IMPACT OF THE FLOODS ON AGRICULTURE
Research Analyst, PAGE
Oct 4 - 10, 2010
The massive floods that began to hit Pakistan in late July have afflicted the whole country. The disaster has not only led to losses in terms of human casualties and large scale displacement but has also damaged major crops over an estimated area of more than 1.38 million acres which constitutes 30 per cent of Pakistan's agricultural land.
Agriculture is the country's second largest sector, accounting for over 21 per cent of gross domestic product. Nearly 62 per cent of the population depends on agriculture for their livelihoods.
Wheat, most important produce, has been severely damaged in the floods. Data from the Ministry of Food, Agriculture and Livestock reveal that 44,896 tonnes of wheat in Punjab and 80,823 tonnes in Khyber Pakhtunkhwa have been totally spoilt. Moreover, in Sindh, some 5, 41,696 tonnes of wheat are estimated to have been destroyed, whereas, in Balochistan, the overall damage to crops has occurred over an area of 321,651 acres.
However, government and agriculture circles are now considering the possibility that seeds planted after the floodwaters recede, may lead to a bumper harvest in the following sowing seasons in flood-affected regions.
Floods have submerged 17 million acres of Pakistan's most fertile crop land, killed 200,000 herd of livestock and washed away massive amounts of grain. A major concern is that farmers will be unable to meet the fall deadline for planting new seeds in 2010, which implies a massive loss of food production in 2011, and potential long term food shortages.
The agricultural damages are more than 2.9 billion dollars and include over 700,000 acres of lost cotton crops, 200,000 acres of sugar cane and 200,000 acres of rice, in addition to the loss of over 500,000 tonnes of stocked wheat, 300,000 acres of animal fodder and the stored grain losses.
Agricultural crops such as cotton, rice, and sugarcane and to some extent mangoes were badly affected in Punjab. The international community is participating in the rehabilitation process, as well as for the revival of agricultural crops in order to get better GDP growth in the future.
In affected Multan Division in South Punjab, some people were seen to be engaging in profit-taking in this disaster, raising their prices up to Rs130 per kg. Some have called for Zarai Taraqiati Bank Limited to write off all agricultural loans in the affected areas in Punjab, Sindh and Khyber Pakhtunkhwa especially for small farmers.
On 24th September, World Food Programme announced that about 70 per cent of Pakistan's population do not have adequate access to proper nutrition. Most of this population with less than adequate nutrition lives in rural areas of the country.
At this time, there are no exact loss estimates. The vast majority of the losses including damage to homes, roads, bridges, agricultural infrastructure, etc are not insured for flood. Those residential properties that do have insurance have very little, which would indicate that insured losses will likely be significantly lower than the total economic loss. There have not been any reports of any major insured commercial, manufacturing or other industrial facility having been impacted.
As of late August, the only losses that appear to be of significance to the insurance industry are the agricultural losses. Given the large damage to standing crops of at least 6.9 million hectares (17 million acres) of cropland reported to be inundated, there is a potential for insured agricultural losses.
Several insurers in Pakistan offer crop insurance, usually with claims payments triggered by the declaration of a particular area as a calamity-hit by the government and also the subsequent recording of the calamity in the official government gazette.
The ability to declare a calamity is legislated in the National Calamities Prevention and Relief Act of 1958, which stated that in each province "whenever the province or part thereof is affected or threatened by flood, famine, locust or any other pest, hailstorm, fire, epidemic or any other calamity which, in the opinion of the government, warrants action under this Act, government may, by notification, declare the whole or part of the Province, as the case may be, calamity affected."
The declaration is based on an official assessment of the state of the crop and the severity of the weather event. The declaration of a calamity is usually made when there is a likelihood of a famine or severe hardship due to a significant reduction in the amount of crop produced in the district. This typically means that a calamity is generally only declared when the crop yield is less than half of the normal historical yield for the district. This requirement is also revealed in the government's normal calamity declaration procedures.
The Loyyah, Mianwali, DG Khan districts in Punjab and the DI Khan District in Khyber Pakhtunkhwa have been declared as calamity areas by the government. The respective provincial governments have also declared the entire area of Khyber Pakhtunkhwa and Sindh to be calamity areas, though these declarations have not been ratified by the government.
The floods have dealt Pakistan a severe blow while the country was still reeling under the economic crisis. Total economic loss estimates have varied widely between the Pakistani government, international aid groups and media outlets. Some of the various estimates have ranged between PKR1.3-3.7 trillion (USD15-43 billion), though based on some of the official statements from the United Nations and the Pakistani government a final economic loss closer to PKR1.73 trillion (USD20 billion) seems plausible.