Thursday, June 13, 2024

Agriculture: A Rare Bright Spot in Pakistan's Economy

Pakistan's agriculture sector grew 6.3% in 2023-24, far outpacing the overall economy that grew just 2.38%, according to the Economic Survey of Pakistan 2023-24.  This is good news for about 40% of the country's population working in the agriculture sector. By contrast, India's agriculture growth slowed to 1.2% in recent quarters. Studies have shown that strong growth in agriculture helps reduce poverty in developing nations like India and Pakistan. 

Snapshot of Pakistan's Economy. Source: Economic Survey of Pakistan 2023-24

The agriculture growth in Pakistan was the highest in 19 years. All major crops saw significant increases. Wheat output jumped 11.6% from 28.2 million tons last year to 31.4 million tons this year, the economic survey said. Cotton, severely damaged by floods and rains last year, reached 10.2 million bales compared to 4.9 million bales last year, growing by 108.2%. Rice output also saw a significant increase — up by 34.8% — reaching 9.9 million tons compared to 7.3 million tons. 

Strong crop output is in part the result of higher yields from increased water and fertilizer availability to farmers, according to the economic survey. 

The survey said the water availability during Kharif 2023 increased to 61.9 million acre-feet (MAF) from 43.3 MAF in Kharif 2022 (when the floods hit). For Rabi 2023-24, the water availability was 30.6 MAF, showing an increase of 4.1% over Rabi 2022-23.

Domestic fertilizer production during FY24 (July-March) rose by 17.3% to 3.25 million tons compared to 2.77 million tons in the same period of FY23. Fertilizer imports also increased by 23.7%, reaching 524,000 ton­s. The availability of fertilizer increased by 18.1% to 3.77 million tons. 

Pakistan's Rice Exports Soared 80% in Current Fiscal Year. Source: FT

The value of Pakistan’s rice exports soared to $3.6 billion over the last 11 months, up from $2 billion in July to May 2022-23. Its previous record for was 4.8 million metric tons of rice exports, valued at about $2.5 billion in 2021-22, according to the Financial Times

Pakistan is among the world's largest food producing countries. It produces large and growing quantities of cereals, meat, milk, fruits and vegetables. Currently, Pakistan produces about 38 million tons of cereals (mainly wheat, rice and corn), 17 million tons of fruits and vegetables, 70 million tons of sugarcane, 60 million tons of milk and 4.5 million tons of meat.  Total value of the nation's agricultural output exceeds $70 billion.  Improving agriculture inputs and modernizing value chains can help the farm sector become much more productive to serve both domestic and export markets.  

Agriculture is considered a key tool for reducing poverty in developing countries like Pakistan. It employs almost half of the rural workforce, contributes around 20% to the country's GDP, and provides raw materials for agro-based industries, according to a study by Yaping Liu, Asad Amin, Samma Faiz Rasool, and Qamar Uz Zaman.  However, some studies suggest that agriculture may only help mitigate rural poverty in the long term, while other sources say that sustainable agriculture practices can significantly improve agricultural production and reduce poverty.

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Vineeth said...

"Pakistan's agriculture sector grew 6.3% in 2023-24, far outpacing the overall economy that grew just 2.38%, according the Economic Survey of Pakistan 2023-24."

Is this "growth" in agricultural sector more due to the loss of production during the previous year due to catastrophic floods or due to an actual increase in productivity?

"Studies have shown that strong growth in agriculture helps reduce poverty in developing nations like India and Pakistan."

Agriculture can do only a little in reducing poverty in India and Pakistan. It is the industry, and the manufacturing industry in particular, that holds the key to economic growth and poverty alleviation in both countries.

Take for instance the case of China and India. Since nearly two-thirds of China's land area towards its west is arid, India has slightly more arable land than China despite being much smaller in geographical size. However, India's farms have lower productivity and as a result its total agricultural production is slightly less than half of China's, with its production of staples like rice, wheat and several other economically significant and widely used vegetables like potato and tomatoes trailing China's production at a second place.

However if one were to compare the relative size of GDP and per-capita incomes of the two countries, their disparity is much larger than what you would see in agriculture. The nominal GDP and per-capita income of China is 5-6 times that of India's, and even if one were to take into account the Purchasing Power Parity (PPP) China's numbers are still 3 times that of India. This is primarily on account of the disparity in size of their manufacturing industries. China was able to lift hundreds of millions of people out of poverty during the last three decades primarily due to expansion of its industrial production, not agriculture. This is true in case of the developed nations as well where the industry generally dwarfs agriculture in their contribution to GDP. In fact, in a recent article about the role of unemployment in Modi's electoral setback, it was mentioned that India's economy had been recently witnessing a worrying trend of people increasingly going back to farming in their villages as employment opportunities in the industrial sector in urban areas was getting scarce. Therefore I would say that a larger share of agriculture in the GDP and employment for India and Pakistan is not exactly a good news for either country. Its a sign of backwardness.

An additional factor to keep in mind here is that in both India and Pakistan, the agricultural sector is highly susceptible to the vagaries of weather and monsoons as their irrigation systems are underdeveloped and agricultural practices remain archaic. India often experience cycles of production shortfalls and over-production in its agricultural sector - the case of onions and tomatoes being a prominent example. During one year they would be in short supply due to drought thereby leading to spike in prices, and the next year there would be such excess production that farmers dump their produce by the roadside leaving it to rot. Pakistan too experienced the catastrophic impact of weather in its agricultural sector during the 2022 floods. Due to such uncertainities, counting on agriculture to alleviate poverty in India and Pakistan would be unrealistic.

Vineeth said...

