Archive for January, 2011

Cotton trading gets slow over new levy

Post Source: Staff Reporter DAWN

KARACHI, Jan 18: Quieter conditions prevailed on the cotton market on Tuesday as ginners continued to protest against the levy of 3.5 per cent withholding tax on farm commodities, including cotton. Physical business, therefore, remained slow as ginners and spinners could not precisely decide who will pay the tax and whether or not to include it in the current selling prices, brokers said.

Some lots, however, did change hands around the previous levels as some of the spinners managed to clinch stray deals minus the proposed tax amid hopes that the protests and strikes, notably in the southern Punjab cotton belt, may force the government to withdraw it to normalize cotton trade, they said.

They said mill ready off-take remained slow for the last couple of sessions as both sellers and buyers have joined the protesters and have reportedly closed their ginning operations.

Meanwhile, reports coming in from the global markets indicate that the lint prices remained on the higher side as supplies were far below the surging demand of the world consumers.

There was, therefore, no change in the official spot rates, which were held unchanged at the overnight level of Rs9,900 per maund.

The following are some of the notable deals reported in the ready section late on Tuesday evening by the Karachi Brokers Forum to the KCA. SINDH TYPE:

400 bales, upper Sindh at Rs10,000, 300 bales, and Mirpurkhas at Rs9,700. PUNJAB VARIETY:

1,000 bales, Khanpur at Rs10,000 to 10,200, 1,000 bales, Rahimyar Khan at Rs10,000, 400 bales, each Alipur and Uch Sharif at Rs10,000, 600 bales, Rajanpur also at this rate, 200 bales, Mian Channu at Rs9,500, 400 bales, Haroonabad at Rs9,600 and 200 bales, Chichawatni at Rs9,800.


Medicinal use of Olive Oil

Post Source: Dawn Economic and Business Review

By Naved Ahmad

OLIVE oil, the world’s most commonly eaten mono-unsaturated oil, has been cultivated for centuries around the Mediterranean. For 4,000 years in the Mediterranean cultures, olive oil has been widely used — from money to medicine. Not only does it taste good, but there is a mass of evidence that a diet based on olive oil can promote longer life and may prevent some of the diseases associated with our usual western eating habits. Today 99 per cent of olive oil is produced in countries that rim the Mediterranean Sea with a trade of multi billion dollar per year. Nature has also bestowed upon Pakistan a large area (from Bhera up to Attock) favourable for olive production but unfortunately neither the farmer nor the government has taken it in consideration seriously.

We can also produce a huge amount of olive oil that will not only bring foreign exchange for the country but also a low price product will be available for local consumption. On closer inspection, this oil has proved to be more than just a source of mono-unsaturated fat.

Olive oil contains a wide variety of valuable antioxidants that are not found in other oils. Hydroxytyrosol is thought to be the main antioxidant compound in olives, and believed to play a significant role in the many health benefits attributed to olive oil. Epidemiological studies suggest that olive oil has a protective effect against certain malignant tumours in the breast, prostate, endometrium and digestive tract. Research has revealed that the “type” rather than the “quantity” of fat seems to have more implications for cancer incidence.

Olive oil can reduce oxidative damage to cells’ genetic material, a process that can initiate cancer development. This could be related to oleic acid, which is the predominant mono-unsaturated fatty acid in olive oil. It has been demonstrated that the addition of olive oil to a diet that is not changed in any other way has a lowering effect on blood pressure.

An olive oil rich diet is not only a good alternative in the treatment of diabetes; it may also help prevent or delay the onset of the disease by preventing insulin resistance and its possible harmful implications by raising HDL cholesterol, lowering triglycerides, and ensuring better blood sugar level control and lower blood pressure. When it comes to heart health, virgin olive oil may have an edge over other vegetable fats.

New research suggests that virgin olive oil may be particularly effective at lowering heart disease risk because of its high level of antioxidant plant compounds.

Virgin olive oil is rich in antioxidants called polyphenols, showed stronger heart-health effects than the more extensively processed “non-virgin” variety. It
helps to ward off harmful blood clots in people with high cholesterol.

Like all other fats and oils, olive oil is high in calories which could suggest that it would contribute to obesity. However, evidence shows that there is less obesity amongst Mediterranean people, who consume the most olive oil in the world. It has been demonstrated that an olive oil rich diet leads to greater and long lasting weight loss than a low fat diet. Olive oil tastes good and it is a stimulus to eat vegetables and pulses.

