prices.
Pakistani officials also say that malnutrition in Sindh province is not a new phenomenon and is unrelated to the food supply.
"Government statistics show that food consumption has not gone down despite the doubling of food prices since 2007-08," Kaisar Bengali, advisor to Sindh's chief minister said.
A lack of public hygiene facilities and safe drinking water were more important factors in child nutrition, he said.
"These are neglected areas, and there has been hardly any development in the public health sector here in decades," Mr Bengali said.
Flood Emergency Cash Transfer Project, designed to support the Government of Pakistan’s Citizen’s Damage Compensation Program (CDCP) in providing cash transfers to more than 1 million flood-affected households, according to pkeconomist.com:
The project will also strengthen the management of the CDPC through effective grievance redressal mechanisms and establishing control and accountability measures to ensure efficient and transparent delivery of the support.
“The 2010 floods were a disaster of historic proportions that affected over 20 million people and created a massive recovery need,” said Rachid Benmessaoud, World Bank Country Director for Pakistan. “Households faced with income shocks often adopt coping strategies that are not beneficial over time, including reducing assets and consumption, increasing borrowing, and taking children out of school to work. Therefore, cash assistance to flood-affected households is essential to mitigate the adverse effects of income shocks besides addressing the issue of poverty and vulnerability. Importantly, the project will also assist in developing necessary capacities and systems to effectively handle the similar disasters in the future.”
Launched in September 2010, the CDCP provided around 1.4 million families with cash grants of PRs. 20,000 (approximately US$230) to cover their immediate needs. The next phase, supported by this project, will provide an additional payment of PRs. 40,000 (approximately US$460) to around 1.1 million most affected households, thereby reaching between 7.5 and 8.3 million people to rebuild their lives. To meet the total financing requirements for the CDCP, the World Bank has worked closely with other development partners, some of which (USAID and Italy) have already committed funds.
“International evidence suggests that cash grants allow the recipients the flexibility of choosing where to put their resources based on their specific conditions and priorities.” said Iftikhar Malik, Co-Project Team Leader. “Beneficiaries are expected to use these additional grants to not only cover basic consumption but to also recapitalize assets as well as recover their livelihoods.”
The World Bank is well placed to support the Government of Pakistan in extending and strengthening the CDCP due to its substantial international and regional experience in protecting the affected and vulnerable through post-disaster cash transfer programs. In addition to this operation, the Bank has assisted the Government in its flood response through financing the Post-Disaster Needs Assessment and making available US$300 million for fast-disbursing financing of critical flood-related imports and US$20 million for highway reconstruction.
The credit is from the International Development Association (IDA), the World Bank’s concessionary lending arm. US$81 million of the credit carries a 0.75% service charge, 10 years of grace period and a maturity of 35 years. The remaining US$44 million has the same terms plus a fixed interest charge of 3.2%.
Here are some excepts from an Op Ed by Pak industrialist Yousuf Shirazi of Atlas Group:
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Pakistan’s mineral resources – oil, gas and copper, much less gold – remain unexploited. Whatever the case, Pakistan is basically an agricultural economy. Before Partition, the area now comprising Pakistan had fed the entire India. Even now when the floods have affected the crops, Pakistan is exporting rice and wheat. And the cotton prices are so high that, together with wheat and rice prices – reinforced by global revival – it has fed the entire rural area, with unusual liquidity, so as to give a fillip to consumer demand seldom seen before!
Pakistan’s major exports consist of textile, rice, leather goods, sports goods, chemicals and carpets. More than 50 per cent of its export earnings still come from textiles – now yarn being in the forefront. Only if Pakistan focuses on agriculture in the right way can it replace the import with export economy. The current year is expected to record export of over $25 billion but, on the other hand, imports are also expected to exceed exports – $35 billion at the close of the year. The deficit finance – July-December FY10, $6.895 billion – is not any pride whatsoever. The existing situation can be remedied through exploration of mines and optimising agricultural growth and export
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In a situation like this, perhaps, the only course remains increased reliance on aid, loans and credit, which, in essence, has been worsening the economy. These loans and credits, in fact, help the economies of the developed world more than the economies of the developing countries. This is achieved through massive import – of machinery, raw materials, if not food – the PL480 of the USA – depriving the recipient countries of local investment, production and export. This has been leading to unemployment and poverty from which the developing countries traditionally suffer. The solution for the developing countries lies in reliance on education, healthcare and socio-economic infrastructure – more so in Pakistan.
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Socio-politico-economic harmony will depend, among others, on development finance through development finance institutions like PICIC and IDBP that provided long-term development finance. Now there is none. The commercial banks are doing it, but not adequately enough. It is not the job of commercial banks either. However, they are not only providing development finance of whatever worth, but all sorts of non-commercial banking – investment banking, leasing, to say nothing of asset management, and mutual funds. Jack of all trades, master of none. It is all at the cost of commercial banking, per se. The regulators may take note of it. The sooner this anomaly is rectified the better for the export orientation of the economy, and for the socio-politico-economic development of the country as a whole.
An immediately available solution is facilitating remittances, now roughly $1 billion per month and taxing the 57 per cent underground economy, under-invoicing and tax evasion, if not smuggling. The World Bank’s recent report claims this deprives the exchequer of over $500 billion annually. This will be equal to, if not, more than the aid, loans and credits which are always given at a high cost to the economy. Taxing the underground economy will reinforce localisation of investment, production and exports – glocalisation, creating employment opportunities, providing the roti, kapra aur makaan (bread, clothing and shelter) promised to the masses of people, not globalisation, which serves global interests. It will enable also much sought after access to the developed world based on outright merit.
Here's a NY Times report on Texas farmers planting more profitable cotton in stead of food crops:
“There’s a lot more money to be made in cotton right now,” said Ramon Vela, a farmer here in the Texas Panhandle, as he stood in a field where he grew wheat last year, its stubble now plowed under to make way for cotton. Around the first week of May, Mr. Vela, 37, will plant 1,100 acres of cotton, up from 210 acres a year ago. “The prices are the big thing,” he said. “That’s the driving force.”
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“It’s good for the farmer, but from a humanitarian perspective it’s kind of scary,” said Webb Wallace, executive director of the Cotton and Grain Producers of the Lower Rio Grande Valley. “Those people in poor countries that have a hard time affording food, they’re going to be even less able to afford it now.”
Myriad factors determine food prices. Ethanol demand has pushed up corn prices. Wheat prices rose last year when Russia banned exports after drought devastated its crop.
Farmers typically respond by increasing plantings of the most profitable crop. In the middle of the last decade, as food prices began to rise, cotton prices remained low, prompting farmers to switch from cotton to grains and other food crops. When corn prices jumped with ethanol demand in 2007, farmers grew much more corn.
This year, cotton prices are the highest they have been in years, luring farmers despite strong prices for other crops.
The United States Department of Agriculture predicted last month that southern farmers this spring would plant 12.8 million acres of upland cotton, the type that accounts for the vast majority of the crop. That is a 19 percent increase from last year, when farmers grew 10.8 million acres. It also predicted that the acreage for corn and wheat would grow, although the increases would be lower than they might have been without the competition from cotton. On Thursday, the department will release an updated forecast, based on a survey of farmers.
The effect of the cotton shift is expected to be magnified internationally, as farmers in other major cotton-producing countries, like Brazil, also respond to the high prices.
Cotton futures prices reached nearly $2.20 a pound this month on the ICE futures exchange in New York, up from $0.73 a pound last July. The price is expected to fall by harvest time, but farmers said they hoped to get close to $1 a pound.
In the United States, the economics of growing cotton vary according to many factors, including regional differences and whether or not the land is irrigated. Farmers in several southern states said that at a cotton price of about $1 a pound, their profit could be roughly $200 to $500 more per acre than they could earn growing corn or wheat. For 1,000 acres planted in cotton, that means an additional $200,000 to $500,000 profit.
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Mr. Patterson expects to plant 1,500 acres of cotton this year, up from 600 last year. He said the frenzy was so intense that even cattle ranchers were talking about growing cotton.
Farmers say they have no choice but to plant the crops that give them the best chance of making money. They face many uncertainties, and their profits can be wiped out by bad weather, rising costs for items like fertilizer, fuel or seed, or unstable crop prices, which can plummet as rapidly as they rise.
The National Cotton Council expects substantial increases in all cotton-growing states, including large jumps in North Carolina, Mississippi and Tennessee. But Texas is the nation’s biggest cotton producer, and will have by far the biggest increase in acreage.
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.
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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.
Here are some excerpts from The Guardian Op Ed on Cameron's warning to Pakistan to raise tax revenues:
Corruption, tax dodging by rich individuals and domestic companies, and tax dodging by multinational businesses all result in a massive flow of "illicit capital" out of developing countries that exceeds the aid they receive from rich nations. Three policy solutions are needed to help reverse this trend and truly fulfil the spirit of Cameron's remarks.
First, revenue officials in developing countries need to be able to follow the money that their rich elites have stashed in tax havens. At present, countries have to conclude individual treaties with each country from which they want this kind of information, and can only do so if that country is willing. This is cumbersome and cannot serve the interests of low-income countries. The UK is one of over a dozen countries that recently ratified a multilateral convention that could provide the solution – but only if developing countries are supported to join, and if tax havens are compelled to participate. The G20 summit in France in November is the opportunity to make this happen.
Second, anti-corruption and tax justice campaigners – and indeed some revenue officials – want multinational companies to break down their financial reports on a country-by-country basis. This proposal is being considered right now by the European commission, and was raised by the chancellor, George Osborne, at a recent G20 summit.
But the devil will be in the detail. If companies have to declare tax payments by country, it will be much harder for corrupt officials to spirit the money away. But if other information such as profits and sales is also included in the breakdown, we could scrutinise the tax payments themselves, holding companies and governments to account for the tax dodging that multinational companies can get away with.
Third and finally, we need the global network of anti-tax avoidance laws to be fit for purpose. It's unfortunate that changes to the UK's "controlled foreign companies" rules in last month's budget will open the floodgates to tax avoidance by British companies overseas. This could cost developing countries £4bn in revenues, effectively wiping out the value of half the British aid budget. At the same time, developing countries keen to crack down on such avoidance are being forced to adopt international "transfer pricing" rules that make them leak like sieves.
It's within the power of the British government to equip developing countries like Pakistan with the information, the rules and the enforcement capacity they need to raise much more tax revenue.
In flood-stricken Pakistan, a good wheat harvest is expected, reports Food and Agriculture Organization (FAO):
Islamabad/Rome, 30 Mar 2011 -- A large-scale distribution by FAO of wheat seeds to the victims of last year’s floods in Pakistan is now ripe to yield enough food for half a million poor rural households.
With an average family size of eight, this translates into a harvest large enough to feed four million people for the next six months.
FAO spent $54 million of international donor funding buying and distributing quality wheat seeds as part of its emergency intervention that began last August. . Once the harvest is completed, this donation will have produced a crop worth almost $190 million in wheat flour, the main staple, at current local retail prices. “The investment made by donors has been quadrupled,” said Daniele Donati, Chief, FAO Emergency Operations Service. “Moreover, farmers will be able to save the seeds from this year’s harvest to plant again later this year.”
More than 18 million people in Pakistan were affected by last summer’s severe flooding, which caused extensive damage to housing, infrastructure and crops.
Farming nearly fully-funded
In responding to the immediate and critical challenges of the 2010 floods, FAO led the Agriculture Cluster, comprised over 200 organizations, reaching 1.4 million farming families across Pakistan.
FAO received $92 million of its $107 million appeal, which has enabled it to shore up the smallholder agricultural system in the four Pakistan provinces affected by the flooding. The donors were Australia, Belgium, Canada, CERF, the European Commission, IFAD, Italy, Sweden, the United Kingdom and the United States of America.
As well as supporting the “Rabi” wheat planting season, it is estimated that FAO saved the lives of almost a million livestock by supplying temporary shelter and enough de-worming tablets and dry animal feed for almost 290,000 families. Green fodder is now becoming available as the harsh Pakistan winter turns to Spring.
“The livestock interventions really paid off,” Donati said. “It costs ten times more to buy a new animal, which often represent a family’s lifetime savings”.
Canals cleared
FAO is overseeing a thousand cash-for-work schemes by which workers are paid to clear irrigation canals blocked with silt and flood debris.
One severely affected province not to have received much help is Sindh. This was because the fields remained waterlogged until well after the end of the Rabi planting season, and in some cases are still inundated. The UN Agency will shortly distribute quality rice seeds to almost 25 000 families in Sindh for the upcoming planning season, but over 700 000 families will require assistance over the coming months.
Recovery priorities
FAO, in partnership with the Government of Pakistan has identified recovery priorities for the next two years. These are increasing crop, livestock, fishery and agro-forestry production, improving diets and nutrition and boosting agriculture extension services to offer advice to landless and smallholder farmers.
“Pursuit of these core objectives will significantly reduce the vulnerability of the populations in question, improve food production and income generation, and increase affected communities’ resilience to future shocks,” said Donati. FAO expects its recovery programme to cost $94 million, enough to assist 430 000 families in 24 districts.
An Early Recovery Working Group, co-chaired by the Pakistan Government’s National Disaster Management Authority and the United Nations Development Programme, has been set up with eight sectors covered including one on Agriculture and Food Security, co-chaired by FAO, WFP and the Ministry of Food and Agriculture.
Pakistan's ministry of finance is projecting 4% growth in fiscal 2011-12, according to The News:
“We are looking at a growth rate of four percent for the next year because of a good services sector and on the hope of better farm output,” said a Finance Ministry official who did not want to be identified.
The figure compares with a 3.7 percent growth forecast by the Asian Development Bank (ADB) in its Outlook 2011 report released on Wednesday.
The ADB expects persistent energy problems and security issues will continue to check Pakistan’s growth in 2011/12, with surging inflation posing a further major risk.
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Last year, the worst-ever floods that hit the country inflicted $10 billion in losses, forcing officials to slash growth estimates in between 2.5-3 percent for the current year, down from an expected 4.5 percent.
The services sector, however, is likely to grow by four percent in the current year to June and there are signs that the farm sector is recovering from the flooding.
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Higher cotton, rice and sugar output is expected in the coming year, analysts said.
“We expect that 2011/12 will be much better than this year ... Our own (growth) forecast is close to 4.5 percent,” said Sayem Ali, an economist at the Standard Chartered Bank.
An official at the Planning Commission, which prepares growth targets, also spoke of likely four percent growth next year, but said that was contingent on continuing support from remittances from Pakistanis working abroad and on exports, which have grown by 20-25 percent during the first eight months of the current financial year.
However, the large-scale manufacturing sector, which dominates the overall industry making up 12.2 percent of Pakistan’s GDP, remains a major concern as it faces chronic energy shortages and high interest rates that discourage private sector borrowing.
The sector grew 1.03 percent up to January, against 2.34 percent during the corresponding period last year.
“Energy shortfalls are lowering real growth by at least two percentage points annually,” the ADB said in its report.
Improved prospects for Pakistan’s economy, however, will largely depend on the implementation of measures to address key problems such as inflation, the budget deficit and the need for transparent revenue policies, according to the ADB.
“Increasing prices are on the warning level, not just for Pakistan, but for the whole region,” said Rune Stroem, ADB’s Pakistan country director.
The ADB forecasts inflation in Pakistan will quicken to 16 percent in 2011, the highest in Asia. Revenue generation is another grey area.
The central bank chief said this week that quick steps were needed to broaden the tax base in Pakistan, which has one of the lowest tax-to-GDP ratios in the world, currently around 10 percent.
The IMF has not yet released the latest tranche of the $11 billion loan due in May last year because of the government’s inability to implement a reformed general sales tax, seen as a key to expanding the tax base.
The fiscal deficit, meanwhile, is expected in between 5.3 percent and 5.5 percent of the GDP in 2010/11, but could be higher if some external flows, including grants, are not received soon.
