KARACHI, May 31: The State Bank of Pakistan said on Saturday that the water shortage seen in Rabi FY08 is likely to continue in the first phase of Kharif FY09.

“Improved water availability is anticipated from better monsoon rains during the second phase of Kharif FY09 (June -September),” the SBP said in its third quarterly report. About fertiliser off-take, it pointed out, that it increased by 9.2 per cent during July-March FY08.

The central bank also recommended that as commodity prices are likely to remain strong, it is imperative that policies be framed to support farmers’ ability to raise productivity substantially in the years ahead.

In its report, the SBP further stated that key areas requiring policy intervention remain the transmission of price gains (establishment of futures markets), risk mitigation (crop insurance, storage facilities), increasing investment in agri-sector infrastructure (water management, electricity, farm-to-market roads, etc.) and in value-addition chains (e.g. through processing).

It said that the agriculture credit disbursement continued apace with its positive trends, with total agri disbursements amounting to Rs 157.6 billion during July-April FY08 - an increase of 34.9 percent year-on-year.

About the agriculture scenario, it said that recent information points to an increased risk of a decline in aggregate value-addition by important major crops in FY08 relative to the previous year.

It was hoped that a wheat harvest close to the annual target would offset much of the drag from the disappointing aggregate performance of the FY08 Kharif harvest. But some reports suggest that wheat production in FY08 may also turn out to be substantially below the target. If these concerns prove correct, a weak performance by major crops would drag the annual growth substantially below the annual target.