Olive oil bolsters the immune system against external attacks from microorganisms, bacteria or viruses. The fatty acids in olive oil are good allies in lowering important immunological parameters. Olive oil is also good for the stomach, hepato-bilary system, pancreas, and intestines. It helps with anti-aging, osteoporosis, cognitive function and skin damage. It is also beneficial to consume olive oil during pregnancy and whilst breast feeding.

Constituents: LeavesOleuropein, apegenin, calcium, cinchonine, choline, luteoline,FruitOleuropein, momsaturated fatty acids, beta-carotene, caffeic acid, calcium, verbascocide, uvaol, Minerals: Calcium, Magnesium, Phosphorus, Potassium, Iron, Zink, and Copper.

Vitamins: carotenes, riboflavin, and thiamin, oleic acid, Oil66% oleic acid, 12% linoleic acid, 9% palmitic acid, 5% eicosenoic acid and 5% palmitoleic acid. Olive oil may contain up to 1.5% of an acyclic triterpene hydrocarbon, carotenoids, chlorophyll, squaleneGumBenzoic acid and olivile.

Streamlining fertiliser marketing

Post Source: Dawn Economic and Business Review


By Ahmad Fraz Khan

SOMETHING seems to be wrong with the government’s fertiliser – urea and DAP – marketing strategy. In its current setting, it regularly fails to stabilise prices, especially during the critical points of agriculture cycle. Of the two fertilisers, urea price is of particular concern to farmers as all its production has now been localised. With two urea plants coming online recently, the country should have production in excess of the existing demand. But urea prices still keep fluctuating upwards, and sometimes wildly. One of the two cited factors for this fluctuation is loadshedding of gas, which has disturbed the production plans and added to the cost of production. Two big manufacturers estimate the gas impact between Rs190-210 per bag.

They argue that they are suffering three different layers of gas loadshedding – general cut for 45 days instead of 30 days, and different and varying reductions from two fields (Sui and Mari). The cumulative impact has forced them to raise the price and they have promised to bring it down, by adjusting it to receding loadshedding.

The second factor in the increase of price is the market forces. The manufacturers recently increased the price roughly by Rs200 per bag, but traders added another Rs200 to the tally. The total impact thus has come around Rs400 per bag, or 50 per cent jump in price in two weeks.

The first part of the increase, declared by manufacturers, may not be transparent and open to question. But it is at least a declared one, and the manufacturers could be challenged over it.

The second part, however, is undeclared. Neither one can challenge it, nor escape it. This is precisely the point the government needs to work on. It is a fact that urea prices include many variables; credit sale, transportation charges and three to four layers of dealers and sub-dealers. These variables are realities of urea trade, but letting these variables become a source of money minting could be counted as a public policy failure.

This failure is glaring given the fact that all hopes, the government has been generating ever since it deregulated fertiliser prices at the turn of the century, seems to be crashing. The federal government has been telling farmers that once the domestic production exceeds the national requirement, the prices would automatically start stabilising round the year.

The current setting, however, contradicts that assertion. At present, domestic urea production has gone up to 6.7 million tons yearly against the national requirement of 6-6.2 million tons. The country has thus entered a surplus regime with 500,000-700,000 tons.

Once the current gas crunch is over by the first week of February, the government, in all probability, would be convening meetings to explore export options.

But at present, prices are high and hurting farmers and the farming sector.

The urea surplus would not automatically solve marketing issues because of production and consumption patterns; both of them would create shortages and gluts.

Gluts during the summers months, when gas (feed stock) is surplus and shortages in the winter when gas is in short supply. Add crop cycles to this pattern, and smooth supplies would become even complicated.

Production and sale pattern this November defines the risks that the government has to avoid through policy measures. During November, against the traditional requirement of 347,000 tons, the total off-take in Punjab was recorded at 645,000 tons. The dealers purchased this additional urea on the plea that the government was planning reformed general sales tax (RGST) from December, which would make urea costly. The manufacturers’ stocks came to zero and the entire quantity was shifted to dealers. They are making huge profits.

In future, the government’s fertiliser policy must have three prongs: monitoring domestic sales, keeping strategic stocks and lining up on-time imports in case anything goes wrong on the domestic front. This year, the government failed on all the three accounts and the farmer is paying the price.

In future, the government should create an institutional mechanism to monitor fertiliser sale round the year and make its own deductions from the pattern. It failed this year to monitor November sales and line up additional imports to stabilise domestic market.

The other reflection of official policy failure is emptying its own strategic stocks of around 350,000 tons with the National Fertiliser Marketing Limited. Around 150,000 tons were given to dealers and the rest went to provinces hit by flood. The distribution was done while being oblivious to their undesirable results.

Some argue that it was done deliberately to favour urea stakeholders. The farmers would end up paying billions of rupees more and then pass it on to consumers.

To make the matter worse, delayed imports would reach the country sometime in February, when domestic production may normalise.

Surplus or no surplus regime, such policy failures help money minting opportunities to those looking for them at the cost of growers and consumers.

Wheat exports resume for 1st time in 3 years

Post Source: The Nation

January 14, 2011

SINGAPORE (Reuters) – Pakistan has resumed wheat exports for the first time in three years, selling cargoes to Bangladesh and Myanmar and more deals are likely as the nation takes advantage of rising global prices and surplus stocks at home, following last year’s bumper harvest. The deals come as fears of global food inflation grow, with devastating floods damaging crops in Australia, forecasts of US corn inventories sliding to uncomfortable levels and dry weather hampering production in Argentina.

Asia’s third largest wheat producer, Pakistan has sold 200,000-500,000 tonnes mainly to Bangladesh and Myanmar and international traders are taking positions for more deals after Islamabad lifted a ban on overseas sales last month. “Pakistani wheat is now competitive, they are actively selling cargoes for the last one week or 10 days,” said one trader with an international trading company in Singapore.

“Traders are taking positions in the domestic market to corner more supplies for exports.”

The benchmark US wheat and corn climbed nearly 50 percent in 2010 on tightening supplies of grains and recent price surge have stoked worries over food inflation, already in double digits in Asia’s top consumers China and India. On Thursday, Chicago corn rose 1 percent to its highest in 2-1/2 years, while soybeans were steady after 4 percent gains in the previous session, buoyed by a surprisingly steep reduction in global supply of grains and oilseeds forecast by the US government. Wheat has risen nearly 2 percent in as many trading sessions.


US stockpiles of corn and soybeans will be drawn down to uncomfortably thin levels this year, according to a government report on Wednesday that sent grain prices soaring and added to concerns over surging world food prices.

But Pakistan decided to allow the private sector to export wheat last month, lifting a three-year ban after a bumper crop led to a market surplus. Pakistan in August deferred earlier plans to export 2 million tonnes of surplus wheat after summer floods washed away at least 725,000 tonnes of the grain.

Traders have said that despite damages from summer floods, Pakistan still has a surplus for export after a bumper crop of 23.86 million tonnes in 2009/10 added to a carryover of 4.2 million tonnes from the previous crop.

A Karachi-based trader said Pakistan has booked orders for about 500,000 tonnes of wheat and shipments had already started.

“Our traders have made deals for about 500,000 tonnes for January-March shipment, and we expect more orders,” Javed Thara said. “Most of our wheat went to Bangladesh.”

He said Pakistan could export more than 2 million tonnes of wheat in the coming months. Another Singapore dealer confirming the news, said deals for Pakistani wheat were signed around $350-$370 a tonne, including cost and freight.

“It is 11.0 to 11.5 percent protein content, perfect for Bangladesh and Myanmar markets,” he said. The sowing for the next crop in Pakistan has almost completed and harvesting will begin in April. The government has set an output target of 24 million tonnes for the 2010//11 crop.

Rising cost of farm inputs

Post Source: Dawn Economic and Business Review


By Ahmad Fraz Khan

FOOD inflation may surge this year mainly because of the increasing cost of agriculture production. Economists believe that this Rabi and next Kharif seasons would have to absorb an additional financial burden of over Rs200 billion, assuming that there is no more increase in prices of diesel, fertiliser, electricity, agro-chemicals and implements. This increased cost of production would be passed on to manufacturers or directly to consumers. In either case, the consumers would have to pay the raised prices of food items. The year appears to be tougher for common man than the last year.

The biggest rise in cost of production would come from increase in fertiliser prices. During this Rabi season, prices of both urea and di-ammonium phosphate (DAP) have increased. The urea price, which was Rs850 per bag in December, has gone up by almost 50 per cent. Currently, a urea bag is selling at Rs1,250. The manufacturers increased the price to Rs1,040 citing gas loadshedding and its cost for the industry. But market forces have added another Rs200 per bag, thanks to the receding writ of the government.

The total increase thus stands at Rs400 per bag. In cumulative terms, Urea usage would cost farmers an additional Rs48 billion if 120 million bags, which farmers use during a year, are taken as a benchmark.

Similarly, a DAP bag, which cost Rs1,770 per bag till October last year, saw its price spiraling to Rs3,300. The farmers use around 40 million bags of DAP, and ended up paying over Rs48 billion on this head alone. The total additional cost on fertilisers’ head, which farmers would pay over and above 2010, would be around Rs100 billion, if the current prices sustain.

