Passco wants official paddy price ensured

Monday, December 01, 2008

By Jawwad Rizvi

LAHORE: The Pakistan Agriculture Storages and Services Corporation (PASSCO) has requested the provincial governments to help it ensure minimum procurement price fixed by the federal government for paddy crop.The PASSCO asked the provincial governments to implement the minimum procurement price of different paddy varieties set by the federal government through district administration, police, revenue, food and agriculture departments. The corporation has made this request after a number of rice millers in Sindh and Punjab refused to pay the minimum price announced by the federal government. The rice millers have started cheating paddy growers while paying less to them and deducting some quantity on account of moisture.A large number of complaints have been made to the PASSCO and provincial agriculture departments of Punjab and Sindh. Paddy growers after harvesting their crop are running from pillar to post to get minimum procurement price announced by the federal government. The delay in the sale of paddy crop is also affecting wheat sowing. Traditionally, farmers after getting money from paddy sales cultivate wheat crop out of what they earn. In current situation when the country has received a bumper paddy crop, farmers are hapless to get reward of their efforts from paddy crop. The problems faced by farming community in sales of paddy crop will affect wheat sowing negatively.Meanwhile, the spokesman for PASSCO confirmed that the organisation had requested Punjab and Sindh provincial governments to ensure payment of specified price to growers.He said that on the directives of the federal government, the corporation has made necessary arrangements for the purchase of Paddy Basmati Super at the rate of Rs 1,500 per maund, Paddy Basmati 385/2000 at Rs 1,250 per maund and paddy Irri-6 at Rs 700 per maund.To make the system effective and extend its outreach to the largest possible number of farmers, a collaborative public-private venture framework has been evolved by the PASSCO, with the approval of the federal government. Consequently, arrangements with 193 rice mills have been executed by the PASSCO. He said the procurement of paddy at rice mills, under PASSCO’s aegis, is going on at brick pace.He admitted that the PASSCO had received complaints that some millers were not conforming to their contractual obligations. These millers were straying from their contracts and not paying farmers on time. He said that millers were deducting paddy on account of variation in quality claiming that the moisture level was high.He confirmed that the PASSCO had not given such discretionary powers to millers to decide the quality of paddy. He said that the PASSCO was also creating awareness among paddy growers, urging them not to sell their produce at less then the price fixed by the federal government. The PASSCO had requested growers not to succumb to the negative tactics of millers and ensure that they were not cheated by them through agents or middlemen. The PASSCO had also requested paddy growers to make complaints of non-compliance by rice millers to the PASSCO, Punjab and Sindh governments.

Excessive regulations for tobacco sector giving rise to illegal trade

Sunday, November 30, 2008

By Jawwad Rizvi

LAHORE: The tobacco cultivated is less than one per cent of total irrigated area of the country but contributes handsome amount in national exchequer both through local consumption and exports.The industry has also been providing jobs to almost 1.2 million directly or indirectly. The federal board of revenue earned some Rs40 billion annually in shapes of excise and sales tax from the legitimate tobacco industry. According to a study the industry is the single largest contributor to the excise duty.Being a highly labour-intensive crop, about 100,000 persons are involved in its cultivation, over 75,000 are engaged in total 26 factories of the tobacco industry and another one million find indirect employment through its trