Report Highlights:

Pakistan's soon-to-be harvested 2016/17 wheat crop is forecast at 25.3 million tons, marginally higher from last year's revised production. The Government has established a procurement target of 6.95 million metric tons, which is expected to raise government-held stocks to around 11 million metric tons at the completion of the procurement season in a few months. Wheat trade estimates are largely unchanged from year to year and Afghanistan remains Pakistan's sole export market, taking 600,000 metric tons of wheat (in the form of flour). MY 2016/17 rice exports are forecast at 4.2 million metric tons, unchanged from the revised current year estimate. MY 2016/2017 corn production is estimated at 5.2 million tons, four percent higher than MY 2015/16 production. The Government of Pakistan imposes a thirty percent regulatory duty and ten percent customs duty on imports of corn.

Wheat

Production:

Wheat is one of the main agricultural crops in Pakistan, with 80 percent of farmers growing it on an area of around nine million hectares (close to 40 percent of the country's total cultivated land) during the winter or “Rabi" season. This crop alone contributed about 10 percent of value added in agriculture and 2.1 percent of the country's gross domestic product (GDP) in 2015. Marketing year (MY) 2016/17 wheat production is forecast at 25.3 million metric tons, marginally higher than a year ago. The anticipated good harvest is due to timely planting, greater availability and use of irrigation water, improved quantity and quality of inputs and favorable weather conditions. MY 2015/16 production is adjusted upwards to 25.1 million metric tons, in accordance with latest government of Pakistan figures.

The Government of Pakistan has decided to buy 6.95 million metric tons of wheat from the next harvest against the target of 6.6 million tons in the previous year. The Government has maintained the wheat support price for the MY 2016/17 crop at the last year's level of Rs. 1,300 per 40 kilogram ($310 per metric ton).

Wheat Area by Province MY 2016/17

Province

Area

(Million Hectares)

Percentage of Total Area

Punjab

6.97

75.5

Sindh

1.15

12.5

KPK

0.73

8.0

Baluchistan

0.38

4.0

Total

9.23

100

Cumulative fertilizer nutrient off-take from October 2015 to January 2016 was 1.9 million tons up 7.7 percent compared to a year ago. Off-take of nitrogen, decreased slightly by 0.2 per cent, while phosphate off-take increased by 27 per cent.

Weather conditions during the current Rabi season were conducive for good crop production. Temperatures during December and January remained in average range; however, major wheat growing areas did not receive significant rainfall until February and March. The late rains could have some effect on yields due to lodging and flattening of the crop in certain areas, a development that is reflected in the current forecast.

About two-thirds of the country's water for irrigation is sourced from snow and glacier melts, with the balance supplied by seasonal monsoon rains. Stored water for irrigation is held mainly in two large reservoirs, Tarbela and Mangla, for use during the summer and during the Rabi/winter growing season.

Since the completion of the nation's irrigation system in the 1970s, demand for water has increased by more than 50 percent, while storage capacity has decreased by about one-third due to silting. During the last two years supplies of irrigation water have been relatively better, but over the long term, Pakistan is likely to face water related challenges. These water challenges, if not addressed, could become a key factor affecting wheat production. Dated farming methods, reduced water availability, dam silting, and an increasing population in the catchment areas of Chenab, Jhelum and Indus rivers have reduced the per capita water availability from 5,000 cubic meters in 1951 to less than 1,000 cubic liters in 2010. 85 percent of Pakistan's wheat production is dependent upon irrigated water.

The effect of water shortages is traditionally more severe in the Sindh province than in the Punjab region. Many parts of Sindh's ground water are alkaline and not fit for irrigation, thereby necessitating a greater reliance on canal water. In the Punjab province, where extensive tube well irrigation is utilized to supplement the canal irrigation, the crop was generally considered to be in normal condition as of March 2016.

Consumption:

Wheat is Pakistan's dietary staple. Pakistan has a variety of traditional flat breads, often prepared in a traditional clay oven called a tandoor. The tandoori style of cooking is common throughout rural and urban Pakistan. Wheat flour currently contributes 72 percent of Pakistan's daily caloric intake with per capita wheat consumption of around 124 kg per year, one of the highest in the world. MY 2016/17 consumption is forecast at 24.5 million metric tons, up slightly from the current marketing year. As incomes increase and a stronger middle class emerges, consumers are gradually shifting towards more dairy, meat, and other higher-value food products in their diet. Over the long term, this shift to a more balanced diet has the potential to limit the pace of growth in wheat consumption. The government has decided to maintain the wheat support price at the current level. While Pakistan's wheat will continue to be significantly more expensive than in the international market, the decision to maintain the support price at the current level will provide some respite for consumers. During 2015, domestic wheat prices remained stable and price of the price wheat flour in December 2015 was almost the same as in December 2014. Out of the total demand of 24.5 million metric tons, only three percent will be used in the feed industry, and the remaining 97 percent will be used for planting and human consumption.

