Kharif freezes cotton out

What do floods and droughts have in common? Both muck up agricultural output equally. Estimates on Pakistan’s kharif season agricultural output are out, and predict a grim picture for the sector.

The last time country saw such a significant decline in agricultural output was in FY11, when over 2.3 million hectares of cultural land was inundated by monsoon rains and resulting flooding in Indus basin. That year, area under cultivation declined by 11 percent over the previous year.

Ever since, area under major kharif crops cultivation slowly recovered, remaining subservient to erratic impulses of precipitation; finally peaking last year at 8.14 million hectares. Yet, the steep decline estimated for the ongoing fiscal year by SBP’s State of the Economy is thanks to no flooding, but increasing shortage of water available for irrigation.

According to preliminary estimates by IRSA, rainfall in Sindh remained 90 percent below five-year estimate, thus lowering recharge rate for groundwater reservoirs; whereas canal water withdrawals in the province were also lower compared to the previous year. While irrigation outlook for Punjab was not equally abysmal, recorded monsoon rainfall was still less by one-third versus previous season.

What does this mean for the major crops? Different things for different regions. In Sindh, for example, the drought-like condition during kharif season has led to across the board decline in area under cultivation for all major crops. For example, cotton area has declined by 33 percent, whereas paddy area has also declined by 17 percent over last year. However, reduction in area under sugarcane cultivation is not equally material, since lower utilization of cane by mills last year meant farmers were expected to other crops.

This also explains why despite lower water availability, area under rice cultivation in Punjab managed to climb upwards. Fiscal year targets by MNFS&R had estimated target area under rice in the province to actually decline by 40,000 hectares, hoping that it would lead to higher cotton cultivation given changing textile dynamics due to rupee devaluation at the start of the calendar year.

Instead, area under rice growth actually grew by seven percent, gaining from the significant decline in area under sugarcane which lost over 123,000 hectares.

Yet, the biggest loser remains the white gold cotton, which not only fell short of target growth of 10 percent over last year, but instead lost additional 10 percent, declining to levels not seen since FY03, when area under cotton cultivation dropped below 2.4 million hectares for the last time.

Given the grim cotton production outlook, it remains to be seen whether the bonhomie anticipated by textile exporters due to rupee devaluation will actually materialize. If not, then god and rain are always there to blame!