PAKISTAN is likely to harvest bumper crops during the kharif season, which starts from April-June and lasts until October-December in different parts of the country.

But under the conditions prevailing in the agriculture sector bumper crops are not so desirable. This time the hopes have been raised by ample availability of water throughout the season. Rice, sugarcane, cotton, corn and mash are some of the key crops of the season. The crops that may produce surplus commodities are sugarcane, rice and corn.

Cotton suffered a steep decline of 34pc in the outgoing season and its stakeholders say they cannot afford failure of another crop in the new season. Meanwhile, the International Cotton Advisory Committee (ICAC) in its monthly review has predicted cotton production in Pakistan to jump 35pc, as yields recover.

The new crops, if they happen to be bumper, would come at a time when carry-overs of previous crops have not yet been fully disposed of. These stocks of wheat, sugar and rice are already a source of distress to the authorities concerned owing to lack of storage facilities, continuing low prices on the international markets, delayed payments to sugarcane growers by mill owners, etc.

The country’s wheat stock currently is over 5.5m tonnes and the new crop that has started coming is likely to be over 25m tonnes. After setting aside compulsory one million tonnes of strategic reserves, the total exportable surplus stands at about 4.5m tonnes. But only 274,000 tonnes could be exported so far. Sugar stock stands at 5m tonnes and only 20,000 tonnes could be exported despite liberal subsidy. From annual export earnings of about $2bn, basmati exports have come down to $500m as Indian basmati has taken over Pakistan’s space.

In this scenario, many farmers are likely to switch to other crops that are more paying. There are reports of shifting of some sugar mills to cotton cultivation areas in South Punjab and Sindh. To suppress such a trend that may affect cotton production, the chairman of the Pakistan Cotton Ginners Association recently demanded a ban on shifting of sugar mills to strictly protected cotton areas.

According to Indus River System Authority (Irsa), about 74.4 million acre feet (MAF) water would be available for distribution among the provinces during the kharif season. Besides, there have been enough rains during January to March. Irsa’s advisory body has allocated 37.1 MAF to Punjab and 33.9 MAF to Sindh. Balochistan and Khyber Pakhtunkhwa would get a share of 2.6 and 0.82 MAF water, respectively. About 16 MAF water would go into the sea. Under the Indus Waters Treaty, Pakistan was expected to build a large dam every decade but failed to do so after Mangla, Tarbela and Chashma in early years.

Meanwhile, sugar exporters have failed to clear the glut within the stipulated period which may further pile up as the likely bumper crop starts arriving after June. Sugar production in 2016 season is expected to reach over 5m tonnes while local consumption may remain at 4.8m tonnes. Pakistan Sugar Mills Association says that exporting sugar is no more attractive to its members. “We would have exported the entire approved quantity of 0.5m tonnes within the stipulated period, had the international market rates recovered from the lingering depression.”

Meanwhile, the PSMA is seeking a three-month extension in the validity period of sugar exports along with the rebate that expired on March 31, 2016. The indications are that the government may give an extension for 45 days instead of 90 days fearing that a longer period validity may lead to increase in prices of the commodity during Ramazan. The Economic Coordination Committee of the Cabinet on Dec 7, 2015, approved the export of 0.5m tonnes of sugar. But contracts for 253,000 tonnes have only been registered with the State Bank of Pakistan despite an export rebate of Rs13 per kg.

The meteorological department has forecast 3 to 4 rain spells in April and above normal rains in May and June. Irsa has, therefore, asked the provinces to get as much water releases as they desire in Kharif season. More rains would also help generate more power in summer season. The recent rains had helped build reasonable carry-over stocks that currently stands at about 3.38 MAF.Because of persistent water shortages, Irsa had over the years adopted an ad-hoc three-tier distribution plan to determine provincial shares in three stages — early, middle and late watering. For the first time after a long period, this plan will not be applicable.

Published in Dawn, Business & Finance weekly, April 11th, 2016