In BMI's Pakistan Agribusiness Report for Q1 2010, we look at what the coming year has in store forPakistan's important agricultural sector which in 2009 contributed 21.8% of the country's GDP. As inneighbouring India, Pakistan's agriculture will suffer in 2010 from the previous year's poor monsoon. TheSouth West Monsoon, which lashes the country from June to September every year, brought only aroundthree quarters of the average volume of rain. Even before the poor monsoon, Pakistan's water reserveswere running short for the time of year.The lack of water will likely see falls from the large harvests of key grain staples recorded in 2009. Riceproduction will be particularly badly hit. We now forecast 2010 production to fall 13.4% from the 2009level to 6.95mn tonnes. Despite this, we see rice exports increasing from the disappointing 2.94mn tonnesrecorded in FY09. The government is going into 2010 with high stocks of rice and should benefit fromthe large fall in production expected in neighbouring India.We expect wheat production to be less badly hit by the water shortages. As in 2009, the government isaiming for a harvest in excess of 25mn tonnes. We expect, however, that production will fall slightly fromthe record 23.30mn tonnes produced in 2009. Whatever the outcome of the harvest, the high governmentstocks should mean there are no shortages on the domestic market.That can certainly not be said for sugar. Production in 2009 fell sharply as farmers moved abandonedcane production owing to the low price paid and frequent late or non-payment by mills. This wasexacerbated by water shortages and cane production dropped by an estimated 21.7% year-on-year in 2009to 50.05mn tonnes. For 2010, we expect little to change and expect only a small increase in area plantedto cane. Water shortages are again likely to curtail yield growth.This will mean that in 2010 Pakistan will have a major deficit in sugar production for the second year in arow. The country will be forced to source sugar on the export market at the current high prices. Theshortage of sugar supplies saw prices rise rapidly through the middle months of 2009. The rise continuedinto Ramadan until the beginning of September when the Lahore High Court issued a ruling fixing theretail price of sugar at PKR40/kg.This move, later confirmed by the Supreme Court and enacted throughout the country, has thrown thesector into turmoil. Mills are refusing to supply sugar to retailers at the PKR36/kg wholesale pricedictated by the court. Retailers in turn are understandably unwilling to sell at a loss sugar bought beforethe new rules. In mid-October, consumers were struggling to find any sugar for sale at all. The state-runUtility Stores Corporation were often the only places with sugar freely on sale for much of October, butmany of those quickly ran dry. With another sugar deficit on the cards for 2010, the government will haveto find a way to protect consumers from spiralling prices without bankrupting the already financiallytroubled mills. With the mills threatening to delay the start of the 2010 crushing season if the problem isnot solved, fast action is needed.

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Pakistan Agribusiness Report Q1 2010
Published on November 2009
Report Summary
In BMI's Pakistan Agribusiness Report for Q1 2010, we look at what the coming year has in store for
Pakistan's important agricultural sector which in 2009 contributed 21.8% of the country's GDP. As in
neighbouring India, Pakistan's agriculture will suffer in 2010 from the previous year's poor monsoon. The
South West Monsoon, which lashes the country from June to September every year, brought only around
three quarters of the average volume of rain. Even before the poor monsoon, Pakistan's water reserves
were running short for the time of year.
The lack of water will likely see falls from the large harvests of key grain staples recorded in 2009. Rice
production will be particularly badly hit. We now forecast 2010 production to fall 13.4% from the 2009
level to 6.95mn tonnes. Despite this, we see rice exports increasing from the disappointing 2.94mn tonnes
recorded in FY09. The government is going into 2010 with high stocks of rice and should benefit from
the large fall in production expected in neighbouring India.
We expect wheat production to be less badly hit by the water shortages. As in 2009, the government is
aiming for a harvest in excess of 25mn tonnes. We expect, however, that production will fall slightly from
the record 23.30mn tonnes produced in 2009. Whatever the outcome of the harvest, the high government
stocks should mean there are no shortages on the domestic market.
That can certainly not be said for sugar. Production in 2009 fell sharply as farmers moved abandoned
cane production owing to the low price paid and frequent late or non-payment by mills. This was
exacerbated by water shortages and cane production dropped by an estimated 21.7% year-on-year in 2009
to 50.05mn tonnes. For 2010, we expect little to change and expect only a small increase in area planted
to cane. Water shortages are again likely to curtail yield growth.
This will mean that in 2010 Pakistan will have a major deficit in sugar production for the second year in a
row. The country will be forced to source sugar on the export market at the current high prices. The
shortage of sugar supplies saw prices rise rapidly through the middle months of 2009. The rise continued
into Ramadan until the beginning of September when the Lahore High Court issued a ruling fixing the
retail price of sugar at PKR40/kg.