Aside from various inherent inefficiencies and lack of modernization in agricultural practices that affect farm productivity and make it susceptibile to vagaries of weather, another factor I missed to mention in my previous comment is the role of middlemen in the agricultural sector. In India, these middlemen have often been accused of buying produce from farmers at low prices and reselling them to consumers for huge profit margins, with the result that farmers get cheated out of a fair price for their produce. Perhaps reforms to India's agricultural sector that reduce or eliminate the role of such middlemen and ensure fair prices to farmers could help lift large numbers of rural agricultural families out of poverty. Some economists and even a few Modi-critics did say that Modi govt's now-retracted farm laws were a step in the right direction by allowing farmers to sell their produce directly in the market to private buyers (thereby eliminating the role of middlemen in between). However, either due to legitimate fears regarding dilution of MSP (minimum support prices) and corporate takeover of farms, or due to pressure of vested interests (middlemen) the said farm laws ended up being rolled back.

I do not know if there is a similar situation in Pakistan's agricultural sector whereby a group middlemen make all the profit while keeping farmers poor.

Hemant Patel said...

Riaz, You forgot one thing. Like population Jihad across the world, the Donkey population helps Pakistan's economy. Please include it in your article. I hope Pakistani sympathizers from India take it with the right context!

Riaz Haq said...

Hemant: "You forgot one thing. Like population Jihad across the world, the Donkey population helps Pakistan's economy. Please include it in your article"

The donkey story from Economic Times of India that you shared is a perfect example of how the hateful Indian media caricatures Pakistan to mislead its consumers.

Another good example from last year is the widely covered but false story about a padlocked grave in Pakistan.

"The story of the padlocked grave has gone viral, thanks to the mainstream Indian news media ranging from the Times of India to NDTV. The story links the image of a padlocked grave to rising necrophilia cases in Pakistan, with the claim that the image is an example of how parents lock their daughters’ graves in Pakistan in order to prevent rape. Alt News, a fact-check site run by Mohammed Zubair and Pratik Sinha, has found that the grave is in fact located in the Indian city of Hyderabad".

Riaz Haq said...

Pakistan rice exports hit record following Indian sales ban

Pakistan is selling record amounts of rice to global markets as it profits from an export ban by India, the world’s biggest exporter. Rice exports from Pakistan, the fourth-largest exporter, surged to almost 5.6mn tonnes in the 11 months to the end of May, up nearly 60 per cent on the same period a year earlier, according to official statistics.

Pakistan's economy Pakistan rice exports hit record following Indian sales ban Windfall is a boon to country hit by double-digit inflation and anaemic economic growth India continues to be the biggest supplier of rice globally, but Pakistan has increased its share of the market from 7% to about 10% © Arif Ali/AFP/Getty Images Pakistan rice exports hit record following Indian sales ban on x (opens in a new window) Pakistan rice exports hit record following Indian sales ban on facebook (opens in a new window) Pakistan rice exports hit record following Indian sales ban on linkedin (opens in a new window) Save Susannah Savage in London and Humza Jilani in Islamabad49 MINUTES AGO 1 Print this page Unlock the Editor’s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. Pakistan is selling record amounts of rice to global markets as it profits from an export ban by India, the world’s biggest exporter. Rice exports from Pakistan, the fourth-largest exporter, surged to almost 5.6mn tonnes in the 11 months to the end of May, up nearly 60 per cent on the same period a year earlier, according to official statistics. The value of Pakistan’s rice exports rose to $3.6bn over the period, up from $2bn in July to May 2022-23. Its previous record for was 4.8mn metric tonnes of rice exports, valued at about $2.5bn in 2021-22. The boom follows India’s decision to impose export restrictions on certain types of rice last year, in an effort to curb rising domestic prices ahead of parliamentary elections after a volatile monsoon disrupted production and spurred fears of a supply shortage. “With India imposing export restrictions . . . Pakistan emerged as a low-cost alternative,” said Elvis John, an associate editor for agricultural markets for S&P Global Commodity Insights. “Many price-sensitive destinations in Africa turned to Pakistan to fulfil demand,” he said, pointing to markets in south-east Asia and the Americas. Pakistan produced almost 10mn tonnes of rice in the nine months to the end of March, compared with 7.3mn tonnes in the same period a year earlier, the Pakistani government wrote in its annual economic survey released on June 11. The 2022-23 crop was particularly low because of the devastating floods in the summer of 2022, said Faizan Ghori, director of Matco Foods, Pakistan’s largest basmati rice exporter. But even compared with the year before the floods, the current export growth “comes to about 20 per cent, which is still very impressive”, he said, attributing the boost to India’s export ban. For Pakistan, the windfall revenues and rebound in production have provided a much-needed source of foreign exchange for the country of 240mn, which is struggling with double-digit inflation, anaemic economic growth and soaring public debt. Global rice prices surged to decade highs after New Delhi implemented export restrictions in July. Poorer countries in Africa, which typically buy large amounts of rice from India, were particularly affected. “Rice prices are still high and I would expect will remain high until India removes the ban,” said Joseph Glauber, senior research fellow at food security think-tank International Food Policy Research Institute.

Despite the export ban, India continues to be the biggest supplier of rice globally, followed by Thailand, Vietnam, and Pakistan, said John, but Pakistan has increased its share in the market to about 10 per cent, up from 7 per cent in the previous year.

Riaz Haq said...

Pakistani YouTubers And Praise India Movement in Pakistan - India Today

"Indians love people from abroad lauding their achievements, but seem to derive the biggest satisfaction when Pakistanis gush over India's success. Pakistanis have understood that and have tapped into that, creating an entire industry of YouTubers in Pakistan"


There is a Praise India Movement in Pakistan if one goes by the pro-India videos being churned out by Pakistani YouTubers. If some are praising India's space programme, others are talking about its economic and political successes. Why are Pakistanis creating such YouTube videos, and that too, in such huge numbers?

"India did a big favour to Pakistan. It was also a tight slap for those Pakistanis who said India would deliberately lose to the USA to get Pakistan out of the T20 World Cup tournament. India is the world's number one team, and can never lose to the US," a man in a black salwar kameez states emphatically, looking at the camera. The person isn't an Indian gushing at India's victory over the USA in a T20 World Cup match, but a Pakistani speaking to a popular Pakistani YouTuber at a market in Pakistan.