Stroem said that 5.5 percent deficit estimates seemed unrealistic and there are signals that these might slip even further.
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.
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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.
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“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.
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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?
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And so Pakistan prepares to harvest another bumper wheat crop in 2011.
Here's a Dawn-AFP story about a modest job recovery in Pakistan's textile sector with rising exports:
KARACHI: After a year of unemployment and wondering if his family would be better off if he died, Pakistani textile worker Murad Ali has got the spring back in his step.
One of thousands laid off by textile bosses last year, the father of four is now back at work and one of those to benefit from a surge in Pakistani exports in the current fiscal year, which ends on June 30.
Experts say rising global commodity prices, a government decision to prioritise power supply to industry and currency devaluation that has made Pakistani products more competitive, have fired an export boom.
Compared with the same period last year, the Trade Development Authority of Pakistan says textile exports such as silk rose 25.8 per cent and agricultural produce, such as basmati, rose 6.2 per cent from July to February 7, 2011.
The textiles sector is one of the key drivers of the Pakistani economy, accounting for 55 per cent of all exports and 38 per cent of the workforce, according to official figures.
Bosses have rehired staff who were laid off, but Ali is only getting a third of the salary as a skilled garment worker that he used to command.
“I’m earning less than last year. It is difficult to live a better life due to price rises, but I’m happy,” Ali said.
He has re-enrolled his sons at school but his wife will continue to work as a maid. Money is too tight for her to go back to being a housewife.
“The situation has drastically changed in the favour of the country’s economy,” said textile tycoon Mirza Ikhtiar Baig, who employs more than 2,000 workers and predicts exports will rise 10 per cent for the fiscal year 2010 to 2011.
“Now with demand for Pakistani products rising internationally we are employing more workers.
“Our exports are getting healthier because of an increase in international commodity prices and the government’s will to give top priority to the country’s economy,” said Baig, an advisor to Prime Minister Yousuf Raza Gilani.
The Asian Development Bank forecasts GDP growth for Pakistan of 2.5 per cent for fiscal year 2011 despite pressures from unprecedented floods in 2010, with a relatively modest rebound to 3.7 per cent for fiscal year 2012.
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Pakistan suffers from a profound electricity crisis that restricts production to around 80 per cent of its needs — a situation that will only worsen as the temperatures crawl higher in the coming months.
The budget deficit has grown to 5.5 per cent of GDP, above a 4.9 per cent target for the current fiscal year to June 30.
To fund the shortfall, the government borrowed $4.4 billion from the central bank from July 1 to February 28, a move that worsened inflation, rather than raise taxes and cut spending as the IMF and World Bank would like.
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Mohammad Sohail, head of the Karachi-based Topline Securities research and brokerage house, said the export boom would contribute to economic recovery, yet warned the gains were minimal.
“It is very fragile because the fiscal deficit is much higher than the target of 5.3 per cent because of the government’s heavy borrowing from the central bank,” he said.
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“Furthermore, the overall security situation in Pakistan is very uncertain, which is making the foreigners and local investors wary all the time.” Independent economist A.B. Shahid said rising international oil prices had hit the country’s economy hard, adding $4 billion to the oil bill.
Pakistan could have benefited more from 8-9 per cent export growth, he said, by exporting cloth in its value-added forms rather than raw cotton and yarn.
While Ali is content with life, he is also wary of uncertainties ahead.
“Life has become too insecure. Everyone is ill at ease. Let’s just wait and see.” – AFP
Here's an IRIN story of a family in Muzaffargarh struggling to recover after the floods in 2010:
MUZAFFARGARH, 8 April 2011 (IRIN) - Eight months after floods forced Saleemullah Adeel and his family to abandon their home in Pakistan’s southern Punjab city of Muzaffargarh, the road to recovery has proved rough for this landless farmer.
The wheat he planted on 10 acres (four hectares) leased from a large landowner at an annual fee of US$118 per acre (0.4 hectares) is doing well, and Saleemullah hopes for a good crop because weather conditions so far have been good. Near his house, which is now partially repaired, there are neat rows of vegetables, and a few hens feed in the yard. But he has little else to be happy about.
“I bought wheat seed and fertilizer after selling the jewellery we had purchased for my elder daughter’s wedding, which was scheduled for this month,” Saleemullah told IRIN. “Now it has been postponed [yet] I have used up all my savings and my two sons, who worked on fish farms, have lost their jobs.”
The July-September 2010 floods destroyed hundreds of fish farms in the Muzaffargarh area, according to media reports, leaving many, like Saleemullah’s sons, out of work.
But Saleemullah’s problems do not end here. Since he did not own the land he farmed, he was not awarded compensation by the provincial government, which gave landowners seed and fertilizer. “The landlord we lease from claimed he needed [the seed and fertilizer] for his own lands,” he said.
Cotton crop destroyed
Other people, too, have suffered. “I have earned nothing for months because the cotton crop was destroyed, and factories which crush the cotton seed to extract oil did not employ us this time as they usually do,” said Ahsan Akhtar, 30, whose wife was not hired this year as a cotton-picker.
Across the country, people have continued to live with losses incurred during the floods, even as they attempt to recover, but this is proving tough. “My youngest child, aged six months, has had diarrhoea for nearly a month,” said Sanober Bibi, 25. “The health workers who used to visit early on after the floods no longer come, and the medicine given by the local midwife did him no good at all.” There is no clinic in their village.
On 6 April Neva Khan, country director of the UK Charity Oxfam, pointed fingers at the government, telling reporters that a delay on the part of the government to provide a “reconstruction strategy” had resulted in delays in urgent rebuilding and recovery work. In some cases this had “barely started even eight months after the disaster”, he said.
A government official refuted that claim. "The rehabilitation phase was started some months ago," Ahmed Kamal, spokesman for the National Disaster Management Authority, told IRIN. A Sindh government official, who preferred anonymity, said a "desperate lack of funds" was holding up recovery in the province, but "progress was slowly being made".
Here's a Dawn piece on rising rural income disparities from high commodity prices:
..Is the current spike in the commodity prices benefiting everyone living in the villages, particularly in Punjab and Sindh which together contribute more than 90 per cent to the country’s agricultural output and where more than two-thirds of the country’s population lives?
“Whereas a large chunk of this income has ended up with the agriculture elite, there are signs that some of it has trickled down to the small farmers as well,” according to Waheed. Others argue that the transfer of additional cash has widened income disparity in the rural society even if many small farmers have also benefited from the soaring crop prices because the “trickle-down” has been uneven and limited.
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Ashfaque Hasan Khan, dean and principal of the NUST Business School who served as a special finance secretary in Musharraf government, says the income disparity in the rural areas has widened as a result of the rising crop prices.
“Only 40 per cent of the rural population is engaged in the crop sector and a vast majority of them are small landholders. This means only a small portion of population in the rural areas has gained from the increasing crop prices,” he elaborates.
In Punjab, for example, less than half of the rural population is engaged in the crop sector. Some 90 per cent of it falls in the category of small farmers with landholdings up to 12.5 acres.--------
“An overwhelming majority of small farmers buys inputs on credit and, thus, is forced to pay a much higher price than those who pay cash for these inputs,” claims Mughal. “Even if they have cash their cost has gone up manifold, offsetting the gains of
higher crop prices.”
There are people who are of the view that smaller landholding have helped a more equitable distribution of additional incomes among the growers in Punjab compared to the farmers in Sindh where landholdings are very large.
Salman Shah, former finance minister, says the additional incomes generated by higher commodity prices have been distributed more evenly in Punjab compared to Sindh.
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Shah is of the opinion that the landless labour in the villages has also benefitted from the new economic prosperity being experienced in rural areas and their wages have also gone up. But he says only a comprehensive study of the impact of commodity prices on the rural society could give answers to many questions.
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Many fear that the growing agricultural commodity prices may rob the farmers of the incentive to boost their productivity. Mughal says the rising prices and decreasing productivity is not good for the economy.
“Our productivity per acre has decreased significantly over the decades whereas India has successfully managed to substantially boost its crop output. The new wave of economic prosperity in the rural areas should not be allowed to take our focus off the need to boost productivity. That will be disastrous for the economy as well as people,” he warns.
While the soaring prices have brought a semblance of prosperity to the rural areas, it has added to woes of the urban population where poverty levels are rising and the quality of life suffering. The Consumer Price Index (CPI) has increased by 55 per cent over the last three years whereas salaries have not risen accordingly, according to Waheed.
“The urban population that relies on manufacturing growth and trading, or earns fixed salaries has generally experienced a deterioration in its standard of living, and is not happy about it. Large scale manufacturing growth has declined by about one per cent over the last three years whereas the wholesale trade has risen by a marginal four per cent,” he says, underlining the impact of rising price inflation on the urban consumers
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.....
Here's a Wall St Journal report on World Well-being Gallup survey that puts Pakistanis ahead of Indians:
The results of the 2010 global wellbeing survey of 124 nations conducted by Gallup reveals that only about 21% of people consider themselves “thriving,” the highest level of wellbeing.
Around 1000 people over the age of 15 were asked whether in their lives they felt they were “thriving,” “struggling,” or “suffering,” measured on a scale from zero to 10. Anything seven or above was considered as thriving, according to the methodology used in the study.
India fared worse than average. Based on the findings, it ranked 71st in the list, with only 17% of respondents reported as thriving. (This was in line with the broader Asian average).
India’s neighbor Pakistan, despite its more volatile political and economic situation, ranked 40th, with 32% of the people describing themselves as thriving.
This category means more than just general wellbeing, and includes better overall health, measured in terms of fewer sick days, less stress or sadness, and more happiness and respect.
Alarmingly, in India 64% of people saw themselves as struggling. The survey describes people who fall into this category as being more stressed, more concerned about their economic wellbeing and less healthy, in terms of their lifestyle and eating habits.
The Danish lead the wellbeing list with 72% falling into the thriving category, while Chad ranked lowest, with only 1% describing themselves as such. Americans ranked average, with 59% of them thriving and only 3% suffering.
China, despite its impressive GDP figures, didn’t do that well, with only 12% of people describing themselves as thriving.
While there were gaps between developed and developing countries, a lot also depended on a country’s political situation and natural disasters, the survey shows. For instance, Haiti, where the 2010 earthquake claimed the lives of up to 250,000 people, those in the thriving range are only 2%.
Overall, the survey findings reveal how GDP figures alone are not sufficient to measure a country’s wellbeing. (This comes close to Gross National Happiness, which the Himalayan kingdom of Bhutan famously adopted in the 1970s.)
“As the uprisings in Tunisia and Egypt showed earlier this year, leaders should not rely on GDP alone as an indicator of how well their countries and their citizens are doing. Monitoring and improving behavioral economic measures of wellbeing are important to helping leaders better the lives of all their residents,” the survey reveals.
Consultant of psychiatry at New Delhi’s Moolchand Medcity, Dr. Jitendra Nagpal held a similar view. In an emailed response to India Real Time, Dr. Nagpal also agreed that nations whose people claim to be happy may or may not be economically sound. Dr. Nagpal added that happiness is more about the ability to do what you want to do, rather than fulfilling life’s basic needs.
Asian Development Bank is cautioning that rising food and fuel prices is threatening economic growth in Asia, according to the BBC:
Soaring food and fuel prices are threatening to derail growth in Asian economies, according to a report by the Asian Development Bank (ADB).
The bank has warned that if food and fuel prices continue to surge, economic growth in the region could be reduced by up to 1.5% this year.
According to the bank, domestic food prices have risen at an average of 10% in many Asian economies this year.
Oil prices have also surged because of the crisis in the Middle East.
The bank said that a combination of these two factors has been a major setback for growth in Asian economies.
Extreme poverty
While Asian economies have emerged strong from the global financial crisis, the rising cost of living has become a big concern in the region.
The ADB has warned that the recent surge in food price is threatening to push millions of Asians into extreme poverty.
According to the bank's study a 10% rise in domestic food prices may result in almost 64m people being pushed into extreme poverty.
According to the ADB's chief economist, Changyong Rhee, "for poor families in developing Asia, who already spend more than 60% of their income on food, higher prices further reduce their ability to pay for medical care and their children's education."
"Left unchecked, the food crisis will badly undermine recent gains in poverty reduction made in Asia." he added.
Export bans
The bank also warned that food prices will remain volatile in the short term.
It said that while there have been production shortfalls in some countries because of bad weather, prices have also been pushed up by other factors, such as the weakening US dollar and rising fuel costs.
This has resulted in many countries imposing export bans on their produce, a practise that is not helping the cause, according to the bank.
"To avert this looming crisis it is important for countries to refrain from imposing export bans on food items, while strengthening social safety nets," said Dr. Rhee.
"Efforts to stabilize food production should take centre stage, with greater investments in agricultural infrastructure to increase crop production and expand storage facilities,"
Dr Rhee added that these measures will ensure that food produce is not wasted, thus helping to keep prices in check.
Here are a few excerpts from Wall Street Journal story titled "India's Boom Bypasses Rural Poor":
The Mahatma Gandhi National Rural Employment Guarantee Scheme (NREGA), as the $9 billion program is known, is riddled with corruption, according to senior government officials. Less than half of the projects begun since 2006—including new roads and irrigation systems—have been completed. Workers say they're frequently not paid in full or forced to pay bribes to get jobs, and aren't learning any new skills that could improve their long-term prospects and break the cycle of poverty.
In Nakrasar, a collection of villages in the dusty western state of Rajasthan, 19 unfinished projects for catching rain and raising the water table are all there is to show for a year's worth of work and $77,000 in program funds. No major roads have been built, no new homes, schools or hospitals or any infrastructure to speak of.
At one site on a recent afternoon, around 200 workers sat idly around a bone-dry pit. "What's the big benefit?" said Gopal Ram Jat, a 40-year-old farmer in a white cotton head scarf. He says he has earned enough money through the program—about $200 in a year—to buy some extra food for his family, but not much else. "No public assets were made of any significance."
Scenes like this stand in stark contrast to India's image of a global capitalist powerhouse with surging growth and a liberalized economy. When it comes to combating rural poverty, the country looks more like a throwback to the India of old: a socialist-inspired state founded on Gandhian ideals of noble peasantry, self-sufficiency and a distaste for free enterprise.
Workers in the rural employment program aren't allowed to use machines, for example, and have to dig instead with pick axes and shovels. The idea is to create as many jobs as possible for unskilled workers. But in practice, say critics, it means no one learns new skills, only basic projects get completed and the poor stay poor—dependent on government checks.
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Others said the ban on mechanization limits the scope of projects to gravel roads and pits to capture water. Such programs last for only a couple of years and do little to improve village life. Balveer Singh Meena, a 31-year old farmer in the village of Mohanpura in northern Karauli, ekes out a living growing wheat and chickpeas. He eats a single Indian flat-bread known as roti and vegetables for every meal. By selling what little excess food they produce, Mr. Meena and his three brothers are able to make just over $400 per year, which must stretch to pay for an extended family of eight people.
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But shortly after the program started in February 2006, workers complained that local leaders were docking pay and asking for money in return for job cards. The central government responded in 2008 by sending money directly to workers' bank accounts. But according to workers and auditors, the money takes so long to reach those accounts—up to 45 days—that workers are often forced to accept lesser cash payments from local leaders on the condition that they repay the money at the full amount.
Audits of the program in the southern state of Andhra Pradesh found that about $125 million, or about 5% of the $2.5 billion spent since 2006, has been misappropriated. Some 38,000 local officials were implicated, and almost 10,000 staff lost their jobs.
In one study of eastern Orissa state, only 60% of households said a member had done any of the work reported on their behalf. Earlier this month, the central government gave the green-light for the Central Bureau of Investigation, India's top federal criminal investigation body, to launch a probe into alleged misuse of program funds in Orissa....
