Pakistan’s agricultural sector is expected to reach or even exceed the 2.8 percent growth target, driven by improved sugarcane and rice production, improved agricultural economics and lower input costs and support packages timely announced by the government, according to the latest monthly economic report by the Government.
The report notes that while the economy is facing inflationary pressures from locust attacks, heavy monsoon rains and agricultural supply chain disruptions caused by Covid19, the crop sector has shown encouraging results and is likely to support overall economic growth as production prices remain low.
The government also announced a Support Package to lower the cost of inputs for farmers with the specific goal of increasing wheat production in the country. According to this package, the minimum supporting price (SME) for wheat has been increased to Rs 1,650 for 40 kg from Rs 1,400 for 40 kg this season.
In addition, the package provided a subsidy of Rs 1,000 per bag of DAP Fertilizer and other fertilizers and herbicides at 50 kg per acre, and fungicides at Rs 150 per acre.
The industry has accumulated total reserves of about one million tons of urea, and production is expected to be 500,000 tons in December.
These stock levels are sufficient to meet seasonal demand in addition to maintaining a buffer stock in the country.
Meanwhile, the Pakistan Automobile Manufacturers Association (PAMA) also showed a positive trend in mechanical equipment manufacturing, with tractor sales data for October showing an increase of 57% year-on-year.
Moreover, field studies show that sugarcane cultivation has become profitable thanks to better economics compared to other competing crops.
However, farmers’ profits could fall slightly by 2% as sugarcane prices are expected to stay in line with last year due to stable sugar prices. With an increase in the total cost of production by 5%, the share of fertilizers in the total cost of crop production decreased to 9.8%.
Field survey data show that rice exports exceeded the $2 billion barrier for the third time last year, helping rice demand and prices stay flat while the crop economy is expected to improve by 21.7% in period 2020-2021.
On the other hand, field research estimates that cotton production will fall to 8.6 million tons from 9.2 million tons last year due to a decrease in planted areas, as well as due to unprecedented rains.
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