Fast Market Research recommends "Pakistan Agribusiness Report Q4 2012" from Business Monitor International, now available

Boston, MA -- (SBWire) -- 11/12/2012 --BMI View: The impressive performance of Pakistan across the key commodities of cotton, rice and corn, all of which are grown with the export market in mind, compared with the relative under performance of wheat and sugar, the production of which is largely absorbed by domestic consumption, suggests that agribusiness in the country does best when responding to international markets.

Key Forecasts

- Wheat production to 2015/16: down 11.2% to 22.4mn tonnes. As government procurement prices represent an unfavorable return for farmers, we anticipate a continued steady decline in the production of Pakistan's staple crop.

- Rice production to 2015/16: up 50.3% to 7.3mn tonnes. We expect an impressive rebound from the devastating impact of the 2010 floods, but these figures disguise an underlying shift from basmati to other varieties.

- Sugar production to 2015/16: 14.5% to 4.5mn tonnes. We have revised down our previous forecasts as unfavorable conditions for growers will see limited progress in yields over the forecast period.

- 2012 real GDP growth: 3.7%. Up from 3.0% year-on-year (y-o-y) in 2011; forecast to average 4.0% over 2012-2016.

- Wholesale price inflation: 6.4% average in 2012 (down from 21.1% in 2011).

- BMI universe agribusiness market value: 2.5% y-o-y decline to US$42.6bn in 2011/12, forecast to average US$44.2bn between 2011/12 and 2015/16.

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Industry Outlook

The impressive performance of Pakistan across the key commodities of cotton, rice and corn, all of which are grown with the export market in mind, compared with the relative under performance of wheat and sugar, the production of which is largely absorbed by domestic consumption, suggests that agribusiness in the country does best when responding to international markets.

The government is the main purchaser of wheat and has set prices at a rate that makes growing the crop unappealing to farmers despite rock-solid domestic demand. The apparent failure to negotiate a trade deal with Iran exchanging wheat for iron ore underlines the difficulties in finding external markets. Sugar growers, meanwhile are suffering from a lack of investment and the poor business practices of government-supported processors who often fail to make payments to farmers on time. This should ensure that Pakistan falls well short of the government's target of 5mn tonnes a year at 4.5mn tonnes by 2016, mainly because yields are significantly lower than in the other major producing countries. The resultant shortfall in production in relation to domestic demand only makes the government's decision to allow 400,000 tonnes of exports a likely driver of higher prices and lower demand: higher prices that are unlikely to end up supporting the growers' investment in improving performance.

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