Here's an AFP report on Pakistani tax dodgers:
ISLAMABAD — Pakistan is defying mounting Western pressure to end a giant tax dodge with fewer and fewer people contributing to government coffers, spelling dire consequences for a sagging economy.
Tax is taboo in Pakistan. Barely one percent of the population pays at all, as a corrupt bureaucracy safeguards entrenched interests and guards private wealth, but starves energy, health and education of desperately needed funds.
Less than 10 percent of GDP comes from tax revenue -- one of the lowest global rates and worse than in much of Africa, say economists.
Federal Board of Revenue (FBR) spokesman Asrar Rauf said 1.9 million people paid tax in 2010, less than the year before, despite 3.2 million being registered to pay -- itself a drop in the ocean of a population of 180 million.
As a result, Pakistan's fiscal deficit widened from 5.3 percent to 6.3 percent of GDP in 2010, the Asian Development Bank said this month, knocking 2011 growth figures to 2.5 percent and predictions for 2012 to 3.2 percent.
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This month visiting British Prime Minister David Cameron pressed the point home, saying aid increases were a hard sell when: "Too many of your richest people are getting away without paying much tax at all and that's not fair".
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The IMF last May halted a $11.3 billion assistance package over a lack of progress on reforms, principally on tax.
And despite a flurry of meetings, no new loan has been agreed in the run-up to the IMF and World Bank's Spring meetings.
An IMF review mission is due to visit on May 8. "Consensus is building, we have almost reached agreement (on reform)," one government official told AFP, but gave no details.
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What would really work, say analysts, would be scrapping exemptions that serve entrenched interests, such as a 50 percent tax discount on sugar and a gate on taxing agricultural income that largely exempts wealthy feudal landowners.
But stalemate and vested interests have made that impossible.
"There's talk of early elections. One has a brittle coalition. A lot of the reform areas that need to be dealt with have very well entrenched and powerful lobbies that are making the case against it," said a finance ministry official.
As it is, the tiny minority who contribute say they carry a disproportionate tax burden, for which they get nothing in return.
Pakistan suffers from an awful energy crisis, yet government spending on electricity subsidies last year reached just under one percent of GDP, health spending 0.5 percent and education two percent, said the finance ministry.
According to a 2009 study by the Pakistan Institute of Legislative Development and Transparency, the average member of parliament was worth $900,000 and the wealthiest $37 million.
Those figures stand against estimates that a quarter of the population lives below the poverty line and that GDP per capita stands at $2,400.
"No one trusts the government," says industrialist Mohammad Ishaq, former vice president of the chamber of commerce in the northwestern province of Khyber Pakhtunkhwa.
"Without social welfare and with this corruption, nobody is ready to pay tax... in return one gets nothing -- no health, education, social security."
Eunuchs have been appointed tax collectors in Karachi, the financial capital, on the understanding that a visit from the maligned transgender group would embarrass people into paying up.
But former finance minister Salman Shah said tax evasion was inevitable because of corruption within the FBR, which employs 23,000 people nationwide.
"There's a big mistrust of the tax authority itself. That's why a self-assessment scheme came in," said Shah.
.............
Australian wheat exports are set to face stiffer competition as Pakistan, which resumed exports after three years, pours grain from its new crop into the market and offers competitive prices to millers in Asia, the Middle East and Africa, according The Express Tribune:
Overseas shipments by Australia, the grain’s fourth largest exporter, have already suffered from the country’s strengthening currency, while a return of Black Sea cargoes, after last year’s drought, promises to worsen the situation.
“There is around $80 spread between the two origins, which makes it attractive for millers to take Pakistani wheat, even though Australian is of better quality,” said a Singapore-based grains trader.
Australian wheat sales have slowed in the past few weeks as a strengthening currency has lifted prices for overseas buyers, while Pakistan has sold some one-and-a-half million tons into the global market since it resumed overseas sales.
Pakistan is making inroads into Australia’s traditional strongholds of Indonesia and Malaysia, while striking deals with millers in Bangladesh, the United Arab Emirates and Tanzania at prices between $300 and $310 a ton, free on board. This compares to Australian prime wheat (APW) being offered around $380 a ton.
http://tribune.com.pk/story/165997/pakistani-wheat-to-dent-australias-exports/
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
exports.
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.
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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.
Here are a few excerpts from an Express Tribune story on Pakistan's growing meat exports:
Halal meat is also one of the fastest growing segments within the global food trade. Between 2001 and 2009, the global beef trade grew at an average of 10.4 per cent to reach just over $30 billion, according to data available from the UN Food and Agriculture Organisation (FAO). However, the market for halal beef imports in the Middle East and Southeast Asia alone grew by over 18.2 per cent to reach just under $2 billion a year during that same period.
Pakistan’s market share within this rapidly growing market is a paltry 2.9 per cent. However, Pakistani exporters seem to be determined to make up for lost time. In the six years ending in 2009, Pakistani red meat exports have risen by an average of 68.6 per cent a year, though admittedly from a very low base.
Yet with the advent of more and more new players, and with surprisingly robust support from the government, Pakistan is on the verge of becoming one of the largest players in the meat trade, at least within the Middle East and Southeast Asia.
Perhaps the single biggest advantage that Pakistan has is proximity. The country is closer to the Middle East than any of its biggest rivals in the market. The three countries with the largest market shares are Australia, Brazil and India, each of which has considerably higher shipping costs to these export markets compared to Pakistan.
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“The Brazilian animal is exactly the same as most of our breeds of cattle. The quality of meat is also the same. The only difference is their ability to market their meat better than us,” said Namazi. He argues that Pakistan can easily displace Brazil as the Middle East’s leading meat supplier.
Iran, in particular, seems to be keen for Pakistani beef. The Iranian government has invested 50 per cent of the capital in the Lahore Meat Company, a dedicated abattoir that will export meat to Iran.
Australian beef, with a powerful branding effort and a larger source animal, has a specific niche market that industry experts believe will be difficult for Pakistan to compete with in the medium term.
India, the one country that could completely destroy Pakistan’s potential in the meat trade, has placed itself outside the global beef market after a 2005 Indian Supreme Court ruling that upheld a ban on cow slaughter as constitutional.
Indian exporters only sell carabeef – meat from buffalo – which is considered inferior and commands lower prices and margins. Nevertheless, Indian exporters dominate the market in Malaysia for the lower end of beef, while Australians command the higher end.
“Malaysia is ripe for a middle-market meat supplier from Pakistan,” said another expert in the meat business. Malaysia has had a free-trade agreement with Pakistan since 2007.
Several companies from Pakistan have entered the red meat export business and even more are in the process of entering the market. The oldest and one of the most successful of these is PK Livestock, a Karachi-based abattoir which has been exporting red meat to the Middle East for over two decades.
Zenith, a Lahore-based exporter, became the first Pakistani company to sell beef to Malaysia, after the Malaysian government relaxed its regulatory requirements for Pakistani exporters.
Others, such as OMC and the Al Shaheer Corporation, have also successfully begun exporting to the Middle East and are aggressively seeking regulatory approvals for markets further afield in Southeast Asia.
Pakistan’s total meat exports may come close to $100 million in 2011 and could surpass the $500 million mark in about five years, according to projections by ASI Partners.
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Despite having the eighth largest herd of cattle and the third largest herd of goats in the world, Pakistan’s animal population is very scattered, which makes procurement of the animals for the abattoir expensive...
Oxfam is warning that food prices will more than double by 2030, according to BBC:
The prices of staple foods will more than double in 20 years unless world leaders take action to reform the global food system, Oxfam has warned.
By 2030, the average cost of key crops will increase by between 120% and 180%, the charity forecasts.
Half of that increase will be caused by climate change, Oxfam predicts, in its report Growing a Better Future.
It calls on world leaders to improve regulation of food markets and invest in a global climate fund.
"The food system must be overhauled if we are to overcome the increasingly pressing challenges of climate change, spiralling food prices and the scarcity of land, water and energy," said Barbara Stocking, Oxfam's chief executive.
Women and children
In its report, Oxfam highlights four "food insecurity hotspots", areas which are already struggling to feed their citizens.
* in Guatemala, 865,000 people are at risk of food insecurity, due to a lack of state investment in smallholder farmers, who are highly dependent on imported food, the charity says.
* in India, people spend more than twice the proportion of their income on food than UK residents - paying the equivalent of £10 for a litre of milk and £6 for a kilo of rice.
* in Azerbaijan, wheat production fell 33% last year due to poor weather, forcing the country to import grains from Russia and Kazakhstan. Food prices were 20% higher in December 2010 than the same month in 2009.
* in East Africa, eight million people currently face chronic food shortages due to drought, with women and children among the hardest hit.
The World Bank has also warned that rising food prices are pushing millions of people into extreme poverty.
In April, it said food prices were 36% above levels of a year ago, driven by problems in the Middle East and North Africa.
Oxfam wants nations to agree new rules to govern food markets, to ensure the poor do not go hungry.
It said world leaders must:
* increase transparency in commodities markets and regulate futures markets
* scale up food reserves
* end policies promoting biofuels
* invest in smallholder farmers, especially women
"We are sleepwalking towards an avoidable age of crisis," said Ms Stocking.
"One in seven people on the planet go hungry every day despite the fact that the world is capable of feeding everyone."
Among the many factors driving rising food prices in the coming decades, Oxfam predicts that climate change will have the most serious impact.
Ahead of the UN climate summit in South Africa in December, it calls on world leaders to launch a global climate fund, "so that people can protect themselves from the impacts of climate change and are better equipped to grow the food they need".
Here's a report on Pakistan trying to collect taxes from middlemen (arti) on their profits:
The government has imposed a 10 per cent advance tax on commission, or brokerage fee, earned by the agents of cultivators or farmers and a withholding tax at a rate of 1.5 per cent on the sale of cotton seed, rice and edible oils.
According to new taxation measures announced by the government on Saturday, the new taxes will not be applicable to growers who sell their produce, a circular of the Federal Board of Revenue (FBR) said.
The circular stated that the withholding tax on sale/purchase of seed cotton will be deducted by withholding agents.
“The withholding agent shall not deduct withholding tax on purchase of agriculture produce which is directly sold by a grower of the produce,” the circular added.
The 1.5 per cent withholding tax is being levied on profits earned by the middlemen in the business of buying produce and selling it to the markets at higher rates.
To ensure that the withholding tax is collected, the FBR has directed that the buying agent will have to make three copies of the certificate and give one to the grower, submit the second copy in office of tax commissioner of Inland Revenue and keep the third copy for own record.._
The FBR has also issued a format for the farmers, describing their sale of sugarcane, wheat, rice or cotton to the buyer, which also explains the details of the agricultural land the produce belongs to and the date of sale.
While the circular also states that “in case sale of seed cotton or other agriculture produce is made by a grower/cultivator through a commission agent, then advance tax is collectible under section 123 of the Ordinance at rate of 10 per cent of the gross commission income of the commission agent”.
However, the farmers have rejected the new initiative of the FBR and the farmers’ associations have come up with plans to organise a demonstration in Multan on April 5.
Agriculturists have been accusing the government of adopting policies that would only hurt the small- and mid-level farmers and these measures are being taken to protect the large land owners who should be paying income tax on agriculture.
Calling the new measures as indirect tax on the agricultural sector, the President of Pakistan Agriculture Forum Ibrahim Mughal talking to Dawn said the government was bent upon destroying all the productive sectors and after imposing 17 per cent General Sales Tax on agriculture inputs including pesticides, fertiliser and tractors through presidential ordinance on March 15, 2011, the new move will have more serious impact on the overall agriculture economy.
Mr Mughal said that new measures would affect the overall agricultural sector and its productivity which would reverse economic cycle for the small and mid-level growers.
“In March government imposed over Rs80 billion taxes on agriculture sector in form of GST and advance taxes,” he said adding that around 80,000 tractors are being purchased by the growers per annum and after the imposition of 17 per cent sales tax, they will have to pay a total of Rs8 billion annually more than the earlier price.
Here's the Wall Street Journal report on Pakistan's 2011-12 budget:
..Finance Minister Abdul Hafeez Shaikh forecast a budget deficit of 4%, down from 6% in the current fiscal year, with economic growth rising to 4.2% versus 2.5%. In the most noteworthy new measure, Mr. Shaikh said the government was ending sales-tax exemptions on about 500 items, which will bring in fresh revenues of about 200 billion Pakistani rupees.
But Mr. Sheikh at the same time reduced the general sales tax to 16% from 17% and failed to bring in bold new measures to increase the state's haul of income tax from the country's wealthiest citizens.
"This is a business-as-usual budget. I was expecting it to be a reformist budget," said Ashfaque Khan, dean of the National University of Sciences and Technology Business School in Islamabad.
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U.S. Secretary of State Hillary Clinton, urged by the IMF, has publicly called on Pakistan in the past year to raise taxes on its richest citizens. The IMF itself has since last year withheld the disbursement of $3.5 billion in funding for Pakistan—the final tranche in a $11.3 billion loan package—due to failures to significantly raise taxes. The IMF has urged Pakistan to reform its sales tax to include services but this hasn't happened.
The World Bank and the Asian Development Bank also have suspended budget-support funding which amounts to about $1 billion.
Mr. Shaikh failed to announce announce any new measures to tax agricultural income, which remains exempt. The government says the issue falls under the purview of provincial governments. Many of Pakistan's richest people are feudal landlords who made their fortunes from agriculture.
Mr. Shaikh, who was booed by the opposition, which at moments almost drowned out the delivery of his budget speech, said the government had identified 2.3 million wealthy citizens who currently pay no tax and whom it will pursue. He gave no further details.
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To fund its gaping budget deficit, the state has in the past year increasingly relied on borrowing from the central bank, essentially printing money and stoking inflation to 13%. Mr. Shaikh said the government had recently cut back on borrowing from the central bank and would aim to get inflation back to single digits.
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By borrowing so heavily from its own banking system, the government has choked off the supply of credit to private businesses. Foreign investors—already nervous because of the precarious security situation in Pakistan—have largely shunned the country.
That has stunted economic growth, estimated at 2.5% for the year ending June 30, which is insufficient to create enough jobs for the two million new job seekers coming onto the market each year. The IMF says the country needs 8% annual economic growth to create enough work. India's economy, by comparison, in the year ended March 31 grew 8.5%.
For now, Pakistan is unlikely to plunge back into a balance-of-payments crisis of the kind that forced it to call in the IMF in November 2008. That's because exports are doing well, fueled by high global agriculture prices for crops like cotton. The country is running a small current-account surplus, compared to its usual deficit. The currency, the Pakistani rupee, has been stable for the past few months and Pakistan's foreign-exchange reserves are about $14 billion, or enough to cover four months of imports.
