Fall in onion price

By Saleem Shaikh

January 17, 2011

ALTHOUGH onion exporters, traders and growers have been hit by partial ban on export to India, consumers have heaved a sigh of relief after significant decline in the retail prices of the commodity across Sindh.On January 4, the government banned export of onion to India via land route but, yieldeding to exporters’ pressure on January 12, allowed them to honour their contracts reached before the ban and send their consignments to India through Wagah.
While traders wanted withdrawal of the ban, officials in the federal commerce ministry saw dim chances of any such thing to happen.
Officials argue that the country was hit by low onion output and the new crop was not expected in local markets from Punjab before March. Export at this pointof time would escalate onion price in the market.
“The ban has been imposed in view of the possible onion shortage in local markets because of low output in Sindh and Balochistan as tens of thousands of acres under onion crop was washed away by floods,” remarked a Minfal official.
According to market reports, on January 4 some 300 truckloads of onion were stopped at the Wagah border from entering India.
Saud Khan said 300 trucks, stuck up at Wagah border, were each loaded with some 300 maunds of onion. The exporters estimate that the value of their held uponion at the Wagah border is at around Rs140-150 million. The vegetable exporters who procured the onion at around Rs2,100-2,200 per maund from thegrowers would have suffered hefty financial losses, if their consignments of surplus onion were not allowed to enter India, he remarked.
However, the relaxation was only for the orders for which the letters of intents were issued and exporters had received money from India.
“The impact of the ban has already been felt in Nasarpur, the country’s largest onion producing area. The onion prices have sharply declined by about Rs800 per 40kg in the Nasarpur wholesale market. Prior to the ban, the commodity was trading at Rs2,200 per maund,” said Nabi Bakhsh, an onion trader in Matyari district.
The exporters also maintain that there was an abundant quantity of onion in excess of the domestic market demand which they wanted to export.
But Abdul Waheed Ahmad, former president of the All Pakistan Fruit and Vegetable Exporters, Importers and Merchant Association, has highlighted another side of the story. He said that the quality issue is also the cause, which prompted the ban.
“There are reports that the growers harvested pre-mature onion crop for sale to exporters, which is destined to rot and be rejected by the Indian traders once it reached across the border market,” he remarked.
Waheed told this scribe on phone that the onion export was continuing through the sea and air routes to India and export target of 600,000 tons would be easily achieved.
Meanwhile, the ban on onion export has brought down the prices of the commodity which had peaked in December last year because of low crop output in the provinces.
Onion which was selling above Rs70-80 per kg in September last year, was now selling at Rs20-25 per kg in retail markets.
The retail and wholesale vegetable traders say the prices are likely to fall further to as low as Rs15 per kg when new onion crop will arrive from Punjab in March.
High prices of onion during November-December last year led to reduced consumption, and its sale declined significantly in the domestic market, recalled Ali Ahmad Shah, a vegetable trader at the Sabzi Mandi in Karachi. “But now its sale has improved and is increasing day by day, thanks to a significant fall in prices following the ban,” he noted.