Pakistan's wheat milling industry is privately owned. There are about 1,000 flour mills in Pakistan, which meet the consumption needs of about 40 percent of the population, with the balance met by on-farm consumption. The disbursement of government-owned wheat to flour mills is managed in an effort to ensure that sufficient wheat is available throughout the year.

In urban areas and among affluent consumers, consumer preference is shifting from higher whole grain to lower extraction flour and traditional flat bread to western-style, loaf bread. Traditional home-ground flour is also losing favor to commercially milled flour. Specialized products like cereals suited to the changing life styles in the urban areas are also gaining demand.

Trade:

MY 2015/2016 wheat exports (exports are in the form of flour) are revised down to 600,000 metric tons with Afghanistan being the sole market. Government-held stocks are above optimal levels heading into the 2016 harvest and the federal government has been considering different options to dispose of the unsold wheat stocks before the arrival of the new crop but could not reach a viable solution. Given the present trend, Pakistan's MY 2016/17 wheat flour exports to Afghanistan are forecast to be 700,000 metric tons (wheat equivalent). Afghanistan has been the main wheat export market for Pakistan for many years mainly due to easy accessibility and traditional trade linkages between the two countries.

As global wheat prices have declined, Pakistan's high sales price for publicly-held stocks has resulted in limited export buyer interest. In January 2015, the Economic Coordination Committee (ECC) of the Cabinet approved a subsidy of $55 per ton for Punjab and $45 per ton for Sindh for three months to cover exports of up to 1.2 million tons of wheat. The deadline was extended twice until Sept 30, 2015. The ministries of Food Security and Commerce and the provincial food departments approached the Finance Ministry to extend the subsidy for wheat exports but the latter declined.

The domestic wheat market has been insulated from imports by a 40 percent regulatory duty. With a high tariff and high domestic prices, Pakistan continues to be isolated from the international wheat market. The tariff is well below Pakistan's bound tariff rate (the maximum tariff rate Pakistan can establish) for wheat of 150 percent. Consequently, Pakistan is not likely to import any significant quantity of wheat during MY 2016/17.

Stocks:

MY 2015/16 ending stocks are estimated at around 4 million tons. Wheat is procured and maintained through provincial food departments and the federal agency known as the Pakistan Agricultural Storage and Services Corporation (PASSCO). In 2015, the GOP procured around 5.0 million tons of wheat from the local harvest. Over the past three years, the public sector wheat procurement has ranged between five to six million tons annually. The procurement target for the upcoming harvest has been set at 6.95 million metric tons which will likely boost public stock levels to around 11 million tons shortly after the start of the marketing year. The GOP has come under pressure from international and domestic sectors to end its wheat procurement operations and let the markets and the private sector handle the efficient allocation of resources. The Government continues to support the policy citing national and food security concerns.

Policy:

Pakistan maintains a largely government controlled wheat marketing system and the government considers wheat as the key strategic commodity. The federal government sets a minimum guaranteed support price or procurement price and an issue price for wheat sold to flour mills. Through provincial food departments, the GOP procures wheat from farmers at the support price and then releases wheat to the flour mills at the government fixed issue price. The issue price is set at a rate that captures much of the cost of buying and storing the wheat, but there are implicit costs that are not fully captured. Wheat prices and the movement of wheat are controlled at the provincial and district levels. Grain stocks are procured and maintained by the provinces. The system aims to protect farmers from price fluctuations and to ensure a minimum return during cyclical post-harvest low prices.

Farmers in Pakistan retain about 60 percent of their wheat production for seed and village and household food consumption. For wheat that is marketed, the government is the main buyer of farmers' wheat, with actual volumes of government procurement often reaching 25 to 30 percent of total production, driven by both food security and market intervention objectives. The remaining 15 percent of the harvest is purchased by the private sector. While food security is an important concern in Pakistan, high volumes of state wheat procurement make it harder to attract private sector trade and investment in the postharvest supply chain.

