Agriculture sector is likely to record reasonable growth during the current fiscal year but the prospects of achieving the target of 4.8 percent growth for the year still remain dim.
According to Ministry of Food, Agriculture and Livestock's (Minfal) statistics gathered by mid-February of FY08, the record sugarcane and maize harvests and anticipated good wheat harvest besides above-target growth in minor crops are unlikely to overcome the drag from the disappointing performance of some major Kharif crops like cotton and rice.
Minfal has estimated provisionally the wheat sowing area by end of January 2008 at 8400 thousand hectares as compared to 8420 thousand hectares by January 2007, which depict 0.2 percent decline in the wheat cultivation area, while the poultry sector that hit by bird flu virus might register some negative growth in the fiscal year.
Furthermore, price dispute between farmers and sugar mills during FY08 may adversely affect FY09 sugarcane crop, which would lead to sugar shortage next year and hike in the domestic sugar prices.
According to official sources, relatively weak aggregate performance of the crops in the face of strong international prices of most agri commodities, indicates not only the sector's vulnerability to the vagaries of nature but also the urgent need to enact reforms. It should target distortions in the incentive structure for farmers and the substantial wastage due to inadequate infrastructure.
For example, official sources mentioned that the disconnect between price signals to farmers and the prevailing international market prices is, in some measure, captured by the small decline in the acreage under wheat during the FY08 Rabi season. Wheat prices, both international as well as domestic retail prices, surged through most of the FY07, but farmers did not appear to be capitalising on this opportunity. Some farmers preferred to delay sowing. An active futures market for wheat could provide some benchmark price to the farmers to help them taking timely sowing decisions, sources mentioned.
According to agriculture experts, future market for agri-produce is even stronger in the case of sugarcane. While government announces procurement prices, sugar mills offer lower prices than the announced benchmark prices and clear payments with significant lags. Delay in crushing season also goes against the farmers as weight of sugarcane gets reduced with each passing day due to evaporation of water content in sugarcane, the added.
The latest data on FY08 Rabi crops indicates that area under wheat cultivation decreased by 0.2 percent, which is a consequence of delayed sugarcane crushing and extended cotton picking season. Other factors responsible for lower area under wheat cultivation are: (1) an anticipated reduction in availability of irrigation water during Rabi FY08, (2) delay in announcement of wheat support price, (3) rising input cost particularly prices of fertilisers and (4) load shedding (that reduced water supply from tubewells).
It has been reported that growers (in Multan, Rahim Yar Khan and Khanewal) shifted cultivation area from wheat to sunflower and also to gram pulse. According to Agri experts that increase in cost of wheat production (due to increase in DAP prices) growers have shifted soil to sunflower plantation; they are anticipating higher earnings as compare to wheat.
In wake of the given situation, the wheat harvest target of 24.0 million tonnes for FY08 is unlikely to be met. Meanwhile, the low temperature would have significant effect on yield, especially at early growth stage, which has brightened the prospects of good wheat harvest. The main beneficiary of rain spell are the barani areas (un-irrigated land), where approximately 14.0 percent of total wheat is sowed, they observed.