http://www.dawn.com/2011/01/17/fall-in-onion-price-2.html

Sugarcane price war spurs gur making

By Saleem Shaikh
January 10, 2011
TO avoid financial losses because of slow off-take of cane by sugar mills and encouraged by rising market prices, cane growers in Sindh have geared up gur making.
The protracted cane price issue between the growers and the millers is hurting the cane crushing activity and has left sizeable crop standing in the fields.
While passing through the right bank districts during last week of December, this scribe witnessed cane crop standing over tens of thousands of acres, while gur making was going on in full swing in scattered cane-growing areas.
The right bank districts of Khairpur Mir’s, Sanghar, Shaheed Benazirabad, Matiyari, Tando Mohammad Khan and Tando Allahyar are major cane-growing areas and together account for over 70 per cent of the total produce of the province.
A gur dealer, Hussain Ali Qureshi, in western Khairpur Mir’s district told this scribe on phone that on average 200-300 maunds of freshly-produced gur was being brought to local gur market in Pir-Jo-Goth of the district.
Similar reports of freshly-prepared gur’s availability in local markets from different cane-growing districts indicate low sugar production during this cane crushing season.
“Why should we sell our produce to millers who cannot pay fair just prices and often delay payments and default on our dues? So far selling cane to exploitative millers has not proved beneficial on many counts,” said Shahid Ali, a cane-grower in Sanghar district.
“I have sown cane on 450 acres this year but millers refused to pick up the produce even at Rs250 per maund.
They offered a price of Rs180 per 40 kg, which I rejected and preferred making gur,” he said.
“I have engaged my farmer tenants on daily wages for making gur. I have so far received orders for 2,000 maunds from local traders and expect more in days ahead,” he said. On reports of reduction in cane crushing, gur prices have shot up and are rising steadily,” he said.
The traders in the Karachi’s wholesale market are procuring gur between Rs3,200-Rs3,400 per 40kg. “The wholesale prices are bound to rise beyond Rs3,600-3,800 per maund in coming days, because reports of reduced sugar production have already reached the wholesale market.
In view of the scary future scenario of sugar availability, more and more gur traders and exporters are vying for procuring as much gur as possible,” said Mohammad Hanif, a gur trader in the Jodia Bazaar in Karachi.
Officials in the Pakistan Sugar Mills Association say that this time the overall crushing activity will be 60 per cent less as compared to last year.
Throughout the crushing period, the growers were unwilling to sell their cane to millers for less than Rs250 per 40kg. Some growers are demanding Rs300 per maund for their produce.
Members of the Sindh Abadgar Board (SAB) say they have reports that some millers were even obtaining cane from Punjab at around Rs230 per maund.
“Out of 32 sugar mills in Sindh, only 22 could start cane crushing till December end, while some of them had to suspend the process on account of non-availability or inadequate supplies of cane,” said officials in the cane commissioner office in Hyderabad.
Official reports indicate that overall cane crushing, which kicked off late in November, is not more than 40 per cent till December 31 as compared to that of last year.
While slamming, what most of the growers described the ‘unjustified’ cane support price, leaders of cane growers said such low prices for their produce was meant to discourage them from growing the crop any more and deprive people of the locally-produced sugar at affordable prices.
While a handful of millers are ready to purchase cane at Rs200 per 40kg, most millers refuse to pick up the crop at Rs300/40kg. They argue that purchasing cane at such exorbitant rates would push sweetener’s price up in the local market.
“If we purchase cane between Rs250-Rs300 per maund the price of sugar will soar beyond Rs120 per kg in retail market,” said an official of Habib Sugar Mills in Nawabshah. “We just want our mills running and ensure availability of sugar to consumers at affordable price.”
“This price war between growers and millers will result in low sugar production and consequently aggravate sugar crisis in the days to come, making the sweetener costlier and unaffordable for consumers,” remarks an official in the Sindh Cane Commissioner’s office in Hyderabad.
“The cane growers sow wheat in their fields after clearing them of cane; the standing cane crop means wheat sowing in the right bank districts would suffer significantly,” remarked Mohammad Aachar, agriculture department’s director for major crops.
The right bank cane growing districts together account for over 65 per cent of the total wheat sowing in the province.

