2013-12-08 13:58:33 - Recently published research from Business Monitor International, "Pakistan Agribusiness Report Q1 2014", is now available at Fast Market Research
We maintain a cautious outlook on the agribusiness sector in Pakistan, as growth in key segments - wheat, rice and cotton - will remain impeded by high input costs, lack of infrastructure, inefficient government policy and vulnerability to climatic changes. With production continuously falling short of demand, domestic prices have risen to levels that are making it difficult for these segments to compete in international markets. We highlight the need for investment and supportive government policies to bolster long-term growth in the sector, which according to our estimates accounted for more than 21% of the country's total GDP during 2012.
* Sugar consumption growth to 2017: 14.3%, to 5.0mn tonnes. Demand, boosted by growth in population and incomes, will
fall just short of supply until 2017.
* Rice production growth to 2016/17: 16.0%, to 6.5mn tonnes. Production growth will mainly be a result of base effects; year-on-year (y-o-y) average growth after 2012/13 will be sluggish, as demand for Pakistani exports stutters and domestic consumption remains low.
* 2013 real GDP growth: 3.6%. Down from 4.4% y-o-y in 2012.
* Consumer price inflation: 7.4% average in 2013 (down from 11% in 2012).
* BMI universe agribusiness market value: US$42.2bn in 2013 (down from US$43.3bn in 2012; forecast to grow annually by 1.2% on average to 2017).
Full Report Details at
- www.fastmr.com/prod/723611_pakistan_agribusiness_report_q1_2014. ..
There is little optimism about Pakistan's rice segment. Basmati rice farmers in Pakistan are seeking support from the government to help them offset losses incurred during August 2013 flooding. The flood hit the northern region of the country, which produces close to 50% of the country's total basmati rice. The Basmati Rice Growers Association of Pakistan has said that farmers are using heavy doses of urea-based fertilisers to revive the affected plants. This has increased production costs. The Rice Exporters Association of Pakistan believes damage to 10% of the rice crop could increase prices by at least 10% during the year, thereby hurting exports. Basmati rice exports have already declined from 970,000 tonnes in 2010 to 630,000 tonnes in 2013, a drop of 35%.
With a complete recovery in wheat production looking unlikely in 2013/14, Pakistan is expected to import between 800,000 tonnes and 1mn tonnes of wheat during the 2013/14 marketing year. A major proportion of this is likely to come from the Black Sea region. In 2012/13, Pakistan imported only 200,000 tonnes of wheat. That said, the US has extended its cooperation to Pakistan as part of an effort to help the latter increase wheat production. In October 2013, scientists from the US and Pakistan introduced and tested a new variety of wheat - NARC-2011. The development is a part of the broader Wheat Productivity Enhancement Project, which aims to introduce disease-resistant wheat varieties to Pakistan.
Some solace for the sugar segment came in October 2013, when the government in Pakistan announced it will allow sugar mills to export 500,000 metric tonnes of sugar, from total production of 53mn tonnes. Local sugar mills and the state-run grain trader, the Trading Corporation of Pakistan (TCP), reportedly have stocks of 1.9mn tonnes for domestic consumption. In addition, the TCP has procured a total of 50,000 tonnes of sugar from close to 40 mills in a deal totalling PKR2.51bn. It is hoped that the procurement will help millers meet their debts to sugar cane growers and thus enable them to make payments to banks.
The cotton segment continues to face a slew of challenges. Pakistan's raw cotton exports fell by a massive 67% y-o-y during 2012/13, to US$154mn, owing to reduced production and higher prices in the domestic market compared with those in the international market. Part of the loss in demand was also owing to quality issues; Pakistan loses out to markets such as India in this regard. In volume terms, exports were down from 1.5mn bales during 2011/12 to only 0.5mn bales in 2012/13.
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