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Pakistan Agribusiness Report Q1 2011

While Pakistan is a major producer of several key agricultural commodities, the sector continues to suffer from major inefficiencies. Although the government has taken some important steps towards investing in and modernising key sectors such as dairy, more investment is needed in the countrys overburdened infrastructure. For example, expansions in rice production, which could potentially become a major export crop and foreign currency earner, is hindered by poor transport and power infrastructure, which are persistent concerns in Pakistan. The effect of the August floods, arguably the countrys worst in decades, no doubt cast a shadow over our prospects production for the countrys overall agricultural sector. We have revised our rice production figures and wheat consumption figures on the back of that.

Wheat production for 2010 will once again fall short of the government production target of 25.0mn tonnes, with the report forecasting production of 23.21mn tonnes.

With our long-term forecasts showing that wheat consumption will outpace production by 2014/15, Pakistan will find itself in the undesirable position of being reliant on imports to meet domestic demand and therefore vulnerable to price fluctuations on the world markets. Impacts of the floods have seen price of wheat flour in some areas shoot by more than 80%.

US aid funds of US$16mn should cover approximately a quarter of the total wheat seed needs for the Rabi wheat planting season in the northwestern Pakistani province of Khyber Pakhtunkhwa, which runs from September to end October.

Domestic consumption of wheat for 2011 has been revised downward as people switch to cheaper staples like rice.

Pakistan is facing a large deficit in sugar production in 2010 and much of the blame for this can be put down to poor business practices in the sugar milling sector.

Livestock production could face upside potential from the acceptance of sample meat sent to Malaysia in September 2010. This could promise more inroads into the export market especially for halal meat products.

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