Macro Bites

Macro Bite # 74

2 min read

The wheat crop was once in abundance in Pakistan, but now requires imports to meet rising demand. This is not due to overpopulation or a lack of arable land. Rather, it is our agricultural productivity that remains stuck in the past, with yields per hectare about 30-50% of what the best-performing countries are able to achieve. Substandard farm machinery is a crucial part of this equation.

With wheat sowing season approaching in Punjab, the province is on track to meet its targets. It has already sown 16.2 million acres with a couple of weeks to go, against an acreage target of 16.7 million. But the Punjab agriculture minister claims it will still struggle to meet production targets come the end of the season, due to the poor state of machinery. According to the minister, about 10-20% of the crop is destroyed in the harvesting stage. That’s 2 million tons of wheat, PKR 150 billion in losses for farmers, and more than USD 1 billion that will then have to be spent on wheat imports.

Most of the 25,000 to 30,000 combine harvesters operating in the country were imported as scrap machinery or second-hand machines that are now decades old. To further exacerbate the issue, their problems are often patched up inefficiently by drivers or unqualified local mechanics, due to the lack of available qualified technicians.

If Pakistan wants to improve its agriculture yields, providing quality machinery at affordable rates to farmers would be a good place to start.

WEEKLY DATA WATCH

KSE-100 rose this week, as a minor hike in the State Bank policy rate conformed to investor expectations. PKR depreciated again this week, amid news of a widening trade deficit. Local gold prices rose marginally this week.

The annual change in Sensitive Price Index rose to 19.49% vs. 18.58% last week. The poorest of the country (Q1) were disproportionately affected with a change of 21.42% vs. 19.46% for Q5. On a weekly basis, prices rose for all quintiles by 0.55%.

Increase in prices of Electricity (+10.4%), Cooked Beef (+0.81%) and Daal Masoor (+4.11%) contributed to weekly inflation. A fall in the price of Potatoes (-15.5%), Petrol (-3.40%) and Chicken (-5.94%) helped moderate inflation this week.

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What Else We’re Reading (Local)

  • Daraz’s decision to livestream the T20 World Cup on its app turned out to be a masterstroke by the company. (Profit)
  • CreditBook, a fintech that helps kiryana store owners maintain a digital ledger of their transactions, raised USD 11 million in a new round of funding. (Dawn)

What Else We’re Reading (International)

  • Christmas parties held by British government officials in 2020 have incensed an electorate tired of recurring lockdowns. (FT)
  • As tensions rise between Russia and NATO, the US is redeploying military equipment from Afghanistan to Ukraine. (WSJ)

Asad Pabani

Journalist, researcher and documentary filmmaker. Prior works featured in Dawn, Soch Videos and Pioneers Post.

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