The video by YouTuber Shaila Khan on her channel Naila Pakistani Reaction has over 3 lakh views in a day.

Indians love people from abroad lauding their achievements, but seem to derive the biggest satisfaction when Pakistanis gush over India's success. Pakistanis have understood that and have tapped into that, creating an entire industry of YouTubers in Pakistan.

There are 5,500 channels and over 84,000 videos just with the hashtag pakistanireactiononindia on YouTube. The number of channels, tracked by IndiaToday.In since November 2023, has grown by 1,000 in a matter of six months. Over 5,000 videos have been added under this hashtag since November.

We are talking about just one hashtag. There are several others with India-related content, some of which every Indian would have come across while scrolling through shorts and videos on YouTube.

This content boom by Pakistani YouTubers has sparked a Praise India Movement in Pakistan.

Seeing is believing, especially if it is about YouTube.

So, just try keying in #Pakistani on the YouTube search bar. The first few results are Pakistani Reaction, Pakistani Reaction on India and Pakistani Public Reaction -- all to do with content related to India.

Such is the rage that even #PakistaniDrama, one of Pakistan's biggest cultural exports, trends below the #PakistaniReaction.

There was a flood of videos by Pakistani YouTubers lauding Team India right after their victory over the USA.

Though cricket is one of the favourites, the range of 'praise India' videos spans from India's economic might to infrastructural developments; from gastronomic delights to space programmes. Then there are videos of Pakistanis describing in amazement their wonderful discoveries during their first visit to India.

You name it, and they have it. There are Pakistani reaction clips to every Top 10 video, featuring India's shopping malls, highways, airports, college campuses, cars, bikes and even golgappas.

Zamir said...

Indians are probably the most insecure people on the planet. The moment you criticize them they get offended. When India dropped from 104th to 111th on hunger index, their foreign minister accused western powers of being jealous of India. Imagine a FM, instead of accepting their shortcomings is accusing an international organization of being jealous. Fact is that it is 5000 year old civilization with a metal level of a five year old.

Pakistani blogger have obviously found the weakness and are exploiting it. The more views they get more money they make, and India is one of the largest market.

Also, notice how secure Pakistanis are. In India there was sedation case against an actress for just saying that Pakistan is not hell. I remember a few years back I was watching some Indian musical channel, the vj wanted to praise some Pakistani group, but he gave a full 30 second speech that he loves India and is very patriotic before acknowledging that the Pakistani groups are very talented.

That is the difference between a secured people and an insecure ones.

G. Ali

Riaz Haq said...

Pakistan's fruit exports up 17.85% in first ten months of current fiscal year

Pakistan's fruit exports experienced a 17.85% rise in the first ten months of the current fiscal year compared to the corresponding period of the previous year. This increase is documented by the Pakistan Bureau of Statistics (PBS), highlighting an escalation from 232,700 million dollars to 274,227 million dollars during July-April (2023-24). Furthermore, a significant 29.32% year-on-year growth was observed in April 2024, with exports reaching 8.161 million dollars against the 6.311 million dollars recorded in April 2023.

Despite the annual growth, a month-on-month comparison shows a 58.51% decrease in April 2024 from 19.629 million dollars in March 2024. Additionally, Pakistan's overall merchandise exports saw a 9.10% increase during the first ten months of the fiscal year 2023-24, totaling 25.280 billion dollars as opposed to 23.171 billion dollars in the same timeframe of the previous year.

Vineeth said...

You are clearly mistaking the touchiness and hubris of Modi government ministers and a bunch of its supporters (the bhakts) as that of the attitude of Indians in general. An average Indian have other things to worry about than the country's international image, as the results of the recent general elections have shown. Just like ordinary Pakistanis, it is the prices of commodities, ticket fares, cost of healthcare, jobs and state of roads that are of greater concern to them. They care nothing about the country's position in hunger index or democracy index.

Riaz Haq said...

India's strategic illusions, delusion and hallucinations - Asia Times

By Bhim Bhurtel

Indian strategists have been suffering from illusion, delusion, and hallucination since their country’s independence from the British Empire. Their illusions are connected to India’s perception of itself. They harbor delusions in their perception of strategic support made available by superpowers and experience hallucinations when looking toward China.

The military standoff between the Indian and Chinese armies at Ladakh for the last three weeks tells a tale of a strategic dilemma that could prove a severe setback to India in the future.

The Ladakh standoff

The recent Sino-Indian military standoff at Ladakh is not an ugly dispute over the barren land in the high Himalaya. It is a manifestation of Asian powers’ moves on the geo-strategic chessboard. Several issues have resulted in China’s resentment against India and have caused Beijing to mount pressure on New Delhi.

First, India backed a joint effort by Australia and the European Union calling for an independent inquiry into the World Health Organization’s response to the Covid-19 pandemic, according to a draft resolution proposed for the 73rd World Health Assembly meeting held in Geneva on May 18.

Second, India’s external affairs minister, Subrahmanyam Jaishankar, participated in a seven-nation virtual meeting of foreign ministers recently convened by US Secretary of State Mike Pompeo, in what was seen as the US attempt to pave the way for full membership of Taiwan in the WHO.

The meeting was attended by the foreign ministers of Australia, Brazil, Israel, Japan and South Korea. All are US non-NATO allies, and they have always supported Washington’s any demand.

Besides, New Delhi plans to send government ministers to Taiwan to explore cultural and commercial cooperation. India is looking for technological assistance from Taiwan in electronics, fifth-generation (5G) telecom technology, semiconductors, and health-care technology. From Beijing’s point of view, this is evidence of New Delhi backing away from its commitment to the one-China policy.

Third is India’s increasing participation in the US-led Quadrilateral alliance in the Indo-Pacific region. The Quad facilitates India’s defense and security ties with the US, Japan and Australia, based on the United States’ strategy that stresses international cooperation, transparency, and openness in the region. India’s covert support for the US strategy in the South China Sea has resulted in Beijing’s further suspicion.