The second biggest burden is from diesel prices. During 2010, the average price of diesel was around Rs70 per litre. Had the price increase of January 1 this year not been withdrawn, it would have jumped to Rs82 per litre. The farming sector runs around 900,000 tractors and 700,000 tube wells on diesel, and roughly consumes 3.5 billion litres of diesel. They would have had to pay Rs42 billion additional on this account. What is in store for the farmers is not yet known.

The electricity tariff is another area of increasing expenditures for farmers. During the last one year, electricity charges have gone up by almost 100 per cent, if the taxes are included in the tally. In all probability, there would be another increase of about 25 to 30 per cent in 2011. Around 200,000 tube wells run on electricity, and their bills have swelled from Rs30 billion to Rs40 billion, the farmers say. This load of Rs10 billion, at the current price factor, would also be passed on to consumers.

The farming sector also consumes Rs100 billion to Rs150 billion on farm machinery and agro-chemicals. If they increase with the normal rate of inflation, which is reaching close to 20 per cent, they would be taking another hit of Rs20 billion to Rs30 billion.

The government has reportedly, and quietly, imposed a withholding tax of 3.5 per cent on all agriculture commodities that come to market. The notification was issued on December 31 and is currently in force. The farming sector brings around five million tons of rice, seven million tons of wheat, three million tons of maize, 50 million tons of sugarcane and some 12 million bales of cotton to market. The total cost of these commodities is around Rs750 billion and the government would be collecting around Rs26 billion of withholding tax on these commodities.

Put together the total financial burden on the agriculture sector, it would be around Rs200 billion. The farmers would naturally pass it on to manufacturers and consumers, increasing the prices of all commodities correspondingly.

Can the consumers sustain that kind of price pressure? In all probability, they cannot.

The other emerging scenario could be farmers reducing usage of fertiliser, tube wells, agro-chemicals and farm machinery, which would certainly reflect on production of food items and force the government to import them spending precious foreign exchange.

Both these scenarios are equally threatening, both in economic and social terms. One can only hope the government is alive to these issues, and preparing some remedial measures.

The government needs to realise that inflation imposes ‘ indirect taxes’ on almost all possible heads. In order to compensate the hurt party, it increases prices where it matters or let the cartels rule where it does not hold any sway. The vicious circle is going on for the last many years, particularly last three years. The result is hyper inflation.

It must do all it can to break the vicious circle. To begin with, it should create regulatory regime that could bring transparency in prices of agriculture inputs. Currently, all these prices have been de-regulated, without any regulatory authority. The manufacturers increase prices at will. They might be justified in those increases, but since the process is not transparent, it gives way to lot of allegations and vitiates business atmosphere in the country.

Rice, wheat prices up

Post Source: Dawn Economic and Business Review


AFTER several lean weeks, activity on the Karachi wholesale markets showed a considerable improvement, but prices generally rose initially under the lead of rice and wheat amid active short-covering. Much of the physical activity, however, remained confined to some essential counters where floor brokers reported pressure on supplies. Leading among them was rice including IRRI and kernel type on reports of exports at higher levels. The biggest rise of Rs250 per 40 kg was noted in sela type of basmati followed by kernel, which rose by Rs100.

Wheat also showed a modest rise of Rs20 per 40kg on reports of export deals with some foreign countries including Bangladesh. A ship from Bangladesh was on the port to load a consignment of 13,000 tons, exporters said.

Arrival from upcountry markets remained fairly steady, which in turn did not allow speculative increase in prices and most of the increases were orderly.

Dealers said price changes were mostly orderly and did not reflect speculative rise on any of the counters amid two-way activity and higher ready off-take.

Industrial sector showed two-way active trading as some of the commodities showed rise under the lead of guar seeds and some cotton based items because of a record rise in cotton prices owing to a short crop, they added.

The sharp rise in guar seed prices was attributed to last year’s crop losses owing to floods. But some local dealers claimed the new crop was comparatively better and prices may come down.

On essentials counters, wheat and sugar prices remained stable despite higher demand followed by reports of steady arrivals from upcountry market.

Some exporters have purchased about 0.4 million tons of wheat and are in advanced talks for another 0.2 million tons, after having signed export deals with some foreign buyers, market sources said.

Sugar prices remained stable around previous levels, although dealers reported a fairly large business at unchanged rates in an apparent effort to sell it later at higher rates. However, there were indications that steady arrival of new crop from Sindh mills did not allow fresh rise or speculative squeeze, they said.

On the export front, news was encouraging as rice was steadily being shipped to various countries under forward deals. The recent increase in global prices is expected to add to earnings of the private sector exporters and could touch last year’s level despite a short crop, rice exporters said.