Still, oil-price rises this year is likely to increase Pakistan's import costs in the months ahead, which could send the current-account back into deficit. The poor state of government finances, if unchecked, could further undermine foreign confidence in months ahead, donors and analysts say.
http://online.wsj.com/article/SB10001424052702304563104576363432170384892.html
Here's Frontier Post on Pakistan's "dismal" economic performance in 2010-11:
The latest Economic Survey of Pakistan, as released by Finance Minister Dr Abdul Hafeez Sheikh at a news conference on Thursday, has portrayed a dismal picture of the performance of sectors key to the national economy; failing to meet most of the targets set for 2010-11, including the vital Gross Domestic Product growth that was set to achieve a target of 4.5 per cent and grew only 2.4 per cent in real terms during the outgoing fiscal. As for the budgetary deficit, this may also swell from an estimate of 5.3 per cent to around 6 per cent despite claims of macroeconomic development and “putting the economy back on track”. One significant portrayal is the rising inflationary trend that now stands at 14.1 per cent and food inflation is now touching a whooping 18.4 per cent despite bumper wheat and rice crops. This factor has sent the middle classes and the poor reeling under escalating cost of living making their life miserable. The fact that more inflation is coming from hike in food prices is detrimental to poverty alleviation efforts. The poor GDP growth mainly contributed by services sector (53.3 per cent), agricultural sector (25.8 per cent) and industrial sector (20.9 per cent), is because agriculture gained only by 1.2 per cent and manufacturing sector by 1.71 per cent.There seems a little improvement in collection revenues by 1.71 per cent. The government collected a revenue amounting to Rs1026.5 billion in full fiscal of 2009-10 and this amount has now posted an encouraging Rs1156 billion up to March 2011. Similarly, there is no addition to foreign debt that stands at $55.9 billion as in the previous financial year. But debt servicing has cost higher this fiscal — $6.94 billion as against $5.78 billion in 2009-10. Remittances from abroad also rose to $9.1 billion as against $7.3 billion in the previous fiscal. So is the case of foreign exchange reserves which showed a ceiling of $17.1 billion against $15.04 billion in 2009-10. However, for obvious reason of ongoing terrorist attacks, foreign direct investments have come down $1.49 billion as against $1.6 billion the previous fiscal. But it is not understandable how foreign direct investment was higher than the outgoing fiscal when the dangers of the war on terror and uncertain internal security were no different from the previous financial year. There is no explanation to this situation in the latest Economic Survey of Pakistan. One conspicuous data missing from the document was that of poverty. The finance minister defended the absence of how many more people have slipped down the poverty line (estimated on the basis of an income of less than one US dollar a day) during 2010-11 pleading that the poverty survey was still in progress (understandably for the use of disbursement of cash under the Benazir Income Support Programme) and will be issued as and when completed. In fact such a data to portray the extent of abject and absolute poverty in the country has not been made available and, obviously, no poverty survey has been in hand for six years. However, poverty was recorded at 35.4 per cent in 2000-01 and the Musharraf’s dictatorial regime claimed five years later that it had come down to 22.3 per cent. All factors like constantly rising prices of food and other essential commodities and utility bills owing to frequent raise in power tariff and prices of petroleum products, besides other socio-economic aspects, some more millions must have found themselves reeling under the poverty line.The survey tells a story of economic failures and not meeting most of the targets for the fiscal 2010-11. Even a tight-fisted fiscal discipline, forced by the State Bank of Pakistan, failed to prevent widening deficit and mounting inflation that ultimately shrank capital formation substantially. ....
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…
http://www.hindu.com/2011/06/04/stories/2011060455071000.htm
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.
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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....
http://www.democracynow.org/2011/5/11/every_30_minutes_crushed_by_debt
http://www.chrgj.org/publications/docs/every30min.pdf
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.
http://www.dawn.com/2011/04/08/pakistan-sees-at-least-25-mln-t-wheat-from-201011-crop.html
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.
Pak Suzuki Motors (PSMC) to gain from Punjab govt's yellow cab scheme, according to The News:
KARACHI: Pak Suzuki Motor Company (PSMC) stands to gain from the Yellow Cab Scheme announced by the government of Punjab in its budget for 2011/12, analysts said.
The provincial government has announced that a grant of Rs4.50 billion has been allocated for the scheme, which will partly finance 20,000 vehicles.
Contrary to the yellow cab scheme, the Nawaz Sharif government introduced in 1992/93, this scheme relies on locally-made vehicles.
‘Mehran’ and ‘Bolan’, the two most popular makes of Pak Suzuki, have been short-listed for the scheme.
The analysts said the ultimate beneficiary will be the PSMC, which has been suffering from appreciating yen, relaxation in import policy and production constraints since a tsunami-hit Japan.
Gross profit margin of the company has squeezed to mere two percent in 2010, which was around four percent a year back, they added.
Details of the scheme are yet to be unveiled, but it is expected that the vehicles would be 50 percent financed by the government of Punjab, while the buyer would have to pay the rest.
There are concerns of possible lack of transparency in financing.
Besides, there is a lack of clarity about the time period over which the scheme would be spread.
Furqan Punjani, an analyst at the Topline Research, said that there are possibilities that out of 20,000 only 12,000 to 15,000 units will go in the said scheme and the rest might fall victim to corruption.
An analyst at Arif Habib Research said that it is believed that PSMC’s car volumes would spike by nine percent and 16 percent in CY11E and CY12F.
Consequently, the earning pershare (EPS) of the company would improve by 75 percent and 116 percent in CY11E and CY12F, respectively, he said.
http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=53955&Cat=3&dt=6/23/2011
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.
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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.
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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.
Hedge funds are behind "land grabs" in Africa to boost their profits in the food and biofuel sectors, a US think-tank says, and BBC reports:
In a report, the Oakland Institute said hedge funds and other foreign firms had acquired large swathes of African land, often without proper contracts.
It said the acquisitions had displaced millions of small farmers.
Foreign firms farm the land to consolidate their hold over global food markets, the report said.
They also use land to "make room" for export commodities such as biofuels and cut flowers.
"This is creating insecurity in the global food system that could be a much bigger threat than terrorism," the report said.
The Oakland Institute said it released its findings after studying land deals in Ethiopia, Tanzania, South Sudan, Sierra Leone, Mali and Mozambique.
'Risky manoeuvre'
It said hedge funds and other speculators had, in 2009 alone, bought or leased nearly 60m hectares of land in Africa - an area the size of France.
"The same financial firms that drove us into a global recession by inflating the real estate bubble through risky financial manoeuvres are now doing the same with the world's food supply," the report said.
It added that some firms obtained land after deals with gullible traditional leaders or corrupt government officials.
"The research exposed investors who said it is easy to make a deal - that they could usually get what they wanted in exchange for giving a poor tribal chief a bottle of Johnnie Walker [whisky]," said Anuradha Mittal, executive director of the Oakland Institute.
"When these investors promise progress and jobs to local chiefs it sounds great, but they don't deliver."
The report said the contracts also gave investors a range of incentives, from unlimited water rights to tax waivers.
"No-one should believe that these investors are there to feed starving Africans.
"These deals only lead to dollars in the pockets of corrupt leaders and foreign investors," said Obang Metho of Solidarity Movement for New Ethiopia, a US-based campaign group.
However, not all companies named in the report accept that their motives are as suggested and they dismiss claims that their presence in Africa is harmful.
One company, EmVest Asset Management, strongly denied that it was involved in exploitative or illegal practices.
"There are no shady deals. We acquire all land in terms of legal tender," EmVest's Africa director Anthony Poorter told the BBC.
He said that in Mozambique the company's employees earned salaries 40% higher than the minimum wage.
The company was also involved in development projects such as the supply of clean water to rural communities.
"They are extremely happy with us," Mr Poorter said.
http://www.bbc.co.uk/news/world-africa-13688683
State Bank tells Pakistan govt to reduce bank borrowing, according to The Nation:
KARACHI - The State Bank of Pakistan (SBP) has stated that the size of the fiscal deficit cannot be reduced unless the government controls excessive borrowing from the central bank, along with fully implementing fiscal reforms, according to State Bank’s Third Quarterly Report on the State of Pakistan’s Economy for FY11 released Monday.
“Desirable revenue generating measures - broadening of the tax base, improving documentation of the economic system, gradual elimination of un-targeted subsidies and curtailment of quasi-fiscal operations are necessary to contain the fiscal deficit to below 4.5 per cent of GDP in FY12”, said the report.
“These efforts need to be accompanied with better debt management to increase the tenor of domestic debt and lower risks associated with debt re-pricing and rollover,” it added.
The report predicted these initiatives will also protect the external account position and rebuild confidence of the private sector and the country’s international development partners. More importantly, this will help in reducing inflation and the crowding out of private sector credit, thereby facilitating investment, growth and employment opportunities.
The SBP report further said the impact of the widening fiscal deficit is clearly visible in the sharply rising domestic debt. The outstanding government domestic debt reached Rs 5,594 billion (31.8 per cent of estimated GDP) which is more than double the stock at end-June 2007, the report said and added that this sharp growth in debt stock is fueling concerns about macro stability and monetary management.
The report showed optimism about the next cotton crop for several reasons: (a) higher cotton prices during FY10 encouraged farmers to increase acreage for the next crop; (b) there is a shift towards more productive (and disease resistive) BT cotton seeds; and (c) water availability is expected to improve over last year. Rising fertilizer prices are the key downside risk at the moment.
According to the report, the government has set the wheat procurement target at 6.57 million tones, which is lower than the target for the previous year. However, the government may come under pressure to exceed this target since the market price of wheat is considerably lower than its support price while banks appear to be willing to finance the additional procurement. This could feed the circular debt problem and also crowd out the private sector at the margin.
“While energy shortages continue to impact a number of industries, some sectors could face new challenges. For example, the disruption in the global supply of auto parts from Japan may impact some manufacturers in Pakistan. In addition, auto manufacturers will face stiff competition from imported cars as the government has increased the age limit for used imported vehicles from 3 to 5 years,” it commented.
http://nation.com.pk/pakistan-news-newspaper-daily-english-online/Politics/05-Jul-2011/SBP-asks-govt-to-contain-borrowing
Here's an OXFAM report about land for landless peasant women in Pakistan:
Oxfam Media Officer, Caroline Gluck, is currently travelling in Sindh district in Pakistan. She sends us this blog from there:
Mother of five, Sodhi Solangi, can’t stop smiling as she shows me her new eight acre plot of land. Cotton crops are growing and, a little further away, building work is almost finished on a large new house overlooking the fields where her family will soon settle.
Just a few years ago, 42 year old Sodhi, who lives in Ramzan Village, Umerkot district, in Sindh, Pakistan, was landless. She and her husband used to work on others’ lands, earning a share of the crops as payment. Daily life was a struggle.
“We often had problems”, Sodhi recalled. “Sometimes we had money, sometimes not. It was very hard for us. We’d spend all our days working on someone else’s farm and our children would be at home.
“We wore torn clothes. But now things are very different. When you like something, you can go out and buy it. Before, we would have to ask the landlord to give us money if we wanted anything, but now we have money in our hands and we can buy things whenever we want.”
“Now we have our own land and are working on our own land. It feels so good when we work there. When we used to work for others, we would have to drag ourselves there.”
Her family’s luck changed when Sodhi was awarded eight acres of land, under a programme run by Sindh’s provincial government, which in 2008 began redistributing swathes of state-held land to landless women peasants. The landmark scheme was an attempt to lift more people out of poverty in the province, where more than two-thirds of the population work the land, but where bonded labour is still widely practiced and most land is still held by wealthy and political influential elites.
Sohdi and her family grew wheat and cotton on their new land. And they managed to earn enough profit to buy another eight acres.
“We were so happy when we go our land. Now, things are so different”, said Sodhi. “Whenever we want to eat anything, we can just buy it. Before, we used to eat dal and potatoes. Now we can buy all sorts of things – mangos, even chicken.”
“Everyday, we have a lot of food. It’s like a festival of food for us every time!” she said, laughing.
Meat is an unaffordable luxury for most poor farming families – and one telling sign of just how much Sodhi’s life has turned around.
Her neighbours and relatives jokingly call her “lady landowner” and many told me they planned to apply for land during the next phase of the redistribution scheme.
But Sodhi is one of the lucky ones. Her land, though parched and lacking proper irrigation, is still cultivable; and, unlike many women, Sodhi didn’t face legal claims disputing her right to the land from wealthy landowners or others living nearby.
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“The landlord sent officials to threaten the women here saying : ‘We will destroy your homes and take your tractors. ‘ He also threatened to send the police to our home”, said Shareefa Gulfazar, who is in her fifties, and was awarded 4.5 acres of land.
Her daughter, Dadli Kehar, who was awarded 3 acres of land, fears they are being tricked out of what is rightfully theirs. With the help of Oxfam’s partner Participatory Development Initiatives (PDI), both women plan to fight through the courts for what they believe is their right to the land.
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Despite the threats and the likelihood of a lengthy legal battle, Shareefa and Dadli intend to fight for their land. They know that having their own land can empower them as well as help to feed their families and ensure they have a better future.
http://www.oxfamblogs.org/southasia/?p=1088
Here's a piece by Prof Roy Prosterman of the Rural Development Institute on land distribution in Pakistan:
Pakistan’s land-tenure problems are more severe and have been more persistently ignored than nearly any others found on the planet. Though last year’s flood altered Pakistan’s landscape, it did not alter the fact that the vast majority of land in Pakistan is owned by a very small number of landlords – chiefly by 300 families of “feudals” who have ruled the Pakistani countryside for generations.
Their workers make up nearly half of the rural population, own no land, and toil as sharecroppers, day laborers, or under debt bondage. For generations, the only land most of them have been able to call their own is the plot for their grave.
These landless poor have no meaningful stake in rural society and it is often the Taliban who step in to use the poor’s grievances as grounds for recruitment.
For the poor, owning at least some land of one’s own is a lifeline to survival – a basic source of nutrition, income, status, and security. Grossly mistreated by landowners, the landless poor in country after country have supported severe civil unrest and outright revolution.
But solutions exist. In neighboring India, a number of individual states are now granting cost-free ownership of house-and-garden plots of about a tenth of an acre (slightly bigger than a tennis court) to the landless poor. Last year, India’s central government, eager to make further progress on the issue of landlessness and to undermine a persisting Marxist rebel movement, pledged $200 million to help buy lands – earmarked to become another 2 million micro-plots – at market price.
In Pakistan itself, Sindh Province has distributed 43,000 acres of government-owned land since 2008, mostly to poor rural women. That distribution has been of much larger plots (about 10 acres), but the same quantity of land could reach more than 400,000 landless families using the smaller house-and-garden plot model. Indeed, Punjab Province, Pakistan’s most populous, is now distributing one-quarter-acre plots to an initial 1,500 landless families, using government land.
The house-and-garden small-plot model reduces the amount of land required, allowing the government to acquire the land voluntarily, at market price, or use underutilized public land.
Huge amounts of assistance are now flowing into Pakistan from the world community. Islamabad and the provinces, with the support of the international community, should embrace giving micro-plots to the landless to ensure that the laborers who didn’t drown in their landlord’s fields are afforded a chance to build better lives for themselves, creating greater stability in Pakistan, and in turn furthering global security
Here's a report by Oxfam's Caroline Gluck posted on Reliefweb:
Pakistan did not carry out essential land reforms soon after independence. As a result, critics say, Pakistan's agricultural and rural sectors are characterised by highly feudal relationships which keep many in abject poverty, including bonded labour. It's estimated that more than 60% of farmers in Sindh are landless, while vast tracts of farmland are still owned by small wealthy elites who wield huge political and social influence.
Sindh's land distribution programme is a bold step forward. For the first time in Pakistan as well as South Asia, state land is being specifically distributed to landless women peasants, in an attempt to begin reducing poverty and bringing about much wider social changes in rural areas.
"It's very important for me to get land"
When I visited the packed kutchari, or open hearing, it was bustling with activity. Many women and their families had traveled in vans organised by Participatory Development Initiatives (PDI), a local partner supported by Oxfam, to ensure as many deserving women as possible had the chance to register for land. PDI staff were also on hand to help those unable to read and write to fill out land application forms; and for weeks earlier had carried out awareness campaigns about the land distribution programme, including using local radio broadcasts.
"It's very important for me to get land," said mother of four, Janat, who currently farms on four acres of land belonging to her landlord. Her family only receive a quarter of the crops they cultivate - the landlord takes the rest.
"We want land of our own to pass on to our children; to have our own house and not live with threats or the fear of having to move. A landlord can ask us to leave at any time," she explained.
Another lady, Sakina, who traveled with her six-year-old son, chipped in. "Security is a priority for us. If we own land, we will have a safe house; no corrupt people can snatch our crops from us... There are always threats from influential people who can take the land from us."
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The second phase of distribution is now solely targeting landless women. It hopes to iron out many of the flaws in the original process, as well as offering women longer-term packages of agricultural support including providing seeds, fertilisers, pesticides and technical help.
