Research and Markets: Pakistan Agribusiness Report Q1 2013

The 2012 monsoon season was relatively kind to Pakistan’s farmers, especially relative to the devastating floods of 2010. Although localised flooding caused severe destruction in parts of Sindh and Balochistan, the main breadbasket region of Punjab enjoyed late rains after a dry start to the season; this has improved the prospects of rice, corn and cotton in particular.

In a major boost to the cotton industry, the EU has finally enacted a long-discussed measure that will suspend import duties on a range of cotton products from Pakistan. The European Parliament finalised the move in September, although the regulation will only apply until the end of 2013, rather than the two-year period initially pushed for by the EU. According to the Pakistan Cotton Ginners Association, the EU is one of Pakistan’s largest trading partners, accounting for more than 30% of the country’s total exports. Of this, the 75 items allowed under the deal contribute about EUR921mn, or 30% of the country’s total exports into the EU.

Key Forecasts:

– Corn production to 2016/17: up 30.0% to 5.6mn tonnes. Continually improving yields and high prices on world markets will support an impressive increase in corn production.

– Cotton consumption to 2016/17: up 23.2% to 12.5mn tonnes. Demand for cotton will surge in the early years of our forecast as the EU lifts tariffs for a year, before falling back to steady year-on-year (y-o-y) growth.

– Rice production to 2016/17: up 16.5% to 7.3mn tonnes. Pakistan will retain its place among the world’s most important exporters of the commodity as its producers look to expand into new markets.

– 2013 real GDP growth: 4.0%. Up from 3.7% y-o-y in 2012.

– Consumer price inflation: 12.4% in 2013 (up from 11% y-o-y in 2012).