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Water scarcity and agri-export woes
6/19/2018

Water scarcity and agri-export woes

Pakistan’s looming water shortage is set to give rice farmers a reality-check this season as sowing is expected to be delayed due to drought and declining level of water stored in reservoirs.

Rice is Pakistan’s most significant Kharif crop in the food group of agri-commodities, both in terms of value and acreage under cultivation. The production target for FY18 has been set at 7.2 million Tons, which is unlikely to be achieved as sowing has already been delayed. Rice contributes 3.1 percent value added in agriculture and its GDP contribution stood at 0.6 percent during the last fiscal year.

Pakistan exports roughly 50 percent of its annual rice production, which is the single-largest value contributor to exports excluding textile goods. Total value of annual rice export has declined over the past 5-year period, from a peak of $2 billion in FY12 to just above $1.6 billion at a negative CAGR of 4.9 percent per annum.

Furthermore, quantity exported has also been a on a downward trend during the past 3 years as water shortage has hurt production time and again, and FY19 is expected to be no different. According to news reports published this month, Met. department estimates snow cover during last winter to be three-fourths less than the 5-year average; this is in addition to lower rainfall during the pre-monsoon April-June season and higher than expected temperatures rising to 2C than normal.

At a time when growth in value added textile and other export industries have come at a grinding halt due to adverse forex policies of the previous government, Pakistan has become increasingly reliant upon consistent growth in food related agri-commodities to provide the much-needed cushion to maintain annual exports above the $20billion mark. With raw sugar export already contentious due to global glut and dependence on government support, rice export is now also facing challenges what once used to be the fallback option.

No doubt that there is no good sense in increasing reliance on a water-intensive crop such as rice in a water-scarce country, and that much is needed to encourage changing crop patterns by incentivizing traditional rice farmers to switch to less water intensive crops. In this regard, debate is needed to formulate a long term agricultural policy in tandem with a water policy.

However, in the short term, urgent steps are needed to address the water shortage this year as a prolonged drought could have implications not just for country’s export and current account deficit but could also precipitate into a crisis as sowing season draws near its end and farmers relying on subsistence income take their woes to streets.

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