Archive for November, 2009

Demo against land transfer to foreign firms

Post Source: Dawn – November 26, 2009

LAHORE, Nov 25: The Pakistan Kissan Sangat on Wednesday staged a demonstration outside the Lahore Press Club to protest the alleged transfer of land to multinationals for corporate farming and permission to an American company for production of genetic cotton seeds.

The demonstration was staged after the two-day Convention on Failure of Agricultural Reforms in Pakistan concluded here. About 150 representatives of farmers and social and political workers from all parts of the country attended the convention.

The protesters said that 2.5 per cent of feudal lords owned 40 per cent of Pakistan’s land, while 90 per cent of farmers had no land. They said the government did not introduce land reforms.

The protesters said the government did not only fail to provide land to landless farmers, but also decided to create new feudal lords in the form of multinationals by allotting them land in the name of corporate farming. They said the government should review its decision to give land for corporate farming and allot land to landless farmers instead.

Separately, Muttahida Kissan Mahaz staged a demonstration in front of the Pakistan Agricultural Storage and Supplies Corporation office to protest delay in procurement of paddy.

Speaking on the occasion, farmers’ representative Ayub Khan Mayo said farmers were suffering a loss of Rs400 to Rs500 per 40kg because wholesalers were buying paddy for Rs700 to Rs750 per 40kg instead of the support price of Rs1,250. He said that all this happened because of Passco’s apathy toward rice growers.

He said the federal government announced procurement of one million ton paddy, but Passco did not procure more than 10,000 ton at its 31 procurement centres located in Lahore and Gujranwala divisions. He said Passco had no funds for paddy procurement because it was maintaining stocks of 1.5 million ton wheat. Only one bank gave Passco some money for paddy procurement, while Rs500 million promised by the federal government had not been released till date.

He said the Muttahida Kissan Mahaz had decided to hold a farmer convention in Lahore on Dec 13 to seek financial assistance for rice growers and begin a protest movement against corrupt and inefficient agriculture policymakers.

Movement against Corporate Farming

Post Source: Daily Waqt – Lahore (November 25, 2009)

Cotton yarn crisis

Post Source: Dawn – Economic & Business Review

As if the shortage of sugar, gas and electricity was not enough, cotton yarn has emerged as the latest addition to the premier league of scarce commodities. Cotton yarn is a basic raw material for value added textile sectors which boast of the largest industrial employment and significant economic contribution. Its sudden shortage and surge in its prices has forced the value added sectors to make an extreme demand to ban cotton yarn exports.

 Cotton yarn availability for domestic market has been on the decline since early October when hectic exports took place between July and September. Export volumes skyrocketed in October and early November, making the commodity scarce and expensive.

The value added sector claims that cotton yarn prices have risen by 33 per cent over the last few months. Spinners feared to have larger export orders in hand for December and January which leaves lesser quantity of cotton yarn for domestic consumption for the coming weeks.

Cotton yarn market is dictated by demand and supply in domestic as well as in most of the overseas markets. Reasonable rise and fall of prices and stocks availability is a market norm and traditional forces of demand and supply ultimately let the market find its true levels at a fairly quick pace. But any sudden rise and excess export volume of cotton yarn beyond the norm can create temporary disruption in the domestic supply chain and a crisis for value added sector.

Value added sector has been accusing spinners for this crisis which is apparently over simplification of the nature and the making of the crisis. The current crisis carry major implications. The quantity of cotton yarn available in the domestic market is far below the usual ratio of industry production (around 70 per cent), creating severe shortage of up to 30 per cent, resulting in the price hike of over 30 per cent in last three months.

Free import and export of raw cotton and cotton yarn have at times worked to the advantage of spinners but many times have left them in cold with huge inventories and losses and vice versa. Cotton lobby and farmers have been benefited due to open trade policy. This policy has so far successfully operated in adverse market conditions and has been allowed to continue till to date.

International cotton scenario experienced an upturn from July. New York Cotton futures for nearby months on June 1, 2009 was USC 57.79 per LB which increased by November 17 to USC 67.89 per LB (an increase of over 17 per cent ).

Domestic prices also moved upward in unison with international prices after a slight delay. Karachi Cotton Association quoted its monthly average spot rates as Rs3,446 per maund in August, Rs3,484 in September and Rs3,597 in October. Spot price of cotton was set at Rs4,200 per maund on November 17, 2009.

The size of the cotton crop for 2009/10 is expected to be slightly better with 12.1 million bales harvest as compared to 11.4 million of last year. Pakistan cotton Ginners Association has reported 29 per cent higher cotton arrivals over the last year by November 15, 2009 mainly due to early harvest varieties. Statistically, cotton crop size and availability is far better than last year but damage to cotton crop in China (the largest producer and consumer of the world) has ignited the rise in cotton prices.

The latest strong retail sales in the US and faster than expected economic recovery in leading world economies have lead the cotton trade revise cotton consumption estimates higher than earlier estimates at the start of the season. International cotton is mostly traded in the dollar.

Recent weakness of the dollar has also resulted in higher price offers for cotton as in case of other global commodities. The appreciation of Indian currency forced their shippers to ask for higher prices for their cotton. India is the largest exporter of raw cotton; hence, it firmed up international market sentiments.

The sudden increase in raw cotton prices caused a panic for the major world importer of cotton yarn, China. Its importers moved fast to cover up their supplies with continued buying spree from Pakistan and India. Their spinners look up to clearing up their piles of inventories of new crop season with renewed vigour.

The value added sector failed to notice the overseas buying spree until they had mopped up huge quantities. The value added sectors woke up too late to the call as overseas buyers mopped up available lot with shipment plans till January 2010. Standard cotton yarn count of 20’s witnessed prices rising from $370 per bale for October/November deliveries to $430 for December/ January deliveries. The price increase in cotton and cotton yarn is a normal market practice. Raw material driven price hike is adjusted by the finished goods buyers in their new purchase programmes. But a severe resistance prevails to adjust the current price increase in the new buying programmes due to global demand contraction. Value added sectors fear slower adjustment of increased raw material cost in future sales carrying risks in export orders or eroded trade margins.

The value added sectors usually enter into longer sales contracts, spanning from two to six months or even longer whereas they buy the cotton yarns on ready prices. Sufficient stocks and relatively subdued prices in the recent past have been supportive of this market practice. But slow response of domestic value added industry to cover up sufficient supplies at increased market prices landed them in the current cotton crisis where bulk of yarn has been shipped in recent months and more is committed for export in coming months. This has flared up the prices to new heights.

The current situation is highly favourable for those spinners who could purchase and afford sufficient stock of raw cotton at the start of cotton harvest season.

Dynamics of market forces and trend indicates that sudden rise of prices and scarcity of cotton yarn is not the spinners making alone. Current imbalance of domestic supply and excessive exports is the result of changing international cotton scenario. Had the value added sectors acted proactively through timely buying commitments with local spinners at market prices, they might have avoided much of the damage. Free import and export mechanism of cotton and cotton yarn has worked well for the economy since early 1990’s. This principle has ultimately helped the industry to improve its efficiency and productivity to attain sustainable gains for whole cotton value chain. The principle of free market economy for cotton trade should not be a causality of current crisis.

Industry consultations with the help of ministry of textiles should be helpful in finding some meaningful mechanism to make sufficient cotton yarn stock available for domestic consumers to fulfill their commitments without much losses. But it is equally important that value added sectors should be more responsive and alert to changing world market trends to protect their own business interests.

Farm credit disbursement falls short of target

Post Source: Dawn – November 23, 2009

KARACHI: Agriculture credit disbursement in the first four months of the current fiscal increased comparatively but was far behind the target set by the State Bank. The State Bank on Thursday reported that agricultural credit disbursement by commercial and specialised banks rose 9.1 per cent year-on-year to Rs62.839 billion in July-October 2009-10. 

The amount disbursed was just 24 per cent of the target set for the period while it should be around 33 per cent of the total target since four months (1/3rd) of the year have gone. 

The State Bank has set an indicative agricultural credit disbursement target of Rs260 billion for FY10. 

In the last fiscal year (2008-09) the banks disbursed a total of Rs233.01 billion to the agricultural sector. 

The SBP said that in absolute terms, disbursement of credit to the agriculture sector increased by over Rs5.239 billion in the July-October when compared with total disbursement of Rs57.60 billion in the same period last year. 

Overall credit disbursement by five major commercial banks including Allied Bank, Habib Bank, MCB Bank, National Bank of Pakistan and United Bank stood at Rs36.915 billion in the July-October compared with Rs31.454 billion in the corresponding period last year, depicting an increase of Rs5.461 billion or 17.36 per cent. 

Zarai Taraqqiati Bank, the largest specialised bank, disbursed a total of Rs14.585 billion in July-October 2009, up 20.65 per cent when compared with Rs12.089 billion in the same period last year, while disbursement by Punjab Provincial Cooperative Bank stood at Rs694.427 million compared with Rs882.732 million.

Besides, 14 domestic private banks also loaned a combined Rs10.644 billion in the period under review compared with Rs13.173 billion disbursed the same period last year.

PASSCO fails to attract paddy growers

Farmers getting better rates in open market

Post Source: The News – By Aftab Maken – Saturday, November 21, 2009

ISLAMABAD: Pakistan Agriculture Storage and Supplies Corporation — the state-run procuring agency for commodities — has failed to attract the farmers to its designated leased mills.

In the six designated zones for Basmati paddy in Punjab, PASSCO has so far procured only 2,325 tons of paddy from farmers against intended procurement of 0.6 million tons. In Sindh and Balochistan, PASSCO did not procure a single grain of Irri-6 in the first ten days of procurement campaign, reveals a daily paddy procurement report of the Corporation and available with The News.

Agriculture Development Commissioner Dr Qadir Bux Baloch claims, “The farmers are getting better price from the private sector against the public procurement centres through PASSCO. The market price of paddy is above the intervention price of the federal government.”

“There is no need of procurement by PASSCO as the farmers are getting higher price of their produce from the private sector,” he added when this correspondent asked about zero procurement of Irri-6 in Sindh and Balochistan even after a month of harvesting.

PASSCO has contracted 53 rice mills on lease in Punjab, five in Sindh and seven in Balochistan for the procurement of basmati and Irri-6. The Corporation did not make any arrangement for the procurement of Irri-6 variety in southern Punjab and all the 53 rice mills are in the Basmati growing areas of six designated zones of central Punjab.

All the five rice mills that will procure Irri-6 in Sindh are from Shahdadkot while seven rice mills in Balochistan are located in Usta Muhammad, Dera Murad Jamali and Dera Allah Yar.The total procurement of paddy in Mandi Bahauddin is 145 tons at the nine leased rice mills, the procurement report added.

Mandi Bahauddin is the home district of Federal Food Minister, Nazar Muhammad Gondal, Acting PASSCO MD, Tauqir Ahmed Faiq, who is also Additional Secretary MinFA and PASSCO GM paddy.

“This slow pace of procurement is mainly because of stringent condition applied by the staffers of PASSCO along with district administration at the designated rice mills,” one of the basmati growers told this correspondent by telephone.

“The federal cabinet, which met the other day with Prime Minister Syed Yousuf Raza Gilani in the chair, constituted a committee on paddy procurement but gave a clear message to the paddy farmers that the government has other serious issues to handle and your’s is a secondary issue for the federal government,” the same farmer lamented. The Punjab government too is totally indifferent to the issues and problems of basmati growers, he concluded.

Another sugar crisis looming

Farmers refuse to sell sugarcane on credit or CPR

Post Source: DailyTimes – November 18, 2009 – By Nauman Tasleem

LAHORE: Another sugar crisis is looming around the corner for the next season, as the farmers are not ready to sell sugarcane to the mills on credit and are demanding cash payments, the stakeholders of the industry told Daily Times on Tuesday.

They said there are multiple reasons for not selling sugarcane to the millers including less sugarcane production and the prevailing sugar crisis.

The farmers are not ready to sell sugarcane on credit or on Cane Purchase Receipt (CPR) due to high demand. The farmers are offering Rs 100 per 40 kg for sugarcane and said they would only give their crop at cash. “We would not accept any credit or CPR, as in the last years we were looted by the middlemen and millers but now it is our turn,” said Rana Asif, a sugarcane grower from Toba Tek Singh. He said in the previous years, the middlemen exploited the farmers and did not pay them the agreed amount. “The growers were exploited in 2007 and 2008 due to surplus stocks of sugarcane but now there is less sugarcane production and the tide has turned in our favour,” he added. “In this season we will give the millers a taste of their own medicine,” another farmer pointing at the exploitation of the millers said.

Last year, there were 50 million tonnes of sugarcane production. The target for this year was set at 57 million tonnes, however, the production dropped to 48 million tonnes thus creating a shortfall of nine million tonnes.

The water shortage, delayed payments of sugarcane to the farmers by the mills, frost attack and less availability of fertilisers was other reasons for low production.

At the same time, the sugar millers have not ignited their boilers owing to sugarcane unavailability. Reportedly, only less than six mills out of 45 have started their boilers and still there is no availability of sugarcane.

AgriForum Pakistan Chairman, Ibrahim Mughal, said the farmers would not sell their crop on credit, as they did in the past. He said the payment on CPR is not clear and the farmers are fully aware of sugarcane shortage therefore everyone is committed to sell sugarcane on cash. The farmers said they are ready to take Rs 5 per 40 kg less but only if it is paid in cash.

“The mills having interest in buying crop on credit should find another way of producing sugar,” he added. Pakistan Sugar Mills Association Chairman, Iskander Khan said the mills are not getting sugarcane from the growers and have not started crushing.

