CROPS THAT CAN PULL PAKISTAN OUT OF FINANCIAL MALICE

SHABBIR H. KAZMI
(feedback@pgeconomist.com)

Dec 17 - 23, 2012

Policy planners in Pakistan seem to be clearly divided into various groups some keen in achieving technical excellence, others want industries to be more efficient and a few want to develop Pakistan into trade and energy corridor. Bringing any major change in economic setup of the country needs billions of dollars that are not available, at least for the time being and multilateral lenders are also not ready to extend funds.

In such a scenario that is a need to come up with a home grown plant that can help in achieving food security and accepting pace of industrial growth. While experts may suggest various plans, mostly aimed at protecting the interest some groups having vested interest, a few experts say for boosting Pakistan's GDP growth agriculture has to be focused. This will help in: 1) containing import of food items, 2) enhancing export of horticulture products and above all 3) increasing income of rural population.

Pakistan has been exporting rice for a long time and has recently joined the club of wheat exporting countries. The country is likely to get his year bumper crops of sugarcane and cotton also. The next plan should be to boost production of edible oil, which can help in saving annual spending of US$2 billion on the import of palm oil. Pakistan can boost production of sunflower, canola and corn oil without having any adverse impact of its four major crops. This will not be any experiment because the country is already producing these oilseeds, though in smaller quantities.

It has been said repeatedly that Pakistan can achieve production of 20 million cotton bales without increasing area under cultivation. At the same time local spinning and weaving units have to be revamped to use each and every gram of cotton produced in the country. To achieve highest value addition export of raw cotton, yarn and un-processed cloth has to be reduced gradually. Along with this there should be a complete ban on the production of yarn of 10 counts, which many experts term negative value addition. The focus has to be on the manufacturing of woven as well as knitted made-ups.

Experts also say that sugar industry is the driving engine of rural economy of the country. Apart from producing sugar, the industry also produces huge quantity of baggase and molasses. Producing larger quantity of sugarcane will yield three main benefits: 1) achieving higher capacity utilization will help in bringing down retail price of sugar, 2) producing larger quantity of baggase that can be used I power generation and 2) distilling ethanol from molasses for the use in E-10 (motor gasoline containing 10% ethanol). This will on one hand earning extra foreign exchange from export sugar but also saving millions of dollars being spent on the import of furnace oil.

This year United States faces huge shortage of corn and its cultivation at massive scale I Pakistan can help in earning substantial foreign exchange and/or containing import of edible oil, at least. Globally corn is used for bio fuels also. Since there are no prospects of reduction in crude oil price, demand for bio-fuels will remain robust I the near future. However, to achieve this any substantial increase in corn production, enough quantity of DAP has to be made available.

It has been highlighted repeatedly that nearly one-third of total agriculture produce goes stale or unfit for human consumption. Investing in modern warehousing and modern logistic facilities can help in containing this type of loss. The added advantage will be higher income for farmers and competitive in the global markets. Initially Pakistan should focus on minimizing production loss of mango and kinno. A policy decision also had to be to promote export of these two fruits to United States and EU countries. Buyers from these countries are willing to pay a premium but exporters have to comply with rules applicable on the entry of these two products in the developed countries.

It goes without saying that that both the government and the private sector have to focus on the export of rice. Though, exported in smaller quantity Basmati helps in earning more foreign exchange. However, unless Pakistani exporters pack the commodity in consumer packs and also establish brand equity, it would continue to sell as a product of India. However, it is fact that Indian exporters are more dedicated and buyers are loyal to Indian brands.

To earn more from each kilogram of food item in the global markets, Pakistan will have to focus on value addition, be it milk or fruits. Pakistan is among the top largest producers of milk but continues to import milk powder. A point has to be kept in mind that around 5% of total milk produced in the country is packed in 'tetra packs'. Modern facilities have to be established for producing dairy products.

Global market for Halal food products runs into billions of dollars but Pakistan's share is highly negligible. Interestingly many rich Muslim countries have shown keen interest not in buying these products from Pakistan but also expressed interest in investing. However, either the foreign investors don't feel comfortable due to poor law and order situation or don't have the confidence in the present regime. It is also a fact that Pakistan is suffering the most because of negative perception about the country but it is also a fact that reality is not as bad as the perception.

Chnag ein perception can't be brought by holding investment conferences but giving the confidence to overseas investors. Let one point be kept in mind that unless local investors are shy no foreign investor will be keen in investing in Pakistan.