http://www.dawn.com/2011/01/10/sugarcane-price-war-spurs-gur-making-2.html

Sindh agriculture struggling for recovery

By Saleem Shaikh

January 3, 2011

THE coming Rabi crops are likely to show good performance if water availability is improved and provision is made for distribution of high-yield seeds, unadulterated fertilisers and unhindered agriculture credit.
Agriculture experts believe that timely recovery of the agriculture sector in the province depends on early draining out of floodwater from inundated farmlands, rehabilitation of damaged irrigation network and roads and provision of unhampered financial support and free farm inputs.
Although Sindh Minister for Irrigation Jam Saifullah Dharejo claimed that the flood-hit irrigation network would be restored by end of December, the situation remained unpromising as most of the breaches have not been repaired as yet.
Sindh irrigation department officials admit that rehabilitation of irrigation networks is very slow. “Though 80 percent floodwater has been flushed out of the flood-ravaged areas, only 660 out of some 2,138 breaches have been plugged so far and floodwater is still flowing through 1,478 breaches,” a senior irrigation official said quoting a report. But, Mehfooz Ursani, general secretary of the Sindh Abadgar Board (SAB), rejected official claims that 80 per cent floodwater had been drained out. He said that despite passage of four months since the flood hit Sindh, much of the affected areas still remains inundated seriously affecting Rabi sowing.
Sindh government has announced support packages and low mark-up loans for flood-hit farmers and drawn out plans to rehabilitate the damaged irrigation network to restore agro-based activity. But, progress is very slow, he said.
Tight financial situation of the provincial government is also hindering the launching of support packages for farmers and expediting process of plugging irrigation network breaches.
Sindh Agriculture Secretary Agha Jan Akhtar hopes that wheat sowing target will be achieved, because major wheat growing areas on the left bank of the Indus River remained unaffected during the floods.
“Efforts are being made to encourage the left bank growers to grow more wheat. Initiatives have already been taken to resolve the cane price issue between the growers and the millers,” he remarked.
The agriculture secretary said that minor crops sowing was also in full swing in the lowing-lying areas on the right side of Indus River, from where water has been pumped out and hopes for good sowing of minor crops particularly pulses and vegetables and fodder were bright.
Amin Thebo, director crop reporting, said that sowing of vegetables, have recently picked up pace in left bank areas that were under cane crop.
“Reports of wheat sowing and vegetable cultivation have poured in recently from the scattered cane growing areas in the right bank areas, where fields have been cleared of cane,” he remarked.
While the floodwater is likely to be flushed out completely by March 2011, improving Kharif sowing.
Sindh’s agriculture has suffered enormous damages in recent floods and rains but no significant measures have been taken so far for its recovery.
Overall damage suffered by agriculture has been estimated at 2.3 billion dollars, according to provincial government’s revised figures. “The province’s paddy crop sown on around 0.7-0.8 million acres was washed away, causing losses to the tune of Rs60 billion,” said a provincial agriculture department official.
Sindh agriculture department officials estimate production of around 663,000 tons of rice in the province against the target of 2.039 million tons for Kharif 2010. The shortfall of 60 per cent is because of the fact that rice on around 850,000 acres, against the target of 1.586 million acres, had been washed away by floods.
The cotton crop, sown on either side of the Indus River, was also hit by the flood on the right bank.
Agriculture department officials said the province, which achieved a record production last year, has experienced short crop this year by around 13.63 per cent to 3.321 million bales recorded till December 15, 2010 as compared to 3.845 million bales in the corresponding period of last year.
As far as sugarcane is concerned, it was cultivated on much less area in the province due to water scarcity. Unattractive support price, ill-and exploitative attitude of sugar millers and lack of government interest has compelled the growers to cut the area under cane cultivation.
Despite water shortages, rains and unfavorable climatic conditions during FY10, the province’s agriculture sector is expected to show a reasonable performance. Contrary to expectations. The performance of minor crops is to remain more or less satisfactory due to switch over of area from major (for example: sugarcane) to minor crops.
THE coming Rabi crops are likely to show improved performance only if water availability is improved and provision are made for high-yield seeds, unadulterated fertilisers and unhindered agriculture credit loans.
Agriculture experts say that timely recovery of the agriculture sector and its bright outlook depends on early draining out of floodwater from inundated farmlands, rehabilitation of damaged irrigation network and roads and provision of unhampered financial support and free farm inputs.
Although Sindh Minister for Irrigation Jam Saifullah Dharejo claimed tat the flood-hit irrigation network would be restored by end of December, the situation remains unpromising For, most of the breaches have not been repaired as yet.
Officials in the provincial irrigation department admit that rehabilitation of irrigation networks is very slow. “Though 80 percent floodwater has been flushed out of the flood-ravaged areas, only 660 out of some 2,138 breaches have been plugged so far and floodwater is still flowing through 1,478 breaches,” a senior irrigation official said quoting a report.
But, Mehfooz Ursani, general secretary of the Sindh Abadgar Board (SAB), rejected official claims that 80 per cent floodwater had been flushed out.
He said that despite passage of four months since the flood hit Sindh, much of the affected areas still remain inundated. Therefore, Rabi sowing would suffer seriously.
The provincial government has announced support packages and low mark-up loans for flood-hit farmers and drawn out plans to rehabilitate the damaged irrigation network to restore agro-based activity. But, progress is very slow, he said.
Tight financial situation of the Sindh government is also hindering the launching of support packages for farmers and expediting process of plugging the breaches in the irrigation network.
Sindh Agriculture Secretary Agha Jan Akhtar hopes that wheat sowing target will be achieved, because major wheat growing areas on the left bank of the Indus River remained unharmed during the floods.
“Efforts are being made to encourage the left bank growers to grow more wheat. Initiatives have already been taken to resolve the cane price issue between the growers and the millers,” he remarked.
The agriculture secretary said that minor crops sowing was also in full swing in the lowing-lying areas on the right side of Indus River, from where water has been pumped out and hopes for good sowing of minor crops particularly pulses and vegetables and fodder were bright.
Amin Thebo, director crop reporting, said that sowing of major Rabi crops, particularly vegetables, have recently picked up pace in left bank areas that were under cane crop.
“Reports of wheat sowing and vegetable cultivation of Rabi season have poured in recently from the scattered cane growing areas in the right bank areas, where fields have been cleared of cane,” he remarked.
Agriculture experts said that although 80 per cent of low-lying areas on the right bank are being claimed to have been brought under Rabi crops while the floodwater is unlikely to be flushed out completely before March 2011. Nevertheless, chances are bright for Kharif sowing of FY 2011.