Fourth, last month, Prime Minister Narendra Modi’s government announced the prohibition of Chinese investments in India, a step China called discriminatory and a violation of World Trade Organization rules.

Fifth, India dropped the idea of participating in the Asia-Pacific Regional Comprehensive Economic Partnership at the last minute. The RCEP is a flagship free-trade partnership proposed by China for regional trade agreements among the Association of Southeast Asian Nations, South Korea, Japan, Australia, New Zealand and India.

Sixth, Indian strategists indulged in a gross overestimation when concluding that China’s losses due to the Covid-19 pandemic would turn out to be India’s gain. They deduced that a vast number of American companies would relocate to India in the aftermath of the pandemic.

Vineeth said...

I am not surprised. Indians probably represent an increasingly influential demographic in Youtube and other social media sites due to their sheer numbers and therefore presents a lucrative market for Pakistani Youtubers due to linguistic similarities and subcontinental politics. And Modi bhakts constitute a large chunk of these "internet Indians" which explains why there are such a lot of videos hyping Modi govt's "achievements". (Of course, many such videos made by Indian Youtubers may have been funded by BJP IT Cell.)

In any case, I would argue that this "Praise India" movement in Youtube is a win-win situation for both parties. Modi bhakts get to apply a soothing balm on their deep-seated insecurity and inferiority complex (because that is where such hubris ultimately originate, when seen in a psychological perspective) while Pakistani Youtubers get to make money out of it. And who knows? Perhaps this "Praise India" movement might do its bit in rescuing Pakistani economy as well.. :-D

Vineeth said...

Isn't this a 4-year old article? As it is, nothing much has changed in the Ladakh frontier since the Galwan clashes. Both sides have digged in and have continued to build up defenses at the border. India for its part has prioritised infrastructure development at border areas and raised new mountain strike corps trained for high-altitude warfare. India's indirect curbs on Chinese FDI continues, forcing Chinese companies like SAIC (which manufactures cars under MG branding in India) to seek local partners to run the factories. Chinese firms have been essentially blocked from contracts for India's big ticket infrastructural projects. Both India and US have continued to deepen security cooperation in the Indo-Pacific. Chinese economy continues to be bogged down due to debt and troubles with its real estate sector.

Riaz Haq said...

Pakistan exports first shipment of cherries to China | Article | Fruitnet

Pakistan has shipped its first consignment of fresh cherries to China marking the opening of Asia’s largest market for the industry.

The Trade Development Authority of Pakistan (TDAP) announced the shipment was dispatched to China on 5 June. It said under the phytosanitary agreement with China over 100 orchards have been registered with China’s General Administration of Customs.

According to a report from Dawn, the first shipment contained 6 tonnes of cherries and was transported by refrigerated truck over the border. The cherries were grown in key the key production region of Gilgit-Baltistan, which produces approximately 5,000 tonnes a season.

Following the initial shipment Pakistan hopes to ramp up supply and send 260 tonnes of cherries to China by the end of the month.

The Pakistan Horticulture Development & Export Company (PHDEC) has been working with the local cherry industry on development, helping to educate growers on producing popular varieties.

PHDEC chief executive Athar Hussain Khokhar said by producing the required varieties of cherries, the country can capture a slice of the China market.

“Proximity and growing demand for the fruit in the Chinese market are a major competitive advantage to Gilgit-Baltistan growers,” Khokhar said.

Riaz Haq said...

America’s assassination attempt on Huawei is backfiring
The company is growing stronger—and less vulnerable

America’s assault continues. In May, for instance, regulators revoked a special permit allowing Intel and Qualcomm, two American tech groups, to sell Huawei chips for laptops. Yet Huawei has not just survived; it is thriving once again. In the first quarter of this year net profits surged by 564% year on year to 19.7bn yuan ($2.7bn). It has re-entered the handset business. Its telecoms-equipment sales are rising again. And it has achieved this in large part by replacing foreign technology in its wares with home-grown parts and programmes, making it much less vulnerable to American hostility in future. Having failed to kill Huawei, Uncle Sam’s attacks have only made it stronger.

Mr Ren, a former soldier, started Huawei in 1987 in his flat in Shenzhen, importing foreign telecoms gear to sell to Chinese customers. An engineer by training, he quickly started making his own equipment. As China’s telecoms market grew, so did Huawei. By 2020 it had become not only the world’s biggest smartphone maker, but also the leading provider of mobile-network gear, with a market share of 30%.

Mr Ren has never been short of ambition for Huawei. Its name is a contraction of the phrase “China has promise”. Its headquarters in Shenzhen are impossibly grand and imposing. A palatial meeting hall features ornamentation worthy of Versailles: marble columns, inlaid floors and oil paintings of bucolic scenes across the ceiling. In a nearby manufacturing city the company has built a European-style town around a lake, complete with life-size replicas of castles that serve as meeting rooms and libraries.

Mend of an empire
In retrospect, America’s blitz only briefly shook this empire. Huawei’s sales last year, of about $100bn, are twice those of Oracle, an American tech firm. It is half the size of Samsung, a South Korean phonemaker, but outspends it on research and development. In fact its r&d budget of $23bn in 2023 was exceeded only by America’s biggest tech firms: Alphabet (the parent of Google), Amazon, Apple and Microsoft (see chart 1). Last year’s profits, of about $12.3bn, put it on a par with Cisco Systems, an American communications group, and vastly exceed those of Ericsson and Nokia, its main rivals in the mobile-networks business. And whereas Ericsson and Nokia are laying off staff, Huawei’s headcount is growing. It now has 12,000 more workers than it did in 2021.

Huawei’s core business remains telecoms-network equipment, which brought in about half of its revenues last year. In recent years this division has also formed teams of engineers to take on consulting projects, helping to re-wire and so streamline all sorts of businesses, from ports to coal mines. These new initiatives have pitted it against Western rivals such as Cisco Systems, Siemens and Honeywell.