Wheat

2014/2015

2015/2016

2016/2017

Market Begin Year

May 2014

May 2015

May 2016

Pakistan

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

9199

9100

9180

9200

0

9200

Beginning Stocks

2214

2214

3742

3743

0

3943

Production

25979

25979

25478

25100

0

25300

MY Imports

749

750

100

100

0

100

TY Imports

749

750

100

100

0

100

TY Imp. from U.S.

11

11

0

0

0

0

Total Supply

28942

28943

29320

28943

0

29343

MY Exports

700

700

700

600

0

700

TY Exports

700

700

700

600

0

700

Feed and Residual

1000

1000

1000

800

0

800

FSI Consumption

23500

23500

23600

23600

0

23700

Total Consumption

24500

24500

24600

24400

0

24500

Ending Stocks

3742

3743

4020

3943

0

4143

Total Distribution

28942

28943

29320

28943

0

29343

Yield

2.82

2.85

2.77

2.72

2.75

(1000 HA) ,(1000 MT)

Rice, Milled

Production:

Rice is Pakistan's third largest crop in terms of area sown, after wheat and cotton. About 11 percent of Pakistan's total agricultural area is under rice during the summer or “Kharif" season. Pakistan is a leading producer and exporter of Basmati and IRRI rice (white long grain rice). Rice ranks second among the staple food grain crops in Pakistan and exports are a major source of foreign exchange earnings. Pakistan grows a relatively high quality of rice to fulfill domestic and export demand. Rice accounts for 2.7 percent of the value added in agriculture and 0.6 percent of gross domestic product. Pakistan has two major rice-producing provinces, namely Punjab and Sindh. Both provinces account for more than 88 percent of total rice production. Punjab, due to its agro-climatic and soil conditions, is producing 100 percent of the Basmati rice in the country. Pakistan's “Kalar" bowl area, a local term that refers to a type of soil suitable for Basmati production, is famous for producing Basmati rice and is located between the Ravi and Chenab rivers in Punjab. IRRI rice is grown in both Punjab and Sindh.

MY 2016/17 rice production is forecast at 6.9 million tons, 2.9 percent above the current year's updated production. Area is expected to increase two percent from the revised official 2015/16 area, mainly because some cotton farmers are likely to shift to rice due to the losses they incurred during the last crop. MY 2015/16 production is also adjusted downwards to 6.7 million tons, in accordance with Government of Pakistan figures. Production and yields during the last three years have been good with little fluctuation. This is due in part to the deposit of a nutrient rich top layer of soil as a result of successive floods in recent years.

Rice in Pakistan is a monsoon crop but the introduction of hybrid varieties in recent years has influenced the timing of sowing and transplanting. Hybrid varieties are sown as early as March and April instead of June and July. However, sowing timing is heavily influenced by the extent and spread of monsoon rains, and the availability of underground and irrigated water. Irrigation water is mostly sourced from the runoff of the Himalayan glacier melt into the Indus river basin, so temperatures during the months of May and June are critical in determining the season's water availability.

Rice Growing areas of Pakistan are broadly classified into following four zones:

Zone I

Northern high mountainous areas of KPK (Swat and Khagan) with sub-humid climate, average rainfall of 750-1000 mm

Zone II

Lies between the Ravi and Chenab rivers in the central Punjab. Sub-humid, sub-tropical climate with average rainfall of 400-700mm. This is the famous premium zone and Basmati rice is exclusively produced in this zone along the Kalar tract consisting of Sailkot, Sheikhupura, Narowal, Gujranwala, Hafizabad and Lahore Districts

Zone III

West bank of Indus river in upper Sindh and Balochistan. Larkana, Jacobabad (Sindh), Nasirabad and Jaffarabad (Balochistan). High temperature and sub-tropical climate with average rainfall of 100 mm make it best suited for long grain rice.

Zone IV

Indus delta basin in Lower Sindh (Badin and Thatta Districts). Its climate is arid tropical and is suited for coarse varieties.

Consumption:

MY 2016/17 consumption is forecast at 2.95 million tons increased slightly from the last year. Unlike many other Asian countries, rice is not considered a staple food crop in Pakistan. Traditionally, 40 to 45 percent of the crop is used for local consumption, with the balance exported. Pakistanis, in general, prefer the higher priced Basmati rice if they can afford it, if not they consume long grain IRRI rice, but wheat is the favored staple. In 2015, domestic rice prices displayed a downward trend and the price of rice in December 2015 was twelve percent lower than in December 2014 mainly due to higher stocks. According to trade sources an estimated 200,000 tons of 40-100 percent broken rice is used in poultry and animal feed annually.