http://www.dawn.com/2011/01/03/sindh-agriculture-struggling-for-recovery.html

Flood-hit growers in wilderness

By Saleem Shaikh

Daily Dawn, December 27, 2010

WHILE the Rabi season is drawing to a close, a vast majority of poor growers in all flood-hit districts of Sindh are yet to get the government`s promised farm inputs free of cost.

When contacted, provincial agriculture department officials said serious efforts were being made to provide the required farm inputs to affected growers free of cost as the government was well aware of the consequences of delayed sowing. Free distribution of fartilisers and seeds have started in some districts.

“As the recent floods had inundated standing crops on 2.2 million acres and caused losses to the tune of Rs102 billion to the agriculture sector, a hefty amount is needed to put things in place,” remarked a senior official in the finance department.

However, they said that delivery of farm inputs was being delayed for want of funds while a provincial minister said that the federal government has given the pledged sum of money.

Meanwhile, growers have cautioned the government that wheat acreage would shrink if the pledged free farm inputs were not distributed among the genuine and deserving farmers without further delay.

The wheat sowing season in Sindh begins from first week of November and ends on December 30.

The provincial government had recently announced to have drawn up Rs3.36 billion Rabi Assistance Plan (RAP) for the recovery of badly hit agriculture sector in flood inundated areas. But, delay in implementing the plan has been adding to the misery of the growers, who want to cultivate their land that remained unaffected or where the floodwater has receded at the earliest.

The growers of Kamber-Shahdadkot, Dadu, Khairpur Nathanshah, Naushero Feroz, Shaheed Benazirabad, Sukkur Ghotki and Jacobabad districts, who suffered heavy flood losses, badly need assistance. They have also fulfilled the necessary requirements and have completed all requisite paperwork.

“Yet, the government officials are making all sorts of excuses to avoid delivery of inputs to these farmers for reasons best known to them,” said Akhund Ghulam Mohammad, general secretary of the Sindh Chamber of Agriculture.

“It is a `do or die` situation for the poor farmers, who have lost everything in the floods but the government officials are dragging their feet on the issue,” he remarked, urging them to have pity on the hapless farmers.

A senior finance department official said that the estimated cost of the Rabi Assistance Plan was Rs3.36 billion, to be equally funded by the federal and the Sindh governments.

“Though the federal government has released its share of fund for initiating RAP, the distribution of farm inputs has started only in some districts,” Sharmila Farooqui, Advisor to the Sindh Chief Minister, told this scribe.

Meanwhile, reports of mismanagement and embezzlement have started coming in from the districts where the disbursement of free seed and fertiliser has started.

Some growers of Rabi crops, waiting to obtain the farm input, have alleged that farm inputs were being distributed among undeserving growers.

Having failed to get the Rabi assistance from the Jacobabad district government, Rustam Khoso, a poor farmer from Ghulam Mustafa Khoso village, attempted self-immolation outside the Jacobabad Press Club, but was saved by a police personnel.

Khoso alleged that “instead of distributing farm inputs among flood-hit small landholders, the agriculture department officials are giving inputs to landholders and those with political clout.”

Members of the Sindh Abadgar Board (SAB) in Jacobabad told this scribe on phone that wheat seed and fertiliser were distributed among some affected farmers during the first two weeks of December, but the supply was later stopped by the district revenue officials for reasons best known to them. Nevertheless, the process of distribution of farm inputs among influential large landholders continues secretly during night hours, they alleged.

