At a time when international prices of agricultural commodities are in steep decline, with sugar prices even sliding to their lowest level since 2009, Pakistan has been blessed with bumper crops of major commodities.

But bumper crops, under the circumstances, are hardly a blessing for the country nor a matter of rejoicing for the stakeholders. Instead the farmers are particularly discouraged because of low prices. And these are a source of torment for those at the helm of affairs who are in a spot over how to tackle the ever-growing mountain of surplus stocks of wheat, rice and sugar canes. These, they know, cannot be profitably exported, nor piled up somewhere for lack of proper storages. And there are no traditions of handing out such carry-over surplus commodities to the poor consumers at lower prices for the sake of disposal of excess stocks; in the West, they prefer to destroy them.

Since April 2014, abundant supplies and the rising dollar, according to FAO, have pushed down international prices of most food commodities. A 2015 downward trend in cereal prices, which in March were 18.7pc below its level a year earlier, can be attributed to the large export supplies and mounting inventories, in particular for wheat and maize. The vegetable oil, which witnessed a 3.1pc drop in price in February was at its lowest value in March since September 2009.

The latest to join Pakistan’s bumper club is cotton. Its production shot up to a new high of 14.83m bales (one bale equals 160kg) during the current year and is likely to touch 14.94m bales as at least 50,000-60,000 more bales are expected to arrive for ginning before the end of the cotton year. This year’s production target was 14.88m bales. The record output also brings to an end the current bad patch in production since 2011-12 by exceeding 14.81m figure of that year. Farmers start sowing cotton by the end of March and harvesting begins from end-June.

There are no traditions of handing out surplus commodities to the poor consumers at lower prices for the sake of disposal of excess stocks; in the West, they prefer to destroy them

However, there are no irritants in its export. Cotton and textiles account for about 55-60pc of the country’s exports and a bumper crop is vital to economic growth. Exporters have already purchased 474,091 bales this season as against 382,006 bales in the last season. Similarly, spinning mills also lifted a larger quantity of 14.389m compared to 12.307m bales last year. The carry-over stock lying with the ginners is much lower than the last season’s. It happened due to higher consumption at home. Punjab has so far produced 10.864m bales, recording a growth of 12.87pc over the last year’s output. And Sindh’s production by April 1 was 3.974m bales, 5.7pc higher than last year.

Another commodity having a bumper crop is rice. Its farmers and exporters in the country are facing problems similar to what wheat growers experienced in disposing of the surplus stock. There exists an unsold stock of around three million tons, a carry-over from last year, which could not be exported because of lower international prices. Of this stock, 2m tonnes are of basmati and 1m tonnes of coarse rice. Rice Exporters Association says that both the exporters and growers are under financial stress because the government was not giving subsidy to them as it has done in case of wheat. On the other hand, they point out the Indian government is giving a huge subsidy to its agriculture sector, which is why the country still competes in the international market.

During 2014-15, total rice production in the country stood at 6.720m tonnes, 50pc of which would meet domestic requirements and the remaining amount for export. But demand is weak. According to FAO, rice production prospects for 2015 are generally positive in the southern hemisphere, with sizeable increases forecast for Indonesia, Sri Lanka, Colombia and Paraguay. By contrast, Australian output is officially anticipated to fall by 18pc.

In case of sugar, the row between mill owners and growers over support price has marred the prospects of a bumper crop. The dispute remains unresolved despite Sindh High Court verdict based on a compromise reached between the two sides. As a result of the prolonged conflict, sugarcane production in the

current year has suffered and declined by 5.2pc, reduced to 63m tonnes against the target of 65m tonnes, according to the figures released by the food security ministry. Sugar mills also exported 1.11m tonnes of sugar in the current year.

Meanwhile, Punjab has decided to procure 4m tonnes of wheat at the rate of Rs 1,300 per 40kg beginning from April 16. The farmers will be helped to bring their grain from fields to procurement centres and then get gunny bags from them.

Published in Dawn, Economic & Business, April 13th, 2015

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