Faisal Ahmed Uqaili, co-ordinator of Sindh government's Land Distribution Programme, acknowledges that about 50% of the original land allocated had proved problematic. But he says that lessons have been learnt and around 80% of cases have been settled. Officials were also under strict orders to ensure greater transparency, he says, to stop nepotism and corruption. There had been cases reported of officials trying to sell application papers to the women, or grant land to people favoured by influential political leaders.
"You need to say the glass is half full instead of half-empty," Faisal told me. "When you meet these success stories, women are now making a livelihood for their husbands and families. There is a marked difference. If change is coming in the life of the people for this allotted land and for a fairly large percentage of people, then it's the start of success."
Mother-of-seven Beebul Hassan's face lights up as she holds up a slip of paper with a signature showing that she's been successful in her application. She is now the proud owner of four acres of land.
http://reliefweb.int/node/357648
Here's Daily Times report on Benazir Income Support Program (BISP) in Pakistan:
The Benazir Income Support Programme (BISP) is ready to share its experiences with the world, especially with the poverty stricken Asian nations, so that the menace of poverty can be eradicated from the region and the goal of mutual growth and prosperity can be achieved, BISP Chairperson Farzana Raja ssaid on Thursday. She stated this while speaking to Asian Development Bank (ADB) Executive Director Siraj Shamas ud Din, who called on her at the BISP Secretariat in Islamabad.
Farzana also apprised the ADB Executive Director of the various components of BISP and the progress made by the programme in the last three years. According to her, the activities of BISP have helped to bring about positive economic changes in the lives of its beneficiaries. She told the visiting ADB official that BISP had launched various strategies which provide interest free micro financing, demand driven vocational and technical training, along with a Life Insurance Scheme, which helps families become self-reliant.
Farzana Raja also informed the ADB executive director of an initiative by BISP for increasing school enrolment in the poverty-hit areas of the country, using a system known as the Conditional Cash Transfer. This would provide free education to the children of beneficiary families, thus helping to bring out a positive social change within the country.
The ADB executive director appreciated the efforts of BISP regarding poverty alleviation and was of the view that ADB’s current assistance to BISP, amounting to $150 million, was being properly utilised by the programme.
Shamas ud Din informed Farzana that various countries in the region were interested in observing the methods and procedures adopted by BISP so that they could implement similar social safety nets for the eradication of poverty. Farzana agreed to share BISP’s expertise and support with such countries of the region as may be recommended by the ADB. Shamas ud Din also called the Scorecard Survey being carried out by BISP throughout Pakistan to identify deserving beneficiaries a remarkable achievement.
http://www.dailytimes.com.pk/default.asp?page=2011\07\08\story_8-7-2011_pg7_24
Here's an assessment by Haris Guzdar and Julian Quan of link between landlessness and rural poverty in Pakistan:
Landlessness consistently comes up as one of the most important correlates of income poverty in statistical and econometric analyses of poverty-related data in Pakistan. The World Bank’s Pakistan Poverty Assessment used data from the Pakistan Integrated Household Survey (PIHS) 1998-99 to show that the head-count ratio of
poverty among the rural landless was 40.3 per cent, while for those owning land it was 28.9 per cent. Even the owners of marginal holdings of less than one acre had a head-count ratio of 31.8 per cent – or 8.5 per cent points lower than that of the
landless.20 These findings are corroborated by the Participatory Poverty Assessment which identifies land ownership and access to land as being among the primary determinants of rural poverty.21 Besides its direct impact on agricultural livelihoods, the distribution of land ownership in Pakistan also had broader economic, social and political implications for poverty. The existence of monopolistic landlords was thought to be associated with the creation of monopolistic conditions in other markets – such as those for credit, water, inputs and outputs – and thus created uneven conditions. Furthermore, locally
monopolistic landlords were thought to adversely affect the quality of governance of
public institutions, including mechanisms for political accountability.
http://www.rspn.org/publications/Microsoft%20Word%20-%20Access%20to%20Land%20&%20Poverty%20Reduction%20in%20South%20East%20Asia.pdf
Here's a BBC report of how inflation is hurting Indians and Pakistanis:
Inflation is the price that ordinary Asians are paying for high growth rates.
For the less well-off, who spend their money on food and fuel, the story is even worse. The rise in their household expenses at the moment is usually higher than headline inflation rates.
According to the International Monetary Fund, last year consumer prices rose 13.2% in India, 11.7% in Pakistan and 9.2% in Vietnam. Other Asian nations coped better but the average for developing Asia was 6% - compared to a 1.6% average rise in prices in advanced economies.
The speed at which prices are shooting up means that unless people find ways to save and invest effectively, they in fact get much poorer - even if Asia is getting richer.
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The world is jealous of Asia's sky-high growth rates, but for ordinary people the price of success is corrosive inflation which could eat away their savings.
"From outside it looks good," says Manasi Pawar. "We're staying in a big house, paying so much in rent and our kids are going to great schools."
Manasi, a qualified software worker in hi-tech Hyderabad in India, recently became a full-time mother. Her husband also works in the IT industry.
The couple epitomise the emergence of a well-to-do middle class in Asian countries - except there's one significant snag.
"We were actually losing money," says Manasi.
The couple recently woke up to the fact that inflation rates of nearly 9% meant that their savings were actually disappearing in front of their eyes.
"We were sitting on a bunch of cash but we didn't know where to put it, and it's important that we don't let it lie there in the bank - because a bank doesn't give an interest rate that even matches the inflation rate," she says.
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The poorest people in society, who spend disproportionately more on food, are hit most savagely of all.
But there is a way to fight back against inflation: to save, and to put some of that money in a part of the economy that rises along with inflation.
For most people, that means investing in shares or equities. "The only way you can make money long-term is through an equity linked product," says Ms Halan.
Money in the bank in India may only earn 3% or 4% - which in fact means you are losing money. But equity linked funds in this exploding economy have risen much faster, sometimes as high as 25%.
http://www.bbc.co.uk/news/business-13959235
Here's a recent Washington Post story on slowdown in India:
....In developments that parallel events in the other Asian powerhouse, neighboring China, rising prices have forced the government to steadily tighten monetary policy. Interest rates rose for the 10th time in 16 months last week.
But business leaders are unhappy. They say the medicine could be making the economic situation worse.
Much of the inflation in India is a function of higher oil and food prices, factors that respond poorly, if at all, to higher interest rates. Instead of depending on the central bank, the government needs to push through the kind of agricultural reforms and investment it has been talking about for years, analysts say.
“Government policy should be focused on improving agricultural productivity, but because that isn’t happening, the burden is falling more and more on monetary policy,” said Sanjay Mathur, Royal Bank of Scotland’s Asia emerging markets economist in Singapore. “Consequently, a number of sectors that shouldn’t be getting hurt are getting hurt.”
That means growth could fall back toward 7 percent, some economists warn, still faster than that of any major economy except China but below what India could achieve — and needs, if it is to pull hundreds of millions of people out of poverty.
“There is no point substituting one bad policy with another bad policy,” said Surjit Bhalla, chairman of Oxus Investments. “When the patient is down, don’t give him another kick in the pants.”
In the early 1990s, India’s government pushed through a series of economic reforms that unshackled the private sector and laid the foundation for two decades of strong growth. With that growth has come rising incomes, an expanding middle class and changing eating patterns. No longer dependent solely on rice, lentils and grains, Indians are demanding more vegetables, fruit, eggs, meat and fish.
Local agriculture has not kept pace. Farmers grow the wrong mix of crops, and about 40 percent of production is wasted before it reaches market because of inadequate distribution, warehousing and cold-storage systems.
Add to the mix a rural employment scheme that has boosted the incomes and appetites of India’s poorest, and a demographic bulge in hungry 15- to 24-year-olds, and it is little surprise that food prices are rising steadily year by year.
That in turn has pushed up wages, while production of raw materials such as coal, ores and cotton is also struggling to keep up with rising demand. Inflation hit 9.1 percent in May, and the central bank says it is expected to remain high through at least September.
To get food prices down, the government needs to promote horticulture and revolutionalize agricultural marketing and distribution, economists say. Allowing foreign companies such as Wal-Mart to set up supermarkets in India and invest in cold-storage facilities, a long-promised but still undelivered policy goal, would also help, they say.
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The Organization for Economic Cooperation and Development last week underlined the need for a new set of reforms in India to bolster growth, and no one in the finance or planning ministries seemed to disagree. The problem is getting it done.
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Higher interest rates are choking much-needed investment, which was almost flat in the first quarter of this year and grew just 4.1 percent year over year, as overall economic growth slipped to 7.8 percent.
The stock market is sliding — shares are down more than 14 percent this year, making India the worst-performing market in Asia. That in turn makes it more difficult for companies to raise the capital they need to invest.
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http://www.washingtonpost.com/business/indian-economy-starts-to-slow-down/2011/06/23/AGvjUBiH_story.html
Here's a Forbes story blaming drought as the main cause of an Indian farmer committing suicide every 30 minutes:
Bt cotton seeds are genetically modified to produce an insecticide that kills Bollworm, a common cotton pest in India. In 2002, the government of India allowed Monsanto to start selling Bt cotton to farmers in India. In the years since, Bt cotton has pervaded cotton farming in India.
As CHRGJ sees it, the problem is this:
Farmers take out loans to purchase the [Bt cotton] seeds, but when the crop fails due to lack of access to water, they often fall into debt. Many kill themselves by consuming the very pesticide they went into debt to purchase.
Bt cotton bears at least partially blame for these tragedies, according to CHRGJ, because it is more water intensive than other cotton seeds. The report cites studies showing that “Bt cotton performs better under irrigated conditions.”
In 2006, the Indian Institute of Management in Ahmedabad, India evaluated the performance of Bt cotton in India based on a survey of Bt cotton farmers and agricultural data. The final study concluded that the yields obtained with irrigation are typically higher than those without irrigation, but that:
in all cases, the yields of Bt cotton are higher than the yields of Non-Bt cotton . . . The results indicate a sizeable impact of Bt cotton on the yield and value of output under both irrigated and unirrigated conditions.
This finding is corroborated by the U.S. Department of Agriculture’s Long-term Agricultural Projections for last year, which described the impact Bt cotton has had on cotton yields in India:
Improved cotton yields in India, largely due to the adoption of hybrid cotton containing the Bt gene, have raised India’s production and exports in recent years. Yield growth is projected to continue as the area planted to hybrid cotton expands and cultivation practices improve. The increase in cotton output is expected to enable India to increase domestic textile production and exports. Its export volume has already surpassed those of Sub-Saharan Africa and Central Asia, and it is expected to maintain this rank throughout the forecast period.
In any event, it should not come as a huge surprise to most cotton farmers that access to water is essential to crop performance. Cotton is an especially thirsty plant. It can take more than 25,000 liters of water to produce a single kilogram of cotton. To put this in perspective, it takes only 500 liters of water to produce a kilogram of potatoes.
http://www.forbes.com/sites/williampentland/2011/05/18/every-30-minutes-an-indian-farmer-commits-suicide-biotech-is-not-to-blame/2/
Here's a wired.com report on 250,000 farmer suicides in India since 1997:
Jaideep Hardikar of the Telegraph in Kolkata described what happens when an agricultural economy crashes. For 10 years, he has been covering an agrarian crisis in India, the aftermath of the 1960s Green Revolution and its 1980s collapse. He was tipped into the story by chance, being randomly assigned to report on the 1998 suicide of a cotton farmer who despaired of ever climbing out of debt. Before he finished the story, four other farmers in the same village also killed themselves by drinking pesticide.
Sometimes the men left notes. Often they did not, leaving their widows to discover they had been impoverished by a descending spiral of borrowing to plant, being unable to pay the loans back, and borrowing further to cover the first round of debt. Since 1997, the Indian government now estimates, 250,000 farmers have killed themselves, and more than 350,000 — the heads of households that add up to 2 million people — are in acute financial trouble. (Here’s a recent story of Jaideep’s on the continuing problem.)
http://www.wired.com/wiredscience/2011/07/peril-hungry-future/
India's main planning body has said half a dollar a day is "adequate" for a villager to spend on food, education and health, according to the BBC:
Critics say that the amount fixed by the Planning Commission is extremely low and aimed at "artificially" reducing the number of poor who are entitled to state benefits.
There are various estimates on the exact number of poor in India.
Officially, 37% of India's 1.21bn people live below the poverty line.
But one estimate suggests the true figure could be as high as 77%.
The Planning Commission has told India's Supreme Court that an individual income of 25 rupees (52 cents) a day would help provide for adequate "private expenditure on food, education and health" in the villages.
In the cities, it said, individual earnings of 32 rupees a day (66 cents) were adequate.
The Planning Commission was responding to a direction from the court to update its poverty line figures to reflect rising prices.
India has been struggling to contain inflation which is at a 13-month high of 9.78%.
Many experts have said the income limit to define the poor was too low.
"This extremely low estimated expenditure is aimed at artificially reducing the number of persons below the poverty line and thus reduce government expenditure on the poor," well-known social activist Aruna Roy told The Hindu newspaper.
The Planning Commission also told the court that 360 million Indians are now being supplied with subsidised food and cooking fuel through the network of state-owned shops.
A World Bank report in May said attempts by the Indian government to combat poverty were not working.
It said aid programmes were beset by corruption, bad administration and under-payments.
http://www.bbc.co.uk/news/world-south-asia-14998248
Here's a piece by Soutik Biswas of the BBC on India's "distress migration":
Are millions of Indians being forced to leave their villages for cities and towns because there aren't enough jobs at home and farm incomes are drying up? Is this "distress migration" unprecedented in India's history?
Award-winning journalist P Sainath thinks so. Examining the latest census data, he finds that India's urban population has risen more (91 million more than in the 2001 census) than the rural population (90.6 million more than in the 2001 census). Nearly half the people in states like Tamil Nadu already live in urban settlements.
The last time, writes Mr Sainath, the rise in India's urban population exceeded the rise of the rural population was 90 years ago and reflected in the 1921 census. The decline in rural population then could be possibly linked to the 1918 flu pandemic that killed several million people.
This time around, Mr Sainath says, the increase in migration is driven by the "collapse of millions of livelihoods in agriculture and its related occupations". He writes that massive migrations "have gone hand-in-hand with a deepening agrarian crisis": more than 240,000 farmers, mostly broken by debt, committed suicide in India between 1995 and 2009.
'Despair-driven'
Mr Sainath has spent a lifetime reporting on distressed farmers and how the poor live in India. He admits that the census is not equipped to examine the complexity of migration in India. In a fast urbanising country, rising migration from villages to cities and towns is natural. Also, newer "urban areas" are being added all the time. The big picture is also not strikingly unusual. According to the census, 31.16% of Indians live in urban areas, up from 27.81% in 2001 - a rate which is actually significantly lower than the rate in many developing countries with similar income levels.
But, argues Mr Sainath, these "natural" factors which triggered migration from villages to cities have been valid in the earlier decades too when additions to the village population actually outstripped those to the cities. So why is the last decade throwing up a radically different result?...
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There may be other pressing questions to ponder. How does India cope with its increasing urban population? Its cities are choking under power cuts, scarcity of water and polluted air. Also the increase of new urban settlements with poor amenities and limited access to jobs could easily lead to massive social unrest among the migrants in the new "cities". Which could actually end up wrecking India's cities faster than its villages.
http://www.bbc.co.uk/news/world-south-asia-15056418
Here's a Bloomberg report on rising consumer spending and growing FMCG sector in Pakistan:
...“The rural push is aimed at the boisterous youth in these areas, who have bountiful cash and resources to increase purchases,” Shazia Syed, vice president for customer development at Unilever Pakistan Ltd., said in an interview. “Rural growth is more than double that of national sales.”
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Nestle Pakistan Ltd., which is spending 300 million Swiss francs ($330 million) to double dairy output in four years, boosted sales 29 percent to 33 billion rupees ($377 million) in the six months through June.