The alleged injustice on the part of the district government officials also led to highway blockades during the third week of this month.

Agha Jan Akhtar, provincial agriculture secretary, rejected the allegations of embezzlement in distribution of free farm inputs. “A few complaints have been received about enlisting of some fake farmers. The government has formed a committee to probe such cases and resolve such issues on a priority basis,” he said.

Meanwhile, reports of sporadic protests of farmers still continue to come from different parts of Sukkur, Ghotki, Kambar, Shikarpur, Shahdadkot, Larkana and Dadu, against delay in supply of promised relief.

Weblink: http://www.dawn.com/2010/12/27/flood-hit-growers-in-wilderness.html

Sindh’s damaged roads hamper rice trading

By Saleem Shaikh

Daily Dawn, December 13, 2010

BECAUSE of standing floodwater and broken road networks, paddy growers in Sindh are facing enormous problem in transporting their produce to rice mills.

Consequently, the rice mill owners have also not been able to gear up rice processing on account of slow arrival of paddy at their mills.

This year paddy was cultivated over 1.15 million acres in Sindh, which is 72 per cent of the sowing target of 1.6 million acres. The production target for rice was set at 2.052 million tons..

According to the provincial government, around 30 per cent of the paddy crop survived the recent floods. “Paddy crop worth over Rs60 billion cultivated over an area of around 0.7-0.8 million acres was completely washed away,” said a provincial agriculture department official.

Agriculture department officials have estimated a shortage of around 1.7 million tons of rice this year, as production expected from the unaffected paddy crop on 0.3-0.4 million acres will be around 0.3 million tons.

Economic activities pick up in rice growing areas of the province during four months of the rice harvesting season, which begins from August every year. But, this time the situation is dismal as rice millers have not witnessed any healthy activity on account of slow and delayed arrival of the produce. There are around 850 rice mills in Sindh, but only a few of them have started functioning so far.

“Nearly 80 per cent or 680 rice mills were fully operational by mid-November last year. But, this season their number was 140-150 by the beginning of this December,” said members of the Sindh-Balochistan Rice Millers Association (SBRMA).

They said that as only 20-30 per cent paddy output was available, more or less 200 mills would be able to go into production.

However, Nabi Khan Brohi, a noted paddy grower in Shikarpur district, said arrival of paddy at mills could improve if floodwater was flushed out and broken roads were repaired without any further delay. But, nothing is taking place in this regard, he complained.

Officials in the provincial roads and communications department estimate that around 1,800 kilometres of provincial (highway) roads and 4,500 kilometres of district roads have been damaged. About Rs38-40 billion is needed for their rehabilitation, for which the required fund is not available.

Rice millers say that they have suffered serious financial losses, their mills were hit by floods and tons of last year’s stored rice and seed in the mills were damaged. Owners of such affected mills are unable to begin rice processing.

“Around 200 rice mills in the province are still under floodwater. The owners of these mills have suffered economic losses worth billions of rupees, ” said Siraj Rashdi, president of the Larkana chapter of the Sindh Chamber of Agriculture.

Some rice millers also complain that paddy arriving at their mills is generally damaged and of poor quality. They also said that it was financially unviable to run these mills because growers were demanding Rs1,000-1,200/ 40 kg for irri-6 paddy, which is unaffordable for them.

Growers argue that since the cost of farm input and transportation charges have soared, they cannot sell their produce at official rate.

The millers are reluctant to pick up paddy at prices demanded by the growers. They are reported to have been buying paddy at Rs800-Rs900 per maund. Each miller, on an average, procures 70,000-80,000 maunds of paddy every year.

According to rice millers’ association, each rice miller employs 80-90 workers on a daily basis during the paddy harvesting season. But, this time thousands of labourers are bound to remain unemployed.

Weblink: http://www.dawn.com/2010/12/13/sindh%E2%80%99s-damaged-roads-hamper-rice-trading.html

Improving access to safe drinking water

By Saleem Shaikh

Daily Dawn, December 20, 2010

DESPITE different programmes launched to provide safe drinking water in Sindh, access to potable water for a sizeable population has not improved. Instead, the situation has deteriorated gradually.