Trade:

Pakistan's rice exports are off to a good start during current marketing year and Pakistan has so far exported 1.72 million metric tons as compared to 1.35 million metric tons during the same period a year ago. MY 2015/16 rice exports are projected at 4.2 million metric tons up five percent from the last year's revised figure of 4.0 million metric tons. Though Pakistan's rice exports are increasing gradually, much of the increase is in non-Basmati varieties as India continues to offer stiff competition in Basmati exports.

Pakistan Rice Exports MY 2015/16 (Nov/October)

Months

MY 14/15

MY 15/16

November

444,747

547,286

December

491,450

475,346

January

413,660

390,223

Total

1,349,857

1,724,690

Source: Pakistan Bureau of Statistics

Rice is a major Pakistani export to the United States. Out of $119 million in Pakistani agricultural products exports to the United States in 2015, rice exports comprised $36.7 million (31 percent of the total). This was the second highest ever value of Pakistani rice exports to the United States.

Stocks:

MY 2015/16 ending stocks are forecast at 1.1 million metric tons while MY 2016/17 ending stocks are projected at 850,000 tons. Pakistan's stock levels were at a historic 1.5 million metric tons in MY 2014/15 and rice millers were concerned about the large stocks at their mills, but the stock level is gradually coming down, as exports increase.

Policy:

Rice trade in Pakistan is carried out by the private sector with little or no intervention from the government. Since the publicly-run Rice Export Corporation of Pakistan was disbanded 20 years ago, Pakistan's rice traders have responded well to market liberalization and over the years have become major players in world rice trading. The milling industry made significant investments in state-of-the-art processing machinery, but Pakistan exports most of its rice in bulk with no modern packaging and branding. Export companies could be doing more to develop brands and a more significant presence in foreign markets. However, the export industry is comprised of a large number of relatively small firms that are often family-run and accustomed to traditional trading practices. However, that is changing and Pakistan's rice exporters are becoming increasingly active advocates for their industry and their trade interests. With time, the industry is expected to adopt more strategic and brand-based approaches to rice exporting.

Rice, Milled

2014/2015

2015/2016

2016/2017

Market Begin Year

Nov 2014

Nov 2015

Nov 2016

Pakistan

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

2891

2850

2850

2740

0

2800

Beginning Stocks

1329

1329

1564

1500

0

1100

Milled Production

7005

6900

6900

6700

0

6900

Rough Production

10509

10351

10351

10051

0

10351

Milling Rate (.9999)

6666

6666

6666

6666

0

6666

MY Imports

30

0

20

0

0

0

TY Imports

30

0

20

0

0

0

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

8364

8229

8484

8200

0

8000

MY Exports

4000

4000

4600

4200

0

4200

TY Exports

4000

4000

4600

4200

0

4200

Consumption and Residual

2800

2800

2800

2900

0

2950

Ending Stocks

1564

1500

1084

1100

0

850

Total Distribution

8364

8300

8484

8200

0

8000

Yield

3.63

3.63

3.63

3.66

3.69

(1000 HA) ,(1000 MT)

Corn

Production:

Corn is one of the major crops in Pakistan and is the third most important cereal after wheat and rice. It accounts for 8.5 percent of the total cereal cropped area, 2.1 percent to the value added in agriculture and 0.4 percent to GDP. The cultivation of corn and its multiple uses for domestic, commercial and industrial purposes play a critical economic role in Pakistan by generating income and employment in its entire value chain. Though corn is mostly known as a Rabbi (winter) crop it is normally cultivated twice a year in Punjab and once a year in Khyber Pakhtunkhwa (KPK). The first cultivation season is known as spring (winter) season that normally starts in the middle of December in Punjab. The summer season begins in September and lasts till the start of December in both Punjab and KPK. Yields are lower in Punjab due to the high temperatures, but conditions in KPK are optimal at this time of year.

MY 2016/2017 production is forecast at 5.2 million tons four percent higher than the current marketing year, reflecting an expected increase in area and sustained demand from industry. At present around forty percent of corn area is under hybrid cultivation while its share in production is about 70 percent. It should also be noted that the corn crop grown on around 50,000 hectares is used for making silage for livestock.

Historical Perspective:

Corn production in Pakistan has increased from 1.76 million tons in 2001-02 to 4.94 million tons during 2013-14. Yields have also improved steadily due to the introduction and adaptation of hybrid varieties. The upward trend in production and yields is likely to continue in the years to come, mainly due to the further adaptation of high yielding varieties and hybrids.