He said currently the price of sugarcane is high and after starting of complete crushing the actual price would be determined.

“The mills would come into full swing after Eid when the growers would bring cane in the mills and then only we would be in a position to forecast the price of sugarcane,” Khan said. “As soon the sugarcane is available in the market the millers would start crushing,” he added.

Sindh: Sindh Minister for Agriculture, Syed Ali Nawaz Shah, claimed on Monday that at least 18 sugar mills of the province have started crushing sugarcane. In a statement, he said some nine other sugar mills have also prepared their boilers and will start crushing soon. According to him, except for a few sugar mills such as the Mehran Sugar Mills, Matiyari Sugar Mills, Ghotki Sugar Mills, other sugar mills are not receiving sugarcane properly, causing delay in the process of crushing. He said mills require at least 130,000 maunds of sugarcane daily for starting the crushing process, the mills are receiving sugarcane up to 10,000 to 15,000 maunds, and the slow supply is affecting the crushing process.

FACT AND FIGURES

  • Number of mills                            81 (72 Operational)
  • Crushing Capacity                       6.1 million toones
  • Contribution to Economy
– Share in GDP                                              1.9 percent 
– Employment                                              1.5 (directly & indirectly)
– Total investment                                    Rs 100 billion (Approx)
  • Average Yield Per Hectare       46.8 tonnes
  • Total Cane Production                 48.0 million tones
  • Average recovery of sugar           9.1 (Vs world avg. 10.6%)
  • Per Capita Consumption             25.8 kgs per capita
  • Contribution to exchequer          Rs 12.16bn

UN and Islamic bank make $1 billion deal to develop farming in poor countries ahead of summit

  Post Source: The Canadian Press By – Frances D’emilio  

ROME — Funding from an Islamic bank will help develop agriculture in poor countries, a U.N. food agency said Sunday ahead of a summit to discuss the so-far elusive goal of reducing the number of hungry people in the world. 

The U.N. Food and Agriculture Organization, which is hosting the three-day summit starting Monday, said it had reached a deal with the Islamic Development Bank for $1 billion in funding to help develop agriculture in poor countries that belong to both organizations. 

“This agreement comes at a critical moment, when the international community recognizes it has neglected agriculture for many years,” the Rome-based agency said. “Today, sustained investment in agriculture – especially small-holder agriculture – is acknowledged as the key to food security.” 

Organizers of the gathering, to be attended by some 60 heads of state, agriculture ministers and other officials, hope to wean national policies away from long-standing emphasis on food aid and instead generate support for a new approach: help farmers, livestock herders and fishermen to produce enough food for their own people. 

U.N. officials point to villages in Kenya, Pakistan and Haiti to show this is possible. 

In one Kenyan village, for example, an irrigation project is credited with not only reducing hunger there, but also allowing farmers to produce enough rice to sell surplus to the U.N. World Food Agency to help feed African’s hungry. 

But past U.N. food summits have so far failed to meet their stated goals, including to halve the number of the world’s hungry by 2015. 

U.N. officials recently put the number of hungry at 1.02 billion, or roughly one out of every six people on the planet. 

The last summit in June 2008 concentrated on how climate change and soaring food prices were undermining food security. 

A draft declaration for this week’s summit would commit world leaders to the new strategy to increase agricultural development aid. But it does not include a 2025 deadline for eradicating hunger – a goal sought by the United Nations. 

Also missing are specific funding pledges, such as the $44 billion in yearly agricultural aid that the Food and Agriculture Organization says will be needed in coming decades. 

Some critics were calling for other approaches. The international agency Oxfam said Sunday that “money alone will not solve the problem,” and suggested instead that the U.N. could drastically reduce the 24,000 hunger-related deaths tallied daily around the globe if it was allowed by countries to co-ordinate their various initiatives. 

Without such co-ordination, “all the different initiatives do not add up to a single effective, coherent and accountable whole,” Oxfam report author Chris Leather said in a statement. 

The London-based think-tank International Policy Network complained that the “real causes of hunger and food insecurity are not even on the agenda” for the summit, and cited restrictions on trade between and within countries as a factor undermining agricultural investments. 

Trade subsidies as well as wealthy nations’ purchasing quotas to boost their own farmers are also often cited as factors frustrating efforts to fight hunger. 

The think-tank noted that, despite past summit commitments to slash the number of hungry, “there are more hungry people now than in 2002 when they held their first summit.” 

Pope Benedict XVI will lend his moral authority to hunger-fighting efforts with an address Monday morning. 

After dusk on Sunday, Rome lit up the Colosseum in a sign of solidarity with the hunger-fighting efforts.