A majority in the province are still without safe drinking water. Water experts blame corruption, inefficient planning and implementation, and poor quality infrastructure for the grim situation. “Most of the projects are malfunctioning or have become dysfunctional due to poor implementation and maintenance, and negligence,” they said.

Survey reports of Unicef, ADB and WB show that only 20-25 per cent population of Sindh has access to safe drinking water. About 65 per cent people in countryside and 35 per cent in urban areas have no access to clean drinking water.

But, some local water experts believe the situation more depressing. They say that 10-15 per cent rural people and less than 25 per cent in urban areas have access to safe drinking water.

In Sindh, 87 per cent of households use improved sources for drinking water and 13 per cent unimproved, according to the Unicef`s Multiple Indicator Cluster Survey (MICS).

`Improved sources` include piped water in the household (31 per cent) or from a public tap (eight per cent), water from hand pump (35 per cent), donkey pump/turbine ( six per cent) or borehole ( four per cent). The `unimproved sources` (13 per cent) comprise unprotected dug well, river or stream and other (e.g., tanker truck and tractor- pulled tanker).

The MICS survey, however, points out that the `improved source` of water does not necessarily imply safety. There is potential contamination from pumps and wells, especially outside the household. Even piped water quality can be compromised by leakage and, in certain situations, come from suspect sources such as stagnant water.

There are major differences for sources in urban and rural areas. In urban centres the improved sources account for 93 per cent, of which piped water in the household (66 per cent) is most common. In rural areas this stands at 83 per cent, where the dependence is mainly on hand pumps (53 per cent) followed by public standpipe (11 per cent), piped water (eight per cent), donkey pump (five per cent) and protected well/ponds (four per cent), according to MICS findings.

Consumption of unsafe and contaminated water pushes up expenditures on health bills because of water-borne diseases. Availability of contaminated water to the people, particularly the poor, increases their living costs, lower their income earning potential, damage their well-being and make life riskier.

The continuing deterioration of the surface and underground water sources on which people survive means that water pressures will simply become worse in future,” remarked Munawar Memon.

“The lack of water infrastructure for the poor forces them to buy water from water-vendors at high prices, walking long distances and waiting in long queues at public sources, and incurring additional costs for storing and boiling water,” admits a senior official in the provincial public health engineering department (PHED).

“This lack of suitable and affordable access to water, leaves people consuming less than the optimum amount of water for good hygiene and impacts health and labour productivity of the household members, reducing income-generating opportunities of such households,” remarked Ghulam Haider Birhamani, a water expert.

“Most of filtration plants installed under the multi-billion rupees `Clean Drinking Water for All` (CDWI) have failed to provide relief to the intended beneficiaries.

According to official reports, most of the filter plants in different parts of the province are mal-functioning, because these developed faults in their first year of installation. Besides, some have become entirely dysfunctional because of poor maintenance and negligence.

As many as 1,108 plants of different treatment capacities (2,000 and 4,000 gallons per hour) were approved for Sindh at a cost of Rs2.4 billion under Rs23.8 billion CDWA project.

The CDWI progress report available with this scribe shows that so far 360 water filter plants have been installed in different union councils of the province, but 227 of them are inoperative.

Conceived in 2004 and executed by the federal environment ministry in 2006, the CDWA project was launched in the year 2006 and was to be completed in November 2010 to provide clean drinking water to the residents of 40 districts across the country, 23 districts of them in Sindh. Relevant officials said that unnecessary delay in procurement of specified water filtration plants has harmed the efforts for timely implementation of the project.

Director Provincial Project Implementation Unit (PPIU) of CDWA, Abdul Raheem Shaikh, said: “A contract for setting up plants in different parts of the province was awarded in 2007, but those responsible failed to procure the specified water filtration plants in time, which caused undue delay in the initiation of work on the CDWA project. Only 360 plants could be set up in three or so years. In fact, all 1108 plants would have been installed and in operation by now.”

“At the time of awarding contract, it was agreed with the contracting firm that Italian filtration plants would be procured. But, it failed in doing so and provided local plants, which were poor in quality and much cheaper than those made by Italy,” he explained.

http://www.dawn.com/2010/12/20/improving-access-to-safe-drinking-water.html

Financing Rabi Sowing

By Saleem Shaikh

Monday, 18 Oct, 2010 | 01:14 AM PST |

THE Sindh government’s efforts to boost Rabi cultivation may receive a setback if banks do not fully cater to the credit needs of the flood-ravaged growers.