Trends in Area Production and Yield of Maize in Pakistan

Years

Area (000 Ha)

Production (000 Tons)

Yield (Kg/ha)

2001-02

941.6

1,664.4

1,768

2002-03

935.5

1,737.1

1,857

2003-04

947.1

1,897.4

2,003

2004-05

981.8

2,797.0

2,849

2005-06

1,042.0

3,109.6

2,984

2006-07

1,016.9

3,088.4

3,037

2007-08

1,051.7

3,604.7

3,427

2008-09

1,052.1

3,593.0

3,415

2009-10

935.1

3,261.5

3,488

2010-11

974.2

3,707.0

3,805

2011-12

1,087.3

4,338.3

3,990

2012-13

1,059.05

4,220.1

3,984

2013-14

1,168.5

4,944.2

4,231

Source: Agricultural Statistics of Pakistan

Maize Growing Areas

The bulk (99%) of the total production comes from two major provinces, KPK, accounting for 51 percent of the total area and 30 percent of total production and Punjab contributing 48 percent area, with 69 percent of total corn production. The provinces of Sindh and Baluchistan produce a very small quantity of corn. The production and yield in Punjab is higher than KPK mainly due to the use of hybrid seed and adoption of better agronomic practices. In Punjab the cultivation of corn is concentrated in Sahiwal, Arifwala, Pakpattan, Chiniot, Vehari, Lahore and Kasur areas. As for KPK, corn cultivation is scattered due to low land holdings. Approximately 65 percent of the maize in Pakistan has access to irrigation; the remainder is farmed under rain-fed conditions.

Consumption:

The poultry industry is the main buyer of corn, utilizing almost 65 percent of the production in poultry feed. Wet milling consumes about 15 percent and 10 percent is used to make dairy feed concentrate while the remaining production is used for human consumption in the form of bread made from the flour and also for seed purposes.

The poultry sector is one of the most modern and vibrant segments of Pakistani agriculture. There are approximately 150 feed mills for poultry feed in the country with an installed capacity of nine million metric tons of feed. Corn plays a growing role in the production of dairy feed concentrates. Wet milling industry use corn to produce starch for the textile industry and also to make various food products.

Trade:

The Government of Pakistan imposes a thirty percent regulatory duty and ten percent customs duty on the import of corn, shielding producers from imports. The Pakistan Poultry Association has reportedly sought a tariff reduction, but without results thus far. The duty has resulted in no corn imports, in spite of the fact that Pakistan's domestic corn prices are much higher than international prices. The domestic price of corn at present is around $280 per ton, while according to trade sources the price of imported corn C&F Karachi stands at around $180 per ton.

Stocks:

MY 2015/16 and MY 2016/17 ending stocks are estimated at around one million metric tons. Most of the stocks are held by the feed mills and wet milling industry.

Policy:

Corn trade in Pakistan is carried out by the private sector with little or no intervention from the government. The government does not fix the procurement price for the commodity and is not involved in its procurement and marketing. Government efforts in corn are limited to some research and extension activities to increase the productivity of the crop.

The growth in corn has been led by the demand in the poultry and dairy feed sectors. Realizing the potential for immense growth, seed companies have led the way towards introducing hybrid corn varieties in Pakistan. The sales of corn hybrid seed vary according to seasons as 60 percent of total sales are realized in spring and 40 percent in autumn. The seed companies provide a comprehensive package to farmers including technology transfer and extension services. The field teams of the private seed companies have been pivotal in establishing corn as one of the rapidly growing grain crops in Pakistan.

Corn

2014/2015

2015/2016

2016/2017

Market Begin Year

Jul 2014

Jul 2015

Jul 2016

Pakistan

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

1130

1142

1150

1148

0

1150

Beginning Stocks

1188

1188

1089

1094

0

994

Production

4695

4900

5100

5000

0

5200

MY Imports

16

16

25

0

0

0

TY Imports

17

17

25

0

0

0

TY Imp. from U.S.

7

7

0

0

0

0

Total Supply

5899

6104

6214

6094

0

6194

MY Exports

10

10

100

0

0

0

TY Exports

50

50

100

0

0

0

Feed and Residual

2700

3750

2900

3800

0

3900

FSI Consumption

2100

1250

2200

1300

0

1300

Total Consumption

4800

5000

5100

5100

0

5200

Ending Stocks

1089

1094

1014

994

0

994

Total Distribution

5899

6104

6214

6094

0

6194

Yield

4.29

4.29

4.43

4.35

4.52

(1000 HA) ,(1000 MT)