This move, later confirmed by the Supreme Court and enacted throughout the country, has thrown the
sector into turmoil. Mills are refusing to supply sugar to retailers at the PKR36/kg wholesale price
dictated by the court. Retailers in turn are understandably unwilling to sell at a loss sugar bought before
the new rules. In mid-October, consumers were struggling to find any sugar for sale at all. The state-run
Utility Stores Corporation were often the only places with sugar freely on sale for much of October, but
many of those quickly ran dry. With another sugar deficit on the cards for 2010, the government will have
to find a way to protect consumers from spiralling prices without bankrupting the already financially
troubled mills. With the mills threatening to delay the start of the 2010 crushing season if the problem is
not solved, fast action is needed.
Pakistan Agribusiness Report Q1 2010 Page 1/5

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Table of Content
Executive Summary ...........................5
SWOT Analysis .7
Pakistan Agricultural SWOT .......................... 7
Industry Forecast Scenario ................8
Pakistan Grains Outlook .... 8
Table: Pakistan Wheat Production, Consumption & Trade ..................... 9
Table: Pakistan Corn Production, Consumption & Trade ....................... 9
Table: Pakistan Barley Production, Consumption & Trade .................... 9
Table: Pakistan Sorghum Production, Consumption & Trade ............... 10
Table: Pakistan Wheat Production, Consumption & Trade ................... 12
Table: Pakistan Corn Production, Consumption & Trade ..................... 12
Table: Pakistan Barley Production, Consumption & Trade .................. 12
Table: Pakistan Sorghum Production, Consumption & Trade ............... 13
Pakistan Sugar Outlook ... 14
Pakistan Sugar Outlook ... 14
Table: Pakistan Sugar Production, Consumption & Trade .................... 15
Table: Pakistan Sugar Production, Consumption & Trade .................... 17
Pakistan Rice Outlook ...... 18
Table: Pakistan Rice Production, Consumption & Trade ...................... 19
Table: Pakistan Rice Production, Consumption & Trade ...................... 20
Pakistan Dairy Outlook ... 21
Table: Pakistan Milk Production & Consumption ................................. 21
Table: Pakistan Butter Production & Consumption .............................. 22
Table: Pakistan Milk Production & Consumption ................................. 24
Table: Pakistan Butter Production & Consumption .............................. 24
Pakistan Livestock Outlook ................................ 26
Table: Pakistan Poultry Production & Consumption ............................. 27
Table: Pakistan Beef & Veal Production & Consumption ..................... 27
Table: Pakistan Poultry Production & Consumption ............................. 30
Table: Pakistan Beef & Veal Production & Consumption ..................... 30
Competitive Landscape ...................31
Table: Agricultural Commodity Producers & Traders .......................... 31
Table: Agribusiness Suppliers ...................... 32
Table: Integrated Agricultural Producers ..... 33
Commodity Price Analysis ..............34
Corn ............................ 34
Table: Corn ................ 34
Rice ............................. 35
Table: Rice .................. 35
Soy . 36
Table: Soybean ........... 36
Wheat ............................... 37
Table: Wheat ............... 37
Softs Update ...38
Cocoa .......................... 38
Table: Cocoa .............. 38
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Coffee ............................... 39
Table: Coffee .............. 39
Milk 40
Table: Milk ................. 40
Sugar ............................... 41
Table: Sugar ............... 41
Downstream Supply Chain Analysis .................................42
Industry Forecast Scenario ' Food .................... 42
Food Consumption ...... 42
Pakistan Food Consumption Indicators -- Historical Data & Forecasts, 2005-2013 ............... 43
Canned Food .............. 43
Pakistan Canned Food -- Value/Volume Sales -- Historical Data & Forecasts, 2005-2013 ..... 44
Trade .......................... 44
Pakistan Food & Drink Trade Indicators -- Historical Data & Forecasts, 2005-2013 ............ 45
Industry Forecast Scenario ' Retail ................... 46
Industry Forecast Scenario ' Retail ................... 46
Pakistan MGR Value Sales By Format -- Historical Data & Forecasts (PKRbn), 2005-2013 .. 47
Grocery Retail Sales By Format -- Historical Data & Forecasts ........... 47
Macroeconomic Forecast 48
Industry Forecast .............................50
Global Cotton Outlook ..... 50
Table: Global Cotton Production & Consumption ................................ 51
Global Cotton Production & Consumption ... 51
Global Oil Palm Outlook . 53
Table: Global oil palm production & consumption ............................... 54
Table: Global Oil Palm Production & Consumption ............................. 55
Industry Trend Analysis ..................56
Halal Opportunity For Local Agriculture .......... 56
BMI Forecast Modelling ...................58
How We Generate Our Industry Forecasts ........ 58
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