Farmers complain that banks are risk-averse facing financial squeeze, particularly due to the recent sharp increase in their non-performing loans in agriculture sector, which has been devastated by the floods.

While significant amount of standing Kharif crops, farming machines, seed stocks for Rabi crops and fertilisers have been washed away, the farmers are less likely to be able to undertake Rabi sowing on their own. And, therefore, “financial assistance for the flood-hit farmers is a must,” the agriculture economists believe.

Displaced by the ravaging floods, the financially-battered farmers are willing to go back to their fields and get engaged in Rabi sowing. But, they need seed, fertiliser, DAP, pesticides and farming tools for ploughing and land leveling, for which they should have an easy access to financial support.

Reports that growers are facing obstacles in obtaining credit loans from banks in flood-ravaged districts of the province have surfaced recently. Farmer leaders say, “when they visit banks for farm credit they are discouraged in different ways.”

“Bank officials tell farmers that they have been directed not to sanction any credit without valid guarantees,” said a farmer. “Other than government, who else can provide guarantees to such hapless farmers who have lost everything and are now penniless,” he questions.

“In this hour of need these farmers are looking towards the government to rescue them from the misery with financial support for raising their crops,” said Akhund Ghulam Mohammad, general secretary of the Sindh Chamber of Agriculture.

On September 24, following deliberation on reviving flood-hit agriculture in Sindh between the provincial government and the State Bank governor, banks were approached to provide agriculture loans to flood-hit farmers. But the banks, in a reply to the provincial planning and development department’s request, questioned the government’s proposal and said it did not meet (banks’) certain criteria for sanctioning loans.

“They ask for surety measures,” said an official in the economic planning section of the provincial P&DD.

Another official in the provincial finance department said that the provincial government had brought the matter of banks’ reluctance to farm credit to the notice of the SBP and asked it to help sort out the matter.

Meanwhile, the provincial government has also tried to know banks’ viewpoint through the SBP if they would provide loans to farmers against ‘Form VII’ (ownership deed) and possession certificates supported with guarantees and undertakings from the provincial revenue department; and that the farmers’ passbooks would be issued to them within specified time, a senior official in the provincial revenue department said.

But the banks, an official told this scribe, have declined to accept such proposals. Instead, they have demanded record of average sales value over three years, number of produce index units (PIUs) and credit history of borrowers, which would help the lending banks to evaluate value of farm land to be offered as collateral.

An official in a bank’s main branch in Karachi said the banks had refused to accept the ownership deed on the ground that it was not possible to verify it as the revenue record of the flood-hit farmers might have been destroyed.

He said that banks feared default on such risk-prone farm loans and subsequent litigations against the defaulting farmers. The proposed undertaking by the provincial Board of Revenue (BoR) would not have any legal validity in establishing their claim over a property in a court of law.

In the first week of October, an official in the central bank’s farm credit department conveyed to provincial P&DD secretary Naheed Durrani that the banks would sanction loans to farmers only if the government furnished a ‘provisional credit surety’ to banks up to the loan amount in conjunction with the markup till the time the charge was created on the passbook in favour of the banks in conformity with the Commercial and Industrial Purposes Act 1973.

One of the major reasons behind the banks’ evident wariness towards loaning the farming sector is that recent floods have raised the NPLs, said a senior bank official.

The central bank estimates these NPLs to be over Rs28 billion, according to the preliminary data of the SBP.

The bankers say that the flood-hit agriculture sector is in the worst shape, which needs a hefty amount for revival. “Not only have the infrastructure but also the land been ravaged by the deluge. It means preparation of the land for cultivation would be a difficult task and will not be possible without huge financial investments. However, it is not going to happen until the government ensures its increased and active participation,” they opined.

Officials in the provincial agriculture department state: “We have chalked out a plan for the revival of farmlands in the province from where over 60-65 farmers took refugee after the deluge battered their crops and villages. But, the ‘agriculture revival plan’ will be of no use if the farmers fail to get hassle-free access to farm credit on low markup.”

Available on Dawn Newspaper's website:

http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/in-paper-magazine/economic-and-business/financing-rabi-sowing-800