“We have been focusing on rural areas very strongly,” Ian Donald, managing director of Nestle’s Pakistan unit, said in an interview in Lahore. “Our observation is that Pakistan’s rural economy is doing better than urban areas.”
The parent, based in Vevey, Switzerland, aims to get 45 percent of revenue from emerging markets by 2020.
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Haji Mirbar, who grows cotton on a 5-acre farm with his four brothers, said his family’s income grew fivefold in the year through June, allowing him to buy branded products. He uses Unilever’s Lifebuoy for his open-air baths under a hand pump, instead of the handmade soap he used before.
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Sales for the Pakistan unit of Unilever rose 15 percent to 24.8 billion rupees in the first half. Colgate-Palmolive Pakistan Ltd.’s sales increased 29 percent in the six months through June to 7.6 billion rupees, according to data compiled by Bloomberg.
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Unilever is pushing beauty products in the countryside through a program called “Guddi Baji,” an Urdu phrase that literally means “doll sister.” It employs “beauty specialists who understand rural women,” providing them with vans filled with samples and equipment, Syed said. Women in villages are also employed as sales representatives, because “rural is the growth engine” for Unilever in Pakistan, she said.
While the bulk of spending for rural families goes to food, about 20 percent “is spent on looking beautiful and buying expensive clothes,” Syed said.
Colgate-Palmolive, the world’s largest toothpaste maker, aims to address a “huge gap” in sales outside Pakistan’s cities by more than tripling the number of villages where its products, such as Palmolive soap, are sold, from the current 5,000, said Syed Wasif Ali, rural operations manager at the local unit.
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Unilever plans to increase the number of villages where its products are sold to almost half of the total 34,000 within three years. Its merchandise, including Dove shampoo, Surf detergent and Brooke Bond Supreme tea, is available in about 11,000 villages now.
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Pakistan, Asia’s third-largest wheat grower, in 2008 increased wheat prices by more than 50 percent as Prime Minister Yousuf Raza Gilani sought to boost production of the staple.
“The injection of purchasing power in the rural sector has been unprecedented,” said Sherani, who added that local prices for rice and sugarcane have also risen.
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Increasing consumption in rural areas is forecast to drive economic growth in the South Asian country of 177 million people, according to government estimates.
Higher crop prices boosted farmers’ incomes in Pakistan by 342 billion rupees in the 12 months through June, according to a government economic survey. That was higher than the gain of 329 billion rupees in the preceding eight years.
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Telenor Pakistan (Pvt) Ltd. is also expanding in Pakistan’s rural areas, which already contribute 60 percent of sales, said Anjum Nida Rahman, corporate communications director for the local unit of the Nordic region’s largest phone company.
Here's a Pakistan Today report on motorcycle manufacturing in Pakistan:
Karachi - To effectively cope with domestic market of over 1.5 million units and after successful launch of their products in global markets, the local motorcycle producers are now planning a further investment of $100-150 million in their existing units.
The motorcycle industry analysts have pointed out that despite numerous hiccups faced by the economy in recent years, growth in motorcycle production has been robust at 15 per cent. “A decade back, the total motorcycle production in Pakistan was around 100,000 units, now the largest player alone is rolling out half a million units while total production of two wheelers has crossed 1.5 million. They said that the encouraging aspect in this regard is that industry is on the path to sustained growth. The local demand for motorcycles is likely to exceed 2 million units within a year or two,” they added.
“The global response to our quality motorcycles indicate a sustained and healthy growth in exports as well” they opined, adding that in fact, the industry experts are seeing themselves as the largest exporters in the engineering sector. A sustained growth is only possible due to regular investment and up-gradation of technology in the motorcycle industry. “The growth we see in motorcycle production would not have been possible without investment”, they added.
In this regard, Fahad Iqbal CEO, HKF Engineering, makers of Ravi motorcycles said that the industry now has to fulfill the growing demand in both domestic and global markets and for this, it needs to invest over $100 million in the next couple of years to keep abreast with market needs and demands. He said that all the motorbike producers having production of 50,000 units or above are now planning to expand their capacities to cope up with the market demands.
“There are almost a dozen players that have achieved this production level” he said, adding that even if each of them invests $10-15 million, the total investment would cross $150 million. These units have been regularly making investments to increase their market share but now they have reached a level where they have to invest in high-tech parts to ensure that instead of having 90 per cent local components, Pakistani bikes are produced by 100 per cent local parts, he added.
Market analysts urged that in such an encouraging situation, the government should refrain from taking steps that might jeopardise this investment. He said that an investment of $150 million by local players without any government concession is better than vying for similar investment over a period of 10 years from a foreign company. The current players, from Italy, China and Japan, are also in various stages of developing new models in the 100-150 cc range with the latest technology, he said. However, he added, they were not offered any relief even on imports of the environmentally friendly Euro 2 components, which have already been introduced in local bike production.
“Capacities exist in the country in areas like sheet metal parts and there is a huge investment need in areas such as die casting for parts like crank cases and crank covers, electronic parts such as CDI units, engine parts like ACG, clutch, pistons, shock absorbers (cushions), plastic parts such as emblems” said Arshad Awan CEO General Engineering and added that even capacity enhancement and thus investment will be needed in low-tech parts like head lights, tail lights etc.
http://www.pakistantoday.com.pk/2011/08/bike-manufacturers-plan-heavy-investment/
Here's a NY Times story about soil renewal for agriculture in Pakistan:
LAHORE, PAKISTAN — In the Pakistani village of Sharbaga, about 130 kilometers from Lahore, a 70-year-old farmer named Mohammed Ali and his wife plant rice seedlings in a wide field. They stand ankle-deep in muddy water holding thin green leaves that they deftly press into the ground. It is hard work under a blazing sun, but this seemingly mundane task is a significant development that can help rural Pakistanis improve their lives.
Just a few years ago, this rice paddy and most of the surrounding fields in this village of 5,000 were barren. For decades the land has lain fallow because it is saline from poor groundwater.
In 2006, the government of the state of Punjab, traditionally Pakistan’s breadbasket, and the United Nations Development Program started an agriculture project to rehabilitate saline farmland by treating it with gypsum. The Punjab government pays for two-thirds of the project’s six-year, $17 million budget, while the U.N. program pays for the rest.
Nearly six million hectares, or about 15 million acres, across Pakistan, including 2.3 million hectares in Punjab, are barren because of salinity and water logging. Gypsum’s calcium composition can neutralize saline soil. Within a season of applying the white powder, farmers like Mr. Ali had transformed a long-degraded land into a field that yielded bountiful crops of rice and wheat.
Forty-three percent of Pakistan’s population of 170 million depends on agriculture for their livelihood and two-thirds of the country’s citizens live in rural areas. Projects that help improve the lives of people on the ground are critical to creating stability in Pakistan, and yet these are often overlooked.
Sustainable agricultural growth is a “necessary condition for rural growth, employment generation, poverty reduction and social stability,” said a 2009 report on Pakistan’s agricultural potential by Weidemann Associates, an economic development consulting firm near Washington. The report was prepared for the U.S. Agency for International Development in Pakistan.
The biosaline project in Punjab has already helped lift 50,000 households out of poverty by raising incomes. From 2007 to 2010, the increase of rice and wheat production on rehabilitated land totaled 417,016 tons, worth $122 million.
Dozens of enthusiastic farmers who gathered to meet a visitor to Sharbaga this past summer were unequivocal about how the agriculture project had improved their lives. Before the project, there were few ways to make money in the village aside from sporadic manual labor. Farmers owned small parcels of largely infertile land, and most of the men migrated to cities for work in factories or as temporary laborers.
Now, all the men said their farming incomes had double or tripled, to as much as $230 a month, compared with the $90 or less that they could earn working in a factory, and migration to the cities is declining.
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Reviving agriculture has been life-changing for many rural Pakistanis. Zeba Bibi, who also cultivates a garden in Liliani village, wants to know how she can make her mango trees healthier and more productive. She aspires to one day buy a tractor with extra income from crops grown on her family’s desalinated land. “We are looking forward to a better life,” she said.
http://www.nytimes.com/2011/11/17/business/energy-environment/soil-renewal-puts-pakistans-poor-on-stronger-ground.html
Here's Business Recorder report on Pakistan's exporters' participation in an Abu Dhabi exhibit:
Pakistan makes foray at SIAL Middle East to explore the Gulf food market and boost exports by attracting local and regional players participating in the region's premier food fair, which opened Tuesday at the Abu Dhabi National Exhibition Centre.
Seven Pakistani firms attending the three-day event for the first time displayed their range of products at the Pakistan pavilion.
They will meet local food importers and regional players to explore the market, which is expected to cross $50 billion by 2020.
"Pakistan has emerged as an important player of food supplies to the UAE and Gulf region particularly in rice, meat, poultry, seafood, fruits, vegetables and spices. We hope SIAL Middle East will facilitate our exhibitors both in product and geographic diversifications," Pakistan Ambassador to UAE Jamil Ahmed Khan told Khaleej Times.
The second edition of SIAL Middle East welcomed 12,000 trade visitors with exhibitor line-up of more than 500 food, beverages, equipment manufacturers, suppliers.
Argentina, China, Italy, Iran, France, Pakistan, South Korea, Taiwan, Thailand, Turkey, Tunisia, UAE, UK and US also set up pavilions to exhibit their products to make inroads in the region striving to ensure food security amid rising inflation across the globe.
According to a new research, Gulf Cooperation Council (GCC) states will spend $53.1 billion by 2020 on food imports to feed growing population.
The region, spent $25.8 billion on food imports last year, depending heavily on imports of agriculture and food products.
Food consumption in GCC is expected to rise at the rate of 4.6 per cent annually between 2011-15 and reach 51.5 million tonnes per year during this period.
Pakistan's exports of food products to GCC region stand at $1 billion and UAE shares around 50 per cent of the total bill.
Appreciating premier event, Pakistan Ambassador said SIAL food fair has become a truly international brand.
"It’s a great pleasure to be part of this food event for first time. We welcome valued visitors to the Pakistan pavilion who will have a chance to meet with our leading food suppliers at this dedicated business platform in the thriving region of the Middle East."
Pakistani exhibitors displayed rice, juices, assorted pickles, edible oil, fresh fruits, vegetables, assorted syrups, wheat flour and flour products among others.
According to Pakistan Embassy officials, Pakistan has the potential to double its food export to the UAE by adding value to its products.
"Our average unit price of food exported items is comparatively less than most of the competing countries, but we need to do value addition by establishing brands in the region," an official said.
http://www.brecorder.com/pakistan/business-a-economy/36142-seven-pakistani-firms-explore-food-market-in-gulf-.html
Here's a Businessweek report on IMF's assessment of Pakistan's economy:
Pakistan faces a “challenging” economic outlook and should seek to contain its deficit while adopting a cautious monetary policy, the International Monetary Fund said after an annual review of the country’s policies.
Economic growth is expected to reach about 3.5 percent for the fiscal year started July 1 and inflation is forecast to slow down, the Washington-based IMF said in a press release today.
Still, “the external current account balance is projected to return to a deficit, and global risk aversion and security concerns may limit capital inflows,” the IMF mission said. Beyond fiscal and monetary policies, “a responsive exchange rate would reduce vulnerabilities, contain inflation and protect Pakistan’s international reserve,” the fund said.
An $11.3 billion loan program to Pakistan expired in September with no payments disbursed since May 2010 because the country didn’t meet the conditions attached to it.
The IMF mission and Pakistani authorities, who met in Dubai and Islamabad Nov. 9-19, also discussed policies for the medium term, including changes to the tax system and in the energy sector.
A detailed report of Pakistan’s economy will be examined by the IMF board in late January, the mission said.
http://www.bloomberg.com/news/2011-11-22/pakistan-faces-challenging-outlook-may-grow-3-5-imf-says.html#
Here are some excerpts from Forbes cover story (Dec 19, 2011) on venture money for Pak entrepreneurs:
Novogratz plays the role of auditor because, as CEO and founder of the Acumen Fund, helping people starts with financial due diligence. In April Acumen sank $1.9 million into the bank (National Rural Support Programme Bank in Pakistan) in exchange for an 18% stake, one small investment in a decadelong experiment in charitable giving. Instead of shoveling aid dollars to causes or governments that give away life-sustaining goods and services, Acumen espouses investing money wisely in small-time entrepreneurs in the developing world who strive to solve problems, from mosquito netting to bottled water to affordable housing. It’s a new twist on the old adage about teaching a man to fish, except that Novogratz wants to build an entire fish market.
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Acumen has given Pakistani farmers the ability to access cash at credit card rates, versus the loan shark terms of before—a staggering 125,000 clients have tapped the bank for $30 million in new credit this year. Novogratz’s infusion has also allowed the bank to take deposits for the first time, introducing the idea of savings, and 6% interest rates, to a community that has been locked in poverty for centuries. Since April 10,000 farmers have deposited $7 million in the bank, which of course has resulted in yet more loans.
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Weeks later Novogratz fortuitously got two anonymous gifts of $500,000 each and took her first trip to Pakistan in January 2002. Acumen has since invested $13 million there in 12 businesses: Ansaar Management Co. (affordable housing), Kashf Foundation (microlending to women) and Micro Drip (agricultural irrigation), among them. She has also collected $2.7 million from 40 Pakistani donors and traveled to that country 20 times, turning one of the most volatile, anti-American populations into a vibrant experiment in alleviating poverty.
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That’s why I find myself in a rural village 10 miles outside the city of Lahore, Pakistan’s second-largest city. Novogratz has come to check on another investment—and to collect the precious data she hopes to use in new fundraising. Here on 20 acres, Saiban, a nonprofit developer, has built homes for an eventual 450 Pakistani families, most of whom earn $2 to $4 a day. The $4,000 units are 85% occupied. You see the occasional motorcycle parked in front, where a few women mill about, talking or hanging laundry.
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These aren’t the answers Novogratz is fishing for. She wants to hear examples of people using their homes as collateral to get college loans for their children or amassing a better dowry for their daughters so they can marry into a more prosperous family. She wraps up the meeting. “So, the next time I come, you’re going to have some good metrics for me? ’Cause this is my challenge for the world.” Someone says, “Inshallah [God willing].”
Novogratz smiles, but shakes her head: “Not inshallah. We’re going to do it!”
....
http://www.forbes.com/sites/helencoster/2011/11/30/novogratz/4/
Quality seeds essential for agriculture development, reports APP:
Supply of good quality seed is the base of sustainable and developing economy. "For improving the seed quality Pakistan Agricultural Research Council (PARC) Scientists are making appreciable efforts in agriculture research sector", Dr Iftikhar Ahmad, Chairman, PARC said while speaking in a meeting here on Tuesday.
The meeting on "Review of Variety Release and Seed Production System in Pakistan" was jointly organized by PARC and International Center for Agricultural Research in the Dry Areas (ICARDA). The PARC Chairman further elaborated that seed supplied to farmer is an important measure for achieving enhanced agricultural production. "Due to lack of awareness and information about quality seed we are unable to achieve required productivity, and the bad quality seed has the potential to threaten food security for whole country", he added.
Foreign delegate from ICARDA, US Department of Agriculture (USDA), and International Maize and Wheat Improvement Center (CIMMYT) were present on the occasion. Provincial presentation under the guidance of Secretary Agriculture, Government of Punjab, Arif Nadeem and heads of other agricultural institutes from Sindh, Balochistan, and Kheyber Pakhtoonkhwa graced the occasion.
Dr Iftikhar Ahmed, who chaired the meeting emphasized on improved varieties for quality seed that are basic requirements for enhancing the agriculture productive as well as in livestock sector.
He said that seed certified Cooperation Department also established in Khyber Pakhtunkhwa, Sindh, Balutistan, Baluchistan as in functioning Punjab province for betterment of farmers and also launched a campaign for awareness of quality seed.
During a roundtable meeting of which 30 members participated from across the country discussed current challenges that are being faced to the seed sector.