Bric-a-brac from the dead
The consumer division, which generates a third of sales, makes all manner of devices that can connect with 5g. It has begun releasing fancy smartphones again, but also makes watches, televisions and the systems that control many Chinese electric vehicles (evs). Revenue from consumer devices grew by about 17% in 2023, thanks mainly to the new smartphones.

A cloud-computing unit accounts for almost a tenth of revenues. Its sales grew by 22% last year. As Microsoft shrinks its operations in China, owing to American tech sanctions, Huawei is said to be scooping up its engineers. Another fast-growing unit focuses on energy, including ev charging networks and photovoltaic inverters, which turn the direct current produced by solar panels into the alternating sort that flows through the grid.

Riaz Haq said...

#Pakistan’s 27% #Stock Rally (in US$ terms) Leads in Asia With More Gains Seen. #India stocks up 8% so far in 2024. The case for more #KSE100 gains is strengthening on the back of one of the cheapest valuations in #Asia #economy #IMF


(Bloomberg) -- The bull run in Pakistani stocks looks to have more legs as signs of improving economic conditions bolster the outlook for Asia’s best-performing market this year.

The case for more gains is strengthening on the back of one of the cheapest valuations in Asia and the budget laying the groundwork to secure a new loan from the International Monetary Fund, according to strategists. A stable rupee and easing inflation boosting the prospect for rate cuts are other positives.

The KSE 100 Index, which has outperformed Asian peers with a 27% surge in dollar terms this year, is likely to further extend gains by 10% by year-end, according to brokerages Topline Securities Ltd. and Arif Habib Ltd.

“There’s a lot of juice left in this rally,” said Ali Hussain, head of research at Dubai-based Frontier Investment Management Partners Ltd. “Cheap valuations, high positive real rates and a fairly valued currency make a very attractive case right now,” he said.

Even while the stocks tested new record highs in recent days, the index remains quite cheap, with a one-year forward earnings-based valuation of 3.8 times, a 50% discount to its lifetime average.

Pakistan earlier this month raised taxes on several industries including cement, automobile and steel to support the government’s finances as it looks to comply with the IMF guidelines. The IMF program is critical for the country to help meet its debt payments of about $24 billion in the next fiscal year.

Still, the beleaguered nation remains exposed to political instability given the split mandate in February this year. The main coalition partner - Pakistan Peoples Party — could easily walk away in the event of a public backlash to austerity measures taken to fulfill the IMF’s conditions for loans, according to Bloomberg Economics. That may even topple the government, BE said.

The KSE 100’s 14-day relative strength index surpassed the 70 level on Thursday. That is typically seen as representing overbought levels, raising the prospect of a correction.

Meanwhile, investors remain bullish. The market momentum over the next two to three years is likely to be driven by foreign buying, earnings growth and robust local liquidity, according to Karachi-based securities firm Arif Habib.

“With the new IMF program spanning the next three years, we anticipate a favorable external position, supporting continued bullish market sentiment,” said Bilal Khan, head of institutional equity sales at Arif Habib.

Riaz Haq said...

Inequality in India: Upper castes hold nearly 90% of billionaire wealth | India News - Business Standard

A recent report from World Inequality Lab titled, ‘Towards Tax Justice and Wealth Redistribution in India’, has laid bare the stark economic disparities that plague India. The findings are sobering: nearly 90 per cent of the country’s billionaire wealth is concentrated in the hands of the upper castes, highlighting a deep socio-economic divide.
Billionaire wealth dominated by upper castes
The analysis in the report unveils a staggering 88.4 per cent of India’s billionaire wealth is controlled by upper castes. In contrast, while Scheduled Castes (SCs) and Scheduled Tribes (STs) together form a significant part of India’s workforce, their representation among enterprise owners remains disproportionately low.

This discrepancy is not limited to the billionaires; the All-India Debt and Investment Survey (AIDIS) for 2018-19 indicates that upper castes hold nearly 55 per cent of the national wealth. This concentration of wealth also highlights the persistent economic inequalities rooted in India’s caste system.
Caste influences financial demographics
Caste continues to play a critical role in determining access to essential resources such as education, healthcare, social networks, and credit — all crucial for entrepreneurship and wealth creation. Historically, Dalits faced prohibitions on land ownership in many regions, severely curtailing their economic progress.
This disparity extends beyond billionaire rankings. The ‘State of Working India, 2023’ report from Azim Premji University further highlights these disparities, showing SCs and STs are underrepresented among enterprise owners relative to their workforce participation. SCs, comprising 19.3 per cent of the workforce, account for only 11.4 per cent of enterprise owners. Similarly, STs, making up 10.1 per cent of the workforce, represent just 5.4 per cent of enterprise owners.


India’s Income Inequality Worse Than Under British Rule: Report | TIME

For income, the economists looked at annual tax tabulations released by both the British and Indian governments since 1922. They found that even during the highest recorded period of inequality in India, which occurred during the inter-war colonial period from the 1930s until India’s independence in 1947, the top 1% held around 20 to 21% of the country’s national income. Today, the 1% holds 22.6% of the country’s income.

Similarly, the economists also tracked the dynamics of wealth inequality, beginning in 1961, when the Indian government first began conducting large-scale household surveys on wealth, debt and assets. By combining this research with information from the Forbes Billionaire Index, the authors found that India’s top 1% had access to a staggering 40.1% of national wealth.

Riaz Haq said...

“There is stabilisation but no substantial growth, which is likely to manifest in slow growth as industry is so dependent on imports,” Safiya Aftab, an Islamabad-based economist, told Al Jazeera. “Employment is not increasing, and bills are becoming unaffordable.”,and%20bills%20are%20becoming%20unaffordable.%E2%80%9D

Ahead of the country’s budget on Wednesday, inflation is down, forex reserves are up. But analysts warn it’s early days.

The Pakistani government will present its annual budget on Wednesday, seeking to balance domestic commitments to the country’s 240 million people and demands of fiscal prudence from the International Monetary Fund (IMF) – a key source of loans.

