Delay likely in sowing of wheat
These factors include cotton and rice price crash between 30 and 40 per cent. Income from both these crops traditionally provides farmers with money to purchase inputs for the next (Rabi) crop. A cut of 30 to 40 per cent in their income has left the growers poorer than last year. Liquidity crunch in banking system has added to the crisis, leaving the traders cash-strapped to purchase both the commodities.
Cotton and rice jointly hold around 13.5 million acres, out of total 20 million acres under wheat, which has to be made available for sowing. The optimum sowing date for wheat is November 20 and sowing has hardly begun in Punjab, the producer of 80 per cent of wheat. With only 10 days left before hitting the optimum date and sowing at its initial stages, there is hardly any room for optimism about the next crop. Sowing after that date normally suffers a yield loss of 5kg per day.
Take 40 per cent water shortage during the next Rabi season, 50 per cent of seed deficit, ever-increasing prices of fertiliser and these factors threatening to hit the crop, the final yield loss of wheat is not difficult to predict.
The current cotton price around Rs1,300 per 40kg, is almost 30 per cent less than last year’s price of Rs2,200 per 40kg. The factors leading to the price slide are purely managerial (inefficient marketing, worsened by capital flight) and farmers cannot be faulted for them. The ginners could not run their factories because of 12-15 hours of load-shedding in rural areas, thus creating an initial glut in the market, which, in turn, led to price crash. Once the price started sliding, the ginners’ smell blood and further slow down purchase, and worsen marketing conditions.
On the other hand, cotton yield, which stood at around 26 maunds per acre at the turn of the century, has also come down to 18 to 20 maunds per acre. It also exposes claims attached to the BT cotton being disease resistant with exceptional high yield. This year, over 60 per cent of area was under BT cotton, but still the yield dropped to around 18-20 maunds and the crop suffered almost all sorts of diseases.
It is easier for the unscrupulous sources of BT seed to deflect the blame on farmers’ poor managerial skills, but fact remains that all hoopla attached to the BT cotton came under test, and failed, this season. With yield cut by almost 25 per cent and price crash by 30 per cent, it is hardly surprising that farmers of 7.5 million acres under cotton are finding it hard to recover their original investment, leave alone making money on the commodity.
Similarly, rice crop framers are also under severe pressure. They are also suffering on both accounts: production and price crash. The paddy price, which was around Rs1,900 per 40kg last year, dipped to Rs1,200 before recovering marginally to Rs1,300 per 40kg during the last few days. These farmers did not get timely water for the last irrigation as India pulled shutters down on the Chenab waters during August and September – thus a production loss of 10 to 15 per cent for the crop, which was already under blight attack.
After the price crashed by 40 per cent, the government moved in and declared an indicative paddy price of Rs1,500 per 40kg. It ordered the Pakistan Agriculture Storage and Services Corporation (Passco) to purchase 500,000 tones of rice in order to stabilising the market. The corporation was given a loan of Rs25 billion to meet the target.
The Passco has set up centres but the farmers doubt it would help stabilise prices because of moisture limit that the corporation has attached to the procurement drive. “The Passco has told farmers that it would only purchase paddy with 12 per cent moisture content, whereas moisture actually hovers around 25 per cent in normal circumstance,” says one of the rice farmers. No farmer owns drying process and no one can bring it down to that level. Thus, Passco is already out of the game before joining it, he said and added: “The price crash is thus expected to continue.”
A vast majority of small farms (around 12.5 acres) falls on the rice belt. They can neither hold the crop nor own resources to dry it. Thus, they could hardly benefit from official initiative through Passco.
Both rice and cotton are cash crops and the government traditionally does not play any role in their trade; the entire exercise is carried out by the private sector through bank borrowings. This year, the private sector has been affected by credit crunch. The massive government borrowing and capital flight has left the banks without less money to lend traders of cotton and rice. The cumulative effect of these factors translated into price crash in a cash-strapped market.
The government, neck deep in its own governance problems, has not been able to deal with any of these factors affecting the Kharif crops. The fear is that these adverse impacts of Kharif season would spill over into the Rabi crops (mainly wheat), creating a vicious circle affecting the entire agriculture sector.
Agriculture is a round-the-year activity and needs an integrated approach rather than sporadic and half-hearted steps to improve it here and there. The government seems content that increase in wheat support price would automatically translate into better production next season and improve food security. That, unfortunately, does not seem to be the case if the current situation is any clue. There a multitude of factors that need to be taken care of before expecting better crop, and all these factors are inter-linked.
Making marketing system efficient has long been over due. The government should not delay it further. Agriculture has always been exposed to natural factors affecting its yields and efficient markets absorb such shocks. Creating such markets must be first official priority if the government wanted to break free from current credit crunch. With manufacturing and service sectors already in a shambles, agriculture could be its last hope and efficient marketing system is first step towards realisation of that hope.