The members of the meeting special focused on accelerating the transfer of new improved varieties to farmers. The meeting was a follow-up of a three-week mission sponsored by ICARDA during which seed specialist Dr Mishael Turner had wide-ranging consultations with both public institutions and private companies.
He was of the view that the threat posed by epidemics of rust diseases of wheat had raised awareness about the need to move new improved resistant varieties rapidly from research institutes to farmers through the variety release system.
These concerns enabled ICARDA to secure funding from USAID to compare variety release procedures in different countries.
Discussion among the participants covered many issues affecting plant breeding and the seed industry in Pakistan and provided an open exchange of opinions among the stakeholders. Key themes that emerged from the meeting included the need to strengthen public private partnerships and the ways to improve capacity building for all partners of the seed sector.
There was an agreement among the participants that the new Ministry of National Food Security and Research should take up these issues as soon as possible.
http://nation.com.pk/pakistan-news-newspaper-daily-english-online/Business/14-Dec-2011/Quality-seed-vital-for-agri-development
Here's Punjab CM pitching his province's potential as the food basket to the world, reported by Daily Times:
Pakistan is as an emerging country of fully traceable products for the world to meet food supply demand of increasing global population.
Chief Minister, Punjab, Muhammad Shahbaz Sharif at a meeting with EU ambassadors said Punjab government has diverted substantial resources to develop science-based, vibrant and internationally linked agriculture sector that could not only meet the food security challenges but also compete in domestic as well as in international markets.
Punjab Government has entered into certification regime to produce fully traceable agricultural and livestock products to reach high-end markets of the developed world and to enhance export upto $2 billion annually, he added.
He said Pakistan has the potential to become 10th largest economy of the world after Germany. He apprised the distinguished envoys Punjab government has allocated Rs 2.024 billion for a mega project to improve supply chain of selected agricultural and livestock products for improving quality and introducing traceability as per international market standards and requirements.
He said participation of Punjab in the forthcoming International Green Week (IGW), Berlin Germany would be an excellent opportunity to showcase traceable agricultural and livestock products from Punjab and to project Pakistan.
He said display of traceable agricultural and livestock products at IGW would open the doors of high-end markets of the world leading towards generation of tremendous business opportunities for Punjab, Pakistan.
He said Punjab government was benefiting from Star Farm and Metro to enhance capacity of our producers, suppliers and traders to boost exports.
Ambassadors from 18 European Union countries including Lars-Gunnar Wigemark, EU ambassador to Pakistan were present in the meeting.
Lars-Gunnar said Punjab has tremendous potential in agriculture and livestock sectors to get its due share in global trade of food products. He lauded Punjab government for adopting techniques and standards required for food safety and quality, and linking its traceable agricultural products to the global markets.
Arif Nadeem, Secretary Agriculture said 15-20 fully traceable fruits, vegetables, rice and meat products would be showcased at IGW for which capacity of about 25 exhibitors has been built for compliance of Global GAP and International Featured Specifications (IFS) by Star Farm.
He told METRO would organise Pakistan week in their chains in Berlin, parallel to the IGW event, therefore, fresh produce to be brought in Germany would not only be displayed and sold at the event but also at the Metro stores/chains in Berlin.
He said a vendor selected for the event has prepared thematic design of Pakistan pavilion, which contains Business to Business (B2B) and Business to Consumer (B2C) areas for display of products.
The concept, ‘farm to fork’ will be demonstrated through cooked dishes of traceable products as well at the
occasion, he added.
Rizwan Khan, Vice Chairman, Punjab Board of Investment and Trade highlighted the significance of International Green Week scheduled for January 20-29, 2012 at Berlin, Germany and briefed about aesthetics and media coverage of the event, embassy coordination and back end support in terms of product development.
The diplomats of EU Countries and others expressed satisfaction on the level of preparedness of Punjab government for participation in the forthcoming IGW, Germany.
http://www.dailytimes.com.pk/default.asp?page=2011\12\18\story_18-12-2011_pg5_7
Here's a story in The Nation on high wheat prices hurting exports:
LAHORE – Pakistan is likely to spoil its surplus wheat owing to its high price as compared to the international market and substandard storage system, losing an opportunity to earn millions of dollars through its export.
Experts feared that fresh imminent increase in the wheat support price will halt export of wheat and its products. At present, 5.5 million tons of wheat was lying in stores and open places with public sector departments while our requirement for next few months was only two million tons. They said 1.4 million tons of wheat was present only in Punjab and added that one of the prime reasons of piling up of this wheat stock was high prices.
Former chairman of the Flour Mills Association, Asim Raza Ahmed, while talking to The Nation, claimed that wheat prices were already high in Pakistan as compared to other countries. Supporting his claim, he said Russia had sold wheat to Egypt and Iraq at the rate of $220 to $250 dollars per ton which in Pak rupees is Rs 22,000 per ton compared to Pakistani wheat price of Rs 23,750 per ton. He said that wheat was playing an important role in agriculture of Pakistan. Pakistan is not only self-reliant in this crop from the last three years but also exporting wheat. Pakistan exported 1.7 million tons of wheat and 1.3 million tons of wheat products this year and was competing on this front with Russia, Turkey, Australia, India and America. Some experts were of the view that the government’s poor measures for utilizing bumper wheat crops may cause it billions of rupees losses again because of substandard ways of stocking of the commodity in packing material, which is not recommended by the experts.
The upcoming wheat harvesting season will be overwhelmingly tremendous as the government increased the wheat support prices to Rs 1,050 per maund for encouraging the production of the commodity. But it will also be harmful for the growers, as they will fail to dispose of their commodity due to high rates.
The country is expected to harvest more than 25 million tons of wheat in the next season as against the national requirement of 21 to 22 million tons, leaving surplus of about 3 to 4 million tons of wheat for export market, which should be exported to earn precious foreign exchange for the country.
http://nation.com.pk/pakistan-news-newspaper-daily-english-online/Business/18-Dec-2011/Surplus-wheat--export-in-jeopardy
Pakistan to support declining cotton prices, according to Bloomberg:
Dec. 19 (Bloomberg) -- Pakistan, the fourth-largest grower of cotton, may buy as much as one million bales through state- run Trading Corp. to support prices, the spokesman for the country’s ginners’ group said today.
“Our group is meeting the prime minister today to settle the details of the deal,” Arshad Islam, spokesman for Pakistan Cotton Ginners Association, said in a phone interview from Karachi. “We are expecting to sell one million bales and above. The last time the government bought from us was in 2005, when they bought 1.6 million bales.”
Cotton prices in Pakistan have declined 42 percent in the financial year started July 1, tracking weak international rates as demand from China waned and global production rose. Cotton in New York has tumbled 59 percent since reaching a record $2.197 per pound on March 7.
Pakistan is hoping to grow 12.7 million bales in the year that began July 1 on better yields, the association said on Dec. 13. This is higher than the 12.2 million bales estimated by the government in October. A bale in Pakistan weighs 170 kilograms (375 pounds).
http://www.businessweek.com/news/2011-12-19/pakistan-may-buy-1-million-bales-of-cotton-to-support-prices.html
Pakistan's food exports are surging, reports PPI:
ISLAMABAD, (Asia Pulse) - Pakistan's exports of food commodities surged by 22.73 percent during the first five months of the current fiscal year to reach at $1.514 billion, Federal Bureau of Statistics (FBS) reported.
The overall food exports were recorded at 1.514 billion during July-November (2011-12) as compared to the exports of $1.233 billion during July-November (2010-11), according to FBS figures issued.
The food products that contributed to positive growth included fish and fish preparations, exports of which increased from $106.742 million last year to $125.959 million during the first five months of this year, showing an increase of 15.83 per cent.
Exports of fruits also increased by 13.94 per cent from $77.753 million to $88.595 during the period under reviews, showing positive growth of 13.94 per cent, the data revealed.
Exports of vegetables and tobacco increased by 28.47 percent and 27.62 per cent respectively during the period under review.
During the month of November 2011, the food exports witnessed negative growth of 25.85 per cent and 6.93 per cent when compared to the exports of October 2011 and November 2010 respectively.
The overall food exports during November 2011 were recorded at $223.360 million against the exports of $301.246 million in October 2011 and $239.984 million in November 2010, the data revealed.
http://www.lankabusinessonline.com/fullstory.php?nid=152011880
Here's Dr. Ataur Rahman's Op Ed in The News on building Pakistan's knowledge economy:
Agriculture represents the backbone of our economy. It can serve as a launching pad for transition to a knowledge economy, as it has a huge potential for revenue generation. But that can happen only if agricultural practices are carried out on scientific lines and use of technology maximised. The four major crops of Pakistan are wheat, rice, cotton and sugarcane. They contribute about 37 percent of the total agricultural income and about nine percent to the GDP of Pakistan.
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Wheat is the most important crop of Pakistan, with the largest acreage. It contributes about three percent to the GDP. The national average yield is about 2.7 tons per hectare, whereas in Egypt the yields are 6.44 tons per hectare and in European countries such as France, Germany and the United Kingdom they are above seven tons per hectare. We presently produce about Rs220 billion worth of wheat. If we can boost our yields to match those of Egypt, it can generate another Rs350 billion, allowing us to systematically pay off the national debt and make available funding for health and education.
However, the government has been reluctant to invest in research, water reservoirs and dams and extension services so that the country continues to suffer. Some progressive farmers in irrigated areas have been able to obtain yields of 6-8 tons per hectare but they are very much a minority. In rain-fed areas the yields are normally between 0.5 tons to 1.3 tons per hectare, depending on the region and amount of rainfall. In irrigated areas the yields are normally higher, in the range of 2.5 tons to 3.0 tons per hectare. Improved semi-dwarf cultivars that are available in Pakistan can afford a yield of wheat between 6-8 tons per hectare. It is possible to increase the yields substantially with better extension services, judicious use of fertilisers and pesticides, and greater access of water from storage reservoirs and dams that need to be constructed.
Cotton represents an important fibre crop of Pakistan that generates about Rs250 billion to the national economy, and contributing about two percent to the national GDP. Pakistan is the fourth-largest producer of cotton in the world, but it is ranked at 10th in the world in terms of yields. The use of plant biotechnology can help to develop better cotton varieties. Bt cotton produces a pesticide internally and safeguards the plant against chewing insects. The yields of Pakistani seed cotton and cotton fibre are both about half those of China. A doubling of cotton yields is doable and it can add another Rs250 billion to the national economy.
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The failed system of democracy in Pakistan is strongly supported by Western governments. It serves Western interests as it leads to docile and submissive leaders who serve their foreign masters loyally. The stranglehold of the feudal system thrives with no priority given to education. More than parliamentarians have forged degrees and the degrees of another 250 are suspect. The Supreme Court decision of verification of their degrees is flouted and ignored by the Election Commission. The bigger the crook, the more respect he is given by the government and the biggest crooks are conferred the highest civil awards. The economy has nosedived and we are today ranked among the bottom six countries of the world in terms of our expenditure on education.
http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=83815&Cat=9
Pakistan produces 13.67 million tones of fruits and vegetables per annum, according to Online News:
An official told Online on Tuesday out of which about 25 per cent goes waste, between farms to consumers, while only 4 per cent is exported at far 41 per cent lower price compared to world average price.
The horticulture sector contributes about 12 per cent to the national agricultural Gross Domestic Product (GDP) and holds great potential for increasing export of quality horticultural produce, and offering multiple employment opportunities throughout the supply chain, he added.
The official said, “However, its growth & profitability is restrained mainly by lack of proper post harvest management and transport infrastructure. Improving post harvest management infrastructure (grading, packing, storage and transport/cold-chain) will help reduce high post harvest losses, increase production surplus along with improving shelf life and quality of fresh produce, which will help to stabilize prices in domestic markets as well as to substantially boost export to highly lucrative and competitive international markets.”
It is pertinent to mention here that Ministry of Commerce had decided to establish a “Cool Chain System” under “National Trade Corridor Improvement Project”. The Cool Chain project is bound act as a backbone for the development of supply chain infrastructure for horticulture produce.
http://www.onlinenews.com.pk/details.php?id=187430
Pakistan to irradiate mangoes exported to US, reports The News:
Pakistan will obtain a US irradiation unit for the treatment of mango in a bid to boost the fruit’s export, Chief Executive Officer Harvest Trading, Ahmad Jawad, said on Tuesday.
Irradiation is a process to preserve food items by using radiations. Presently, the fruit has first to be transported to Lowa city in the United States for the treatment, Jawad said.
Growers and exporters of mango on Tuesday called for evolving a marketing strategy involving Pakistan Horticulture Development and Export Company (PHDEC) to capture new markets.
“The United States is one of the biggest importers of mangoes produced globally with a share of almost 44 percent and Pakistan has great potential for boosting its to that country”, Jawad said.
He said that Pakistani mangoes are famous world over for their sweet flavour with more than 40 different varieties, it is the world’s sixth largest producer. But unfortunately less than only five percent of the cultivated crop is exported, he added.
Jawad said that currently, the Middle East was importing 65 percent of the total produce and it can be enhanced by extended efforts and facilities to the growers.
The Harvest Trading has also been in touch with the private sector in South America to set up relationships and persuade their embassies to let them import Pakistani mangoes, he added.
On the other hand Indian mango exporters are losing ground to their Pakistani counterparts in the US market. The exports of this exotic fruit from India, which started in 2007 is seeing a continuous decline over past three years, he added.
Data shows export of mangoes from India to US declined by 13.4 percent in 2009-10 at 175.40 tons from 202.64 tons in 2008-09. In 2010-11, export saw a steeper decline of 22.1 percent at 136.70 tons.
http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=85623&Cat=3
Here's a News story on Pakistan missing kinnow orange export target:
Pakistan’s kinnow export target of 300 million tons for this year seems difficult to achieve due to the hurdles created by the customs authorities, an exporter said on Thursday.
The Co-chairman of All Pakistan Fruit and Vegetable Exporters, Importers and Merchants Association (PFVA) told The News that exporters suffered a loss of $10 million on export of kinnow, as shipments were delayed because of complete checking of consignments. “In many consignments planes left and cargo was not taken,” he said.
CEO Harvest Tradings Ahmad Jawad said Japan may be good market for Pakistan kinnow in the coming years if Pakistan Horticulture Development and Export Company (PHDEC) and Ministry of Commerce make serious efforts to explore this market as we did in mangoes last year. “The planners need to realise that there are certain areas where the private sector cannot help exports grow,” he said.
The import of citrus in Japan has doubled in 2010/11 due to decline in local production Jawad said quoting a report of the US Department of Agriculture (USDA). The US and Australian citrus import to Japan has increased substantially during the period.
The import of fresh produce in Japan increased to 21,406 tons for the 12 months to September 2011, up from 10,797 tons for the same period a year before, the USDA Global Agricultural Information Network (GAIN) report said.
The US accounted for the majority of the increased volume, with a 93 per cent jump to 17,650 tons giving it a market share of 82 per cent.
Matching with Japan’s new role as Australia’s largest citrus export market, Australian imports jumped 136 percent to 2,276 tons. New Zealand, Chilean and Taiwanese imports also grew over the period.
Japan’s citrus imports are expected to decline by about 12 percent to 19,000 tons in 2011/12, the report added, because of Japanese Mikan production bouncing back.
“On the other hand Pakistan’s export target for kinnow set at 300,000 tons this year is becoming harder to meet as the season unfolds due to unlimited blunders,” he said.
The CEO Harvest Tradings further emphasized that starting with Pakistan’s image building the trade or counsellors should work as marketing managers fully knowing about the market demand there and about the quality of products and selling tactics by Pakistan’s competitors.