Aiming to increase its gross domestic product (GDP) growth rate to more than 3.5 percent from 2.38 percent in the outgoing fiscal year, the country is looking to revive its economy, which has faced a nearly two-year slump following political volatility.

Pakistani authorities have held multiple meetings with the IMF recently. Prime Minister Shehbaz Sharif, who came to power as the head of a patchwork coalition after the February elections, has been at the forefront of these efforts.

Sharif recently travelled to Saudi Arabia, the United Arab Emirates, and China – countries considered Pakistan’s closest allies and key to supporting its economy – to discuss opportunities for driving foreign direct investment in Pakistan.

But is Pakistan’s economy showing signs of revival? Are the government’s measures helping everyday people? And what do analysts think the next budget should prioritise?

Is Pakistan’s economy truly showing signs of revival?
Latest figures from the country’s central bank and international bodies like the IMF paint a cautiously optimistic economic forecast.

Pakistan’s inflation, which had skyrocketed to 38 percent a year ago in May 2023, has slowed down to 11.8 percent over the past 12 months, as reported by Pakistan’s Bureau of Statistics. A kilogram (2.2 pounds) of wheat, which would cost more than 130 rupees ($0.47) last year in May, is down to 102 rupees ($0.37) this year.

Fuel prices have also shown a declining trend, down from 288 rupees ($1.03) per litre (0.26 gallons) in May 2023, to 268 rupees ($0.96) per litre at present.

Riaz Haq said...

Pakistan stands as the world’s 5th largest mango producer

Pakistan stands as the world's 5th largest mango producer, offering 24 unique varieties. The mango season, active from May to August, is centered in Punjab and Sindh, home to the Sindhri and Chaunsa varieties. Despite its global standing, Pakistan exports only 6 to 7% of its mango production, facing challenges in production, processing, transportation, and compliance with international standards.

This year, production declined due to pests and climate issues, yet the country continues to meet domestic demand and export. The majority of exports, about 75%, target GCC countries via sea, air, and land. Efforts to improve air shipment logistics are in progress to maintain quality and competitive pricing.

Enhancing branding and packaging is vital for competing internationally. Unlike Mexico and India, Pakistani mangoes lack a strong global brand, affecting their pricing abroad. Streamlining regulatory compliance and export procedures is also crucial for smoother market access.

Strategic initiatives aim to strengthen marketing, upgrade processing facilities, and explore new markets in Europe, Africa, Iran, and China. These efforts are expected to diversify export destinations and support the sector's sustainable growth.

With targeted efforts to address challenges and seize opportunities, Pakistan aims to boost its mango exports, contributing to economic growth and its global trade footprint.

Riaz Haq said...

As climate change threatens Pakistan mango exports, surge in Middle East demand offers some hope

ISLAMABAD: The All Pakistan Fruit and Vegetable Exporters Association (APFVEA) said on Sunday that Pakistan might not meet its target of exporting 100,000 metric tons of mangoes this year due to adverse effects of climate change on its production, with officials pinning their hopes on a surge in demand from the Middle East.

Pakistan is the world’s fourth-largest mango producer and the fruit export generates millions of dollars in revenue annually, according to the APFVEA. Additionally, mangoes serve as a cultural symbol and a diplomatic tool that help the government strengthen international connections.

Pakistan has faced mango export challenges in recent years due to adverse weather, and pest and fruit fly infestation, with production declining for the third consecutive year in 2024.

The country produces around 1,800,000 metric tons of mangoes annually, with 70 percent grown in Punjab, 29 percent in Sindh and one percent grown in Khyber Pakhtunkhwa.

“We had set a target of exporting 100,000 metric tons of mangoes this season, but it seems unachievable due to the pronounced negative impact of climate change on Pakistan’s mango orchards resulting in less production and a lack of export-quality mangoes,” Muhammad Shehzad Sheikh, the APFVEA chairman, told Arab News.

Due to the weather this year, he said, mango production was down by up to 40 percent in Punjab and 20 percent in Sindh, reducing the overall production by around 600,000 metric tons.

He said the APFVEA reduced this year’s target because it could not achieve the export target of 125,000 metric tons last year and exported only 100,000 metric tons of mangoes in 2023.

“With the export of 100,000 metric tons of mangoes during the current season, if achieved, a valuable foreign exchange of $90 million would be generated,” Sheikh said.

Expressing grave concerns, the APFVEA chairman said the effects of climate change on fruit cultivation, particularly mangoes, as well as on the larger agricultural sector were intensifying with each passing year.

“Extended winters, heavy rains, hailstorms and subsequent severe heatwaves have altered disease patterns throughout the seasons,” he explained, stressing an urgent need for research-based solutions to mitigate these effects and warning that failure to promptly do so could further jeopardize mango production and exports.

Riaz Haq said...

‘Note ban, GST, COVID shocks cost ₹11.3 lakh cr., 1.6 crore informal sector jobs’

India Ratings says in FY23, GVA in the economy by unincorporated businesses was 1.6% below 2015-16 levels; firm estimates 63 lakh informal enterprises shut down between FY16 and FY23

In 2022-23, the Gross-Value Added (GVA) in the economy by such unincorporated enterprises was still 1.6% below 2015-16 levels. Moreover, their compounded annual growth rate (CAGR) was 7.4% between 2010-11 and 2015-16, but slipped into a 0.2% contraction since then, the rating firm reckoned based on the recently released findings of the government’s Annual Survey of Unincorporated Sector Enterprises (ASUSE).


The latest data suggests that the real GVA of unincorporated firms in manufacturing, trade and other services (MTO) was ₹9.51 lakh crore in 2022-23, with an 18.2% share in India’s real MTO GVA, falling sharply from 25.7% in 2015-16.

“The shrinkage has been sharper in other services and trade, with the informal sector’s share dropped to 32.3% and 21.2% in 2022-23 from the pre-shock level of 46.9% and 34.3%, respectively. In the manufacturing sector, the share of the informal sector fell to 10.2%, from 12.5% during the same period,” the firm said in its report.