On counters of other essentials, price of pulses showed a tendency to rise but the increase was orderly and was confined mostly to imported types.

Prices of gram whole and masoor showed a modest rise. As a result, imports of some type of pulses were far below the monthly average, they added.—M.A

Managing safer use of pesticides

Post Source: Dawn economic and business review

By M Tariq Javed

THE indiscriminate use of agricultural pesticides has created serious health and environmental hazards in many developing countries including Pakistan. Millions of farm workers suffer pesticide poisoning every year and at least 20,000 die annually from toxin exposure. During 2010 in particular, thousands of people across Pakistan reported falling ill after drinking polluted water. The increasing levels of pollution in drinking and agricultural water supplies lead to water scarcity problems as well. According to a World Bank report “despite the enormity of the problem, surveys of pesticide use have been few and far between, and much of the information to date has been mostly anecdotal.”

In 1989, the sale and distribution of pesticides were transferred from the public to the private sector, which increased pesticide consumption five-fold in one year but the yield in agricultural crops did not rise significantly that year. About 80 per cent of total pesticides are now being used on cotton plants, the remaining 20 per cent is applied to other crops.

Farmers are often unable to distinguish the symptoms of pesticide poisoning from other health problems. Regular medical checkups and blood tests should be carried out for those who handle toxic pesticides. Also, farmers should be encouraged to switch to lower-hazard pesticides and use protective gear to reduce individual health risks.

Even when individual farmers are careful, pervasive contamination from others’ pesticide use and persistent pesticide residues in local water, air and soil may pose significant health risks.

Quite obviously, there are large information gaps in the supply chain of pesticide use. Farmers identified pesticide traders as one of their main sources of information. However, 54 per cent of traders themselves reported frequent health symptoms commonly associated with acute pesticide poisoning and 92 per cent freely admitted that they did not take any protective measures while handling pesticides.

Local agricultural pollution also has global effects. For example, toxic compounds from pesticides accumulate in oceanic food chains. Even the tissues of land mammals in ‘pristine’ Polar Regions now contain significant toxic accumulations. Chemically polluted runoff from fields has contaminated surface and ground water, damaged fisheries, and destroyed freshwater ecosystems. It has also created growing “dead zones” in parts of oceans close to river mouths that drain agricultural regions.

Integrated pest management (IPM) comprises a range of approaches, from carefully targeted use of chemical pesticides to biological techniques that use natural parasites and predators to control pests. The productivity of IPM rice farming is not significantly different from the productivity of conventional farming. Since IPM reduces pesticide costs with no accompanying loss in production, it seems to be more profitable than conventional rice farming.

Again, collective adoption of these methods is a must. Neighbour’s continued reliance on chemicals to kill pests will also kill helpful parasites and predators, as well as exposing IPM farmers and local ecosystems to chemical spillovers from adjoining fields.

The herbicide usage in Pakistan is increasing rapidly creating severity of the problem. Allelopathy is an environment-friendly science which has emerged rapidly during the past two decades.

Allelopathy is a biological phenomenon by which an organism produces one or more – bio-chemicals – that influence the growth, survival, and reproduction of other organisms. It has different applications in sustainable agricultural systems.

A group of researchers is working at the Department to Agronomy, University of Agriculture, Faisalabad, to figure out the possibilities of developing a technique for reducing herbicide usage. The crop water extracts foliar sprays have shown weed suppression by 40-50 per cent and significantly improved yield of wheat, maize, canola, cotton, and mungbean, with relatively little cost as compared to herbicides. Moreover, it has been observed that crop water extracts combined with lower doses of herbicides gave effective and economical weed control.

Keeping in view above considerations, there is an urgent need to actively promote safer pesticide use and hygienic practices among people who handle these chemicals.

The policymakers should design effective, targeted outreach programmes that address pesticide risk, safe handling, and protection. The approach should ideally be participatory, to address the most dangerous information gaps.

An important observation is that specific crops and geographic locations experience more overuse than others. Therefore for the most measurable results, interventions should focus on these crops and regions.

It should be the concern of environmental scientists to assemble and analyse detailed survey data on the risk perceptions of pesticide users, their pesticide-handling behaviour, and the effects of pesticides on their health.

There is a need to figure out hands-on methodology to identify toxic hotspots even in the absence of detailed information on pesticide use.

In addition, it should analyse the potential adoption of safer production methods.

To establish testing facilities of pesticide residue determinations in all the four provinces for water, soil, plants, aquatic life, and in biological fluids of the field workers can be a milestone towards the solution.