They should be very much in touch with the business communities there, exchange business data and information, provide businessmen at both ends with proper consultation meant to increase bilateral trade and investment, help resolve trade disputes between entrepreneurs of Pakistan and any other country.
http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=86002&Cat=3
Here's a market research report on Pakistan's agriculture sector:
Pakistan Agribusiness service provides proprietary medium term price forecasts for key commodities, including corn, wheat, rice, sugar, cocoa, coffee, soy and milk; in addition to newly-researched competitive intelligence on leading agribusiness producers, traders and suppliers; in-depth analysis of latest industry developments; and essential industry context on Pakistan's agribusiness service.
Pakistan's agricultural output has steadily declined in its contribution to GDP in the past decade, down from 24.0% in 2000/01 to 20.9% in 2010/11. That said, the sector still employs the largest number of workers in the population and we expect the industry to remain a government priority as the country deals with issues of food security and the vulnerability to natural disasters. Over the long term, we foresee the dairy, poultry and wheat industries as benefiting the most from increased investment.
However, despite the existing network of irrigation systems across the country, we believe that significant improvements in infrastructure and better supply chains will have to be implemented in order for the country to reap the full benefits of its fertile soil.
Key Trends
- Rice production out to 2015/16: 7.5% to 7.3mn tonnes. We expect the country to increase its share in the basmati rice trade as production expands over our forecast period.
- Wheat consumption out to 2016: 14.2% to 25.3mn tonnes. Consumption growth will be driven by rising incomes and population growth, as well as increased access to good-quality milk.
- Sugar production out to 2015/16: 35.1% to 4.8mn tonnes. Large-scale consumers such as confectioners, candy makers and soft drink manufacturers account for about 60% of the total sugar demand and will be the main drivers of growth.
- 2012 Real GDP Growth: 3.8% (up from 2.4% y-o-y in 2011; forecast to average 3.7% from 2011 to 2016).
- Consumer Price Inflation: 11.2% average in 2012 (down from 13.7% in 2011).
- Central Bank Policy Rate: 12.0% (lower than 14.0% in 2011)
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South Asia rice exporters should benefit the most from the recent rice trade disruptions out of Thailand. So far, traders report that more than 100,000 tonnes of rice for export have been stalled as a result of the country's worst flooding in decades. Some sources estimate that this could rise to more than 300,000 tonnes. Given these developments, the spotlight has now turned to South Asia to meet demand for the grain in the near term.
Despite the recent floods, which destroyed approximately 20-30% of the sugarcane crop in the Sindh region, we forecast 2011/12 sugar output from Pakistan at 4.1mn tonnes, 2.5% up from our previous estimates. This is largely due to an overall 5-8% increase in sugarcane yields, area harvested and favourable monsoon rains during the growing season. Sugar crushing is estimated at 82% and sugar recovery at 8.8%. According to provincial reports, higher sugar prices farmers received last year, coupled with strong demand from the industrial sector, have boosted planting in the provinces of Punjab, Sindh and Khyber Pakhtunkhawah.
http://www.researchandmarkets.com/research/b503cb/pakistan_agribusin
Former British foreign secretary David Miliband joins Pakistan private equity fund as advisor, according to Express Tribune:
In what appears to be a coup for the fledgling Pakistani private equity industry, Indus Basin Holdings has managed to get Britain’s former foreign secretary David Miliband on board as a senior adviser.
“We are delighted to be able to bring on board the expertise of Miliband who knows the region and its challenges well,” said Indus Basin founder and CEO Aamer Sarfraz, according to a press release issued by Miliband’s office. “He shares our conviction that investment in Pakistan’s agricultural sector can have substantial long-term impact on the country’s poorest farming communities.”
“I am delighted to be advising Indus Basin Holding, a company that is investing in Pakistan’s future at a time of such fundamental importance,” said Miliband in a press statement. “I care deeply about Pakistan, the development of its economy and its future in the wider region. IBH is committed to developing an agricultural sector which has huge potential, but currently lacks investment. I look forward to working with IBH in building support and investment in Pakistan’s agricultural capacity and productivity.”
Officials at the company say they had been trying for the past year and a half to secure the contract with Miliband, who served as Britain’s foreign secretary between 2007 and 2010. He also served as Britain’s secretary of state for the environment, food and rural affairs previously.
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Indus Basin Holdings is only a relatively recent entrant into Pakistan’s nascent private equity and venture capital space but already began to attract a lot of attention for the kinds of big-name investors it was able to attract in its fund, which is focused on capitalising on opportunities presented by raising productivity levels in Pakistani agriculture.
The company’s investors include Tim Draper, the famous American venture capitalist known for being an early investor in Skype and Hotmail, and Baron Lorne Thyssen-Bornemisza, a Swiss aristocrat whose family owns the ThyssenKrupp, a German technology conglomerate with over 670 subsidiaries and 200,000 employees worldwide.
Indus Basin’s investments currently include Agroventures, a Faisalabad-based breakfast cereal manufacturer, and Rice Partners, a company that is focused on contract farming and marketing Pakistani rice directly to North American and European retailers.
http://tribune.com.pk/story/324941/high-connections-david-miliband-joins-pakistani-private-equity-firm/
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.
http://www.dailytimes.com.pk/default.asp?page=2012\01\23\story_23-1-2012_pg7_23
Here's an Express Tribune report on Psakistan's fruits and vegetables exported to Sri Lanka:
A Pakistan trade delegation, visiting Sri Lanka these days, has proposed setting up a body under the title Horticulture Export Marketing Access with the objective of facilitating export of agricultural produce to Sri Lankan markets.
The proposal was floated by the leader of the six-member delegation, Faqir Nusrat Husain, at a ceremony held in Colombo.
The delegation, sponsored by the Trade Development Authority of Pakistan, is on a week-long visit aimed at exploring ways and means to enhance bilateral trade in fruits and vegetables, flowers and other agricultural produce.
Team members include prominent agriculturalists from across the country, who have specialised in production and export of various fruits and vegetables including guava, chikoo, mango, citrus, berry, potato, dry fruits, gur, tobacco (cigar) and fresh and dry dates.
Faqir Husain told Sri Lankan agriculturalists that Pakistan’s fruits and vegetables had good quality and were also cheaper, adding Pakistan provided an ideal alternative to Sri Lanka, which imported these items from far-off countries.
Eager to reap maximum benefits from the free trade agreement (FTA) with Sri Lanka, the delegation also planned to explore opportunities in the tea industry. In this regard, it will visit Kandy to interact with the local chamber of commerce and the Tea Research Board. It will also visit tea factories and spice gardens.
The team members plan to hold meetings with Sri Lankan fruit and dry fruit importers as well as other stakeholders to explore possibilities of enhancing bilateral trade.
Sri Lanka, which imported $300 million worth of agriculture produce from Pakistan last year, was the first country to sign an FTA with Pakistan. Since the agreement came into effect in June 2005, bilateral trade has strengthened and Pakistan is the second largest trade partner of Sri Lanka in the South Asian region.
http://tribune.com.pk/story/328188/pakistan-proposes-export-facilitating-body/
"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", wrote Punjab's director general of board of investments in a recent Op Ed in Dawn.
In 2011/12 K&N’s expects to produce 80 million layer and broiler chicks, reports thepoultrysite.com.
In the 1960’s and 1970’s, obtaining safe, reliable sources of poultry feed was an insurmountable challenge in Pakistan. This led Khalil to set up his own feed mill to produce feed for K&N’s operations at Karachi in 1971. With the growing need of feed for the integrated production operations in Central Punjab province and Northern areas of the country, a feed mill established by a multi-national company at Lahore, was acquired by K&N’s to take advantage of low-cost feed ingredients available in the Central part of Pakistan.
The growth of commercial poultry production through the decades changed the mindset of consumers towards farm raised broilers and eggs, helped by lower prices and greater availability. Today, Desi chicken and eggs are produced in lower volumes and considered more of a delicacy.
Yet the strength of the live/wet chicken market culture, the negligible overheads of roadside sales – a butcher’s knife costs less than US$1 – and the reassurance of Halal slaughter remain significant influences slowing the uptake of processing, says Adil Sattar.
Practical problems, particularly the limited availability of cool chain facilities and frequent power breakdowns, have to be overcome with production and distribution of processed products inevitably involving high overheads.
"Earlier, within our industry, poultry processing was considered a non-viable poultry business activity as many firms had tried but ended up closing down their operations," says Adil. "At K&N’s, we endeavoured to develop the market, and other companies are now looking to start processing operations."
Today, chicken is the most popular protein source in Pakistan, primarily through the industry’s growth and success leading to lower cost and widespread availability, with per-capita consumption about 7kg (15.4lb) per year. The tradition is to eat chicken at home, always skinless cooked in curries, with rice or barbecued.
Restaurants offer local cuisine including a variety of curries, barbecue dishes and different types of rice, with a number of upmarket cafes and restaurants serving western cuisine and many of the international fast food caterers such as McDonald’s, KFC, Pizza Hut, Nando’s, Hardees and Subway also present.
Here's a News report on meat consumption in Pakistan:
The consumption of poultry meat increased by 239 percent in 11 years from 322 million tons in 1999/2000 to 767 million tons in 2010/11, but it is still only 0.7 percent of the global poultry production, experts said on Monday.
At a seminar organised by Big Bird to commemorate its 20 years association with the global poultry giant Hubbard pioneer of poultry in Pakistan Dr Yaqoob Bhatti in his paper revealed that the value of poultry infrastructure exceeds Rs300 billion and annual turnover of commercial poultry is Rs40 billion.
With 105 hatcheries, the annual broiler chick production is 820 million, he said, adding that the commercial egg production is 8.690 billion per annum in addition to 3.742 million production of rural eggs.
Pakistan Poultry Association former chairman Abdul Basit said that poultry is the cheapest source of animal protein not only in Pakistan, but the world over. The average daily animal protein consumption in Pakistan is only 17 grams per capita, while the average minimum requirement is 27 grams, he said.
There is a dire need to increase poultry production in the country that has largely grown without helpful government policies or facilitation, said Basit. The industry, for instance, has since long been demanding the government to disallow poultry farm clusters through a law as chicken farms at least 1.5km apart greatly reduce the risk of spread of diseases among various poultry flocks, he said.
He said his concern has to relocate its very large chicken farms each time when place was surrounded with many other farms too close to his farms. He said he has shifted his major high quality grand parent farms to Thar deserts. Dr Mustafa Kamal said that the consumption of mutton has declined rapidly, while that of beef and poultry has increased.
The share of poultry meat increased from 16.4 percent to 24.3 percent, he said, adding that the consumption of mutton declined from 0.649 million tons to 0.616 million tons, showing a fall of 20 percent in total meat consumption share.
Still, he said, Pakistan as a meat eating country produces around 50 percent broiler chickens of those produced in India, which has seven times human population and has a good chance to develop Grand Parent breeding operations, which has an existing capacity of producing eight million parent stocks for domestic as well as for export purposes.
Olvier Behaghel of Hubbard France said that Pakistani poultry improved efficiencies rapidly during the last 20 year that has helped it control the cost. Maturing time of a broiler has reduced during this period from four days to 46 days and from 38 days to 40 days, he said.
The weight gain of the chick at the time of maturity has increased from 1.5-1.7kg to 1.9 to 2kg and feed consumption by the time of maturity has declined from 2.2-2.5kg to 1.7-1.9kg. “Pakistan, he said, is gradually reaching global and Hubbard standards in chicken health, morality and efficiency in productive processes.
http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=70726&Cat=3
Here are excerpts of Express Tribune story on Nestle Pakistan's record revenue and profits:
Even as the economy continues to grow sluggishly, Nestle Pakistan announced another year of record breaking profits, which grew by 13.5% to reach Rs4.7 billion – or about Rs102.94 per share – on the back of a 26% increase in revenues, which reached Rs64.8 billion.
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Managing Director Ian Donald – a South African national who has been with the global parent company for 40 years – believes the key for Nestle to grow in Pakistan is primarily by growing the packaged foods market.
“Take the example of yoghurt. We are 80% of the market when it comes to packaged yoghurt. But that packaged segment is only 2% of the total market,” he said in an interview with The Express Tribune. “So it doesn’t really matter what our market share is. We need to grow the whole packaged segment.”
A key constraint to growing that segment, however, seems to be the limited purchasing power of the ordinary Pakistani consumer. “Our single biggest challenge is how to get the right quality product to the consumer at a price that they can afford,” said Donald.
Over the past year, inflation has not helped matters. While Nestle’s global food portfolio is highly diversified, in Pakistan it focuses heavily on milk and dairy products. As milk prices continue to rise by more than 20% a year, the company has not been able to pass on the entirety of that effect to its customers. This is at least partially reflected in its gross profit margins, which shrank by 1.2% to 25.8% in 2011. Energy costs have continued to go up as well. Nonetheless, the company was able to grow the volume of products sold by a healthy 12%.
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“We have a lean mindset,” said Giuseppe Bonanno, the company’s head of finance and control in Pakistan. The company’s operating costs are certainly lower than most of its competitors. For instance, Nestle’s logistics costs are about 12% of revenues, compared to between 18% and 19% for both Unilever Pakistan and Engro Foods, two of its biggest competitors. Part of the advantage is economies of scale: Nestle about as big as both of its rivals combined. But part of it, said Donald, is that the company invests heavily in its infrastructure. In 2011, the company invested about Rs8.9 billion in building up its capacity.
Nestle already has a gigantic infrastructure in Pakistan. The company collects milk from over 190,000 farmers spread out over an area of about 145,000 square kilometers.
Another part of its growth strategy seems to be augmenting and developing its existing brands rather than adding newer brands to its line-up in Pakistan. “We cannot afford to invest in too many brands because we cannot grow all of them,” said Donald.
However, the company has introduced brands such as Nido Bunyad, which is a powdered milk product targeted to the rural consumer at a price that is competitive with non-packaged milk.
The rural economy seems to be a key market for Nestle. “It seems to us that the rural economy is growing faster than the urban economy. However, we are also consciously driving growth in the rural markets,” said Donald.
The company identifies its fastest growing markets as Peshawar, Multan and areas that it describes as “peri-urban”, areas that lie on the outskirts of most large cities and form a part of its metropolitan area.
Nestle’s growth in Pakistan has been a mixture of both organic as well as through acquisitions. When asked about whether Nestle might pursue acquisitions in the future, Donald replied: “We are always open to considering opportunities.”
As part of its plan over the next three years, the company will spend about 320 million Swiss Francs in growing its presence in Pakistan.
http://tribune.com.pk/story/333671/despite-stellar-earnings-nestle-pakistan-aspires-for-better-results/
Here's a News report on US presence at the Karachi Agri Expo 2012:
The US Ambassador Cameron P Munter on Saturday said that the United States is committed to the development of Pakistan’s agricultural sector.
The United States is working with government and private sector authorities to improve productivity and food security, and to increase farmers’ incomes and stimulate overall economic growth, he said speaking at the Dawn Pakistan Agri-Expo.
“This event highlights the collaborative efforts in agriculture between our countries that spans more than five decades and continues today,” the US envoy said.
The expo, a two-day national agricultural exposition supported by the U.S. Department of Agriculture (USDA) and the United States Agency for International Development (USAID), showcases new agricultural farming technologies, products, and development programs.
The US Ambassador Cameron P Munter, Karachi Consul General William Martin, and the US Embassy Agricultural Counsellor Todd Drennan highlighted US-Pakistan agricultural cooperation during a visit today to the Dawn Pakistan Agri-Expo.
Ambassador Munter and Consul General Martin toured the USA Pavilion, where they met with companies that are implementing USDA- and USAID-funded programmes and are importing US agricultural products.
The USA Pavilion, under the theme of ‘Linking US Agriculture to the World’ highlights US-Pakistan institutional linkages and partnerships, which are introducing new technologies, farm equipment, and farming practices to the Pakistani agricultural sector.
The exposition, taking place in Karachi on February 11 and 12 and in Lahore on February 17 and 18, brings together exhibitors and participants from across Pakistan and the world from various business sectors involved with agriculture production and distribution.
http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=92246&Cat=3
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