Had the macro shocks not taken place during the post 2015-16 period and the growth in these enterprises followed the pattern between 2010-11 and 2015-16, the total number of such firms would have reached 7.14 crore in 2022-23, with the number of workers employed rising to 12.53 crore, India Ratings concluded.

The unorganised sector contributes over 44% to the country’s GVA and employs nearly 75% of the work force employed in non-agricultural enterprises, as per the 2022-23 Periodic Labour Force Survey.

Riaz Haq said...

Nishat’s focus towards corporate farming - Newspaper - DAWN.COM

Quietly but steadily, corporate money is betting on Pakistani agriculture. One of the country’s largest business conglomerates — Nishat Group — for example, which began to expand into agriculture by setting up a modern dairy farm near Sukheki more than a decade ago is now planning to venture into the manufacturing of “precision” farm machinery in the country.

The growing corporate interest in agriculture is not surprising given the huge business opportunities offered by this sector in terms of its production of some key agriculture commodities like wheat, rice, cotton, meat and milk.

“I am very much excited about the agricultural sector in Pakistan. There are enormous opportunities here for sustainable business growth and exports,” Mian Mohammad Mansha, the chairman of Nishat Group, told this correspondent last week.

The country’s food exports, especially of rice, grew 37 per cent to $8bn in the first 11 months of last fiscal year to May. “The sector’s actual potential remains unexplored. The large productivity gap underscores that agriculture can make huge contributions to economic growth, food exports, and poverty alleviation,” he adds.

Ever since venturing into corporate farming in 2013, his company, Nishat Agriculture Farms Limited (NAFL), has invested consistently and heavily in agriculture. The group owns five farms spread over 1,500 acres of farmland and a large modern dairy farm producing packaged milk and other dairy products in collaboration with a Turkish firm for the large urban market.
“When Nishat Agriculture bought the land, it was water-logged and barren. We have constantly been investing in mechanisation of our farms every step of the way, from seed plantation to irrigation to crop harvest since 2017. This has helped us reclaim uncultivable land and turn it into one of the most fertile pieces of farmland in the country,” Mian Mansha notes.

His efforts to turn his own farms into fertile land have also helped his neighbouring farmers in Thatha Raika village recover their thousands of acres of water-logged farms. Nishat Agriculture is growing four crops — Alfalfa (protein-rich fodder), corn, rice and wheat — at the farm.

“Our lands were almost knee-deep below water when Nishat began reclaiming their land,” a local farmer recalls. “Now the groundwater level has gone down significantly, and we are again able to cultivate our area.”

Mian Mansha argues that Pakistan’s agriculture has enormous potential, but there is a need to improve farming practices, especially replacing the age-old flood irrigation method, by promoting mechanisation to get more out of the land at a reduced cost and less burden on natural resources and land under cultivation.

“The rapid climate change demands that we quickly adopt mechanisation in agriculture to reduce water consumption (around 90pc of available water in Pakistan is consumed in farm irrigation in the country), improve crop output, and cut time spent on sowing and irrigation,” he maintains.

Since Pakistan does not manufacture most of the machines used in farming, the upfront cost of farm mechanisation is quite formidable, especially for smallholder farmers.

“Nevertheless, the long-term benefits of mechanisation in the shape of huge water conservation, significantly reduced input and labour costs, and notable increases in crop yields and product quality can be enormous,” the Nishat Group chairman underscores.

“We are also helping smallholder farmers from the area by educating them in efficient farming practices and new technology.”

“The Pivot Irrigation System that we have installed to irrigate our farms, for example, is extremely efficient and uses 70pc less water compared to conventional flood irrigation, lowers electricity consumption, improves precision application of inputs, and results in time and labour savings due to its uniform uses as against flood irrigation methods.

Riaz Haq said...

Nishat’s focus towards corporate farming - Newspaper - DAWN.COM

“The pivot irrigation system can also be accessed online through a mobile app to perform various functions. The water thus saved could be used by other farmers. This also helps us get much better crop yields even from dry land or sandy soils than other farmers,” he says.

Local Manufacturing: Recently, Nishat Agriculture Farms has imported the Yanmar rice transplanter, the automated seedling picking and planting system, from Japan and aims to manufacture the machine locally.

“We have plans to invest in local manufacturing of agriculture equipment and machines in Pakistan, starting with the Japanese transplanter. We may collaborate with Millat Tractors or may use our own auto assembly facility in Faisalabad,” he asserts.

A hydraulic system for effortless operations and maintenance, the transplanter significantly reduces seedling waste, improves crop spacing and uniformity for optimal growth, controls plant density, and increases efficiency in water and fertiliser usage.

“The use of rice transplanters is estimated to drastically slash the labour costs from present Rs11,000 per acre to less than Rs1,000,” a senior Nishat Agriculture Farms official claims. According to him, the Japanese manufacturer of the machine claims that Bangladeshi rice growers had more than doubled (up to 100-200pc increase) their production by using this machine.

Agriculture is the backbone of Pakistan’s economy, contributing more than a fifth. The sector is the largest employer, employing more than 45pc of the country’s total workforce and is a major source of export earnings.

However, the sector faces multiple challenges: low yield, negligible mechanisation, growing water scarcity, large post-harvest crop losses, absent storage and cold chain facilities, rapidly declining soil fertility, extreme climate events, land fragmentation and so on.

Economic experts are unanimous that Pakistan cannot achieve robust, sustainable economic growth without a boost to its agricultural productivity and rural incomes. That will require intensive efforts to manage energy, water, land, soil and energy more efficiently and sustainably through adaptation to climate change and mechanisation.

It requires substantive policy reforms in agricultural research, extension, seed technology, and input markets, as well as large investments. Corporate participation and investment in agriculture are key to tackling these challenges and transforming agriculture with precision and efficient farming techniques and practices.

With Pakistan’s agriculture at a turning point, corporate participation will go a long way in realisation of the sector’s untapped potential provided policymakers seize this opportunity to execute reforms needed to encourage corporates like Nishat Group to invest in this largely neglected area.

Riaz Haq said...

Pakistan clinches IMF bailout deal, to raise tax on farm income | Reuters

The new agreement introduced increased tax on agricultural incomes, underscoring the need to increase government revenue and reduce recurrent deficit to win the lender's approval.
The IMF said it had got assurances from Pakistani authorities - provincial and federal - that they would bring taxation on agricultural incomes on par with corporate and other tax rates.
Agricultural income has historically been taxed much lower than other sectors, despite contributing 23% to the GDP, employing 35% of the labour force, and bringing in an annual income of around 9 trillion Pakistani rupees ($32.37 billion).
Under the IMF deal, the highest effective tax rate can rise to as much as 45% from the current 15%. It will be implemented from 2025, a move that was termed "unprecedented" by brokerage and investment banking firm JS Global.
"These changes could contribute to inflation, particularly in food prices, affecting consumers nationwide," said Ghasharib Shaokat, head of product at Pakistan Agriculture Research, adding that larger farmers will be affected more.
Inflation averaged close to 30% in FY23 and 23.4% in FY24, which ended on June 30.
Policymakers have long wanted to do this, but were unable because Pakistani governments do not want to risk their popularity among the rural voter base, said Vaqar Ahmed of the Sustainable Development Policy Institute, a think tank.
"Most of the good reforms for fiscal consolidation, unfortunately, have not come as a result of our own political will and have come as a result of external push," he said.

Prime Minister Shehbaz Sharif's government is also based on a weak coalition and faces political pressure of a popular jailed opposition leader, former premier Imran Khan.
But Sharif says his government is committed to tough but unavoidable reforms.
Pakistan has been struggling with boom-and-bust cycles for decades, leading to 22 IMF bailouts since 1958. Currently the IMF is fifth-largest debtor, owing $6.28 billion as of July 11, according to the lender's data, opens new tab.
The latest economic crisis has been the most prolonged and has seen the highest ever levels of inflation, pushing the country to the brink of a sovereign default last summer before an IMF bailout.
The conditions of the programme have become tougher. The latest bailout is aimed at cementing stability and inclusive growth in the crisis-plagued South Asian country, the IMF said.
A source close to negotiations with the IMF told Reuters that the agriculture income tax was agreed weeks ago, but was deliberately not highlighted by the government because of the sensitivity of the matter.
The IMF has said the SLA agreement is subject to approval by its executive board and the confirmation of necessary financing assurances from Pakistan's development and bilateral partners.
This would include rollovers or disbursements on loans from Pakistan's long-time allies Saudi Arabia, the United Arab Emirates and China.
($1 = 278.0000 Pakistani rupees)

Riaz Haq said...

Pakistan’s current account posts deficit of $681mn in FY24 - Markets - Business Recorder

Pakistan’s current account posted a deficit of $681 million in FY2023-2024, massively lower by 79% than the deficit of $3.275 billion in the previous fiscal year, revealed data released by the State Bank of Pakistan (SBP) on Friday.

The CAD amounts to 0.2% of GDP, which is the lowest in the last 13 years, said brokerage house Arif Habib Limited (AHL).

“This significant decline was driven by a 6% reduction in the trade deficit and an 11% increase in remittances,” it added.

In FY24, the country’s total export of goods and services amounted to $38.9 billion. Imports clocked in at $63.3 billion during the period, according to SBP data.


Pakistan's IT exports up by 24% to $3.2bn in FY24 - Profit by Pakistan Today

Pakistan's IT exports surge by 24% to reach US$3.2 billion in FY24. In a significant economic development, Pakistan's Information Technology (IT) exports have soared to US$3.2 billion in the fiscal year 2024, marking a robust 24% year-on-year increase from the previous fiscal's US$2.59 billion.

The latest data, released by the State Bank of Pakistan, underscores the sector’s resilience and growth amidst global economic challenges.

For June 2024 alone, Pakistan recorded IT exports worth $298 million, up by 33% compared to the same period last year. Despite a month-on-month decline of 10%, June’s exports surpassed the twelve-month average of $262 million, highlighting sustained momentum in the sector.


FY24 exports soar 10.54pc to $30.645bn YoY - Business & Finance - Business Recorder

ISLAMABAD: The country’s exports increased by 10.54 percent ($2.921 billion) to $30.645 billion during the fiscal year 2023-24 compared to $27.724 billion in the corresponding period of 2022-23, says the Pakistan Bureau of Statistics (PBS).

The monthly trade data released by the Bureau noted that Pakistan’s trade deficit narrowed down by 12.32 per cent in the fiscal year 2023-24 as it stood at $24.089 billion compared to $27.474 billion during the fiscal year 2022-23.

Imports declined by 0.84 per cent to $54.734 billion during the fiscal year 2023-24 as compared with $55.198 billion in the fiscal year 2022-23.

The data further noted that the trade deficit widened by 30.39 per cent on a year-on-year basis and stood at $2.390 billion in June 2024 compared to $1.833 billion during the same month of 2023.

The imports increased by 17.43 per cent on a YoY basis and remained $4.919 billion in June 2024 compared to $4.189 billion in June 2023. The exports increased by 7.34 per cent on a YoY basis and remained $2.529 billion in June 2024 compared to $2.356 billion in June 2023.

On a MoM basis, the trade deficit widened by 15.13 per cent to $2.390 billion in June 2024, as compared to $2.076 billion in May 2024. Exports recorded a 10.92 per cent negative growth to $2.529 billion in June 2024 when compared with $2.839 billion in May 2024.


Remittances in FY24 - BR Research - Business Recorder

Remittances to Pakistan grew by 10.7 percent year-on-year in FY24 to $30.3 billion. The annual tally is the second highest in the country’s history at $30.3 billion in FY24 after $31.2 billion in FY22. Remittances during June 24, the last month of the fiscal year stood at $3.16 billion, up by 44 percent on a year-on-year basis, but down by 3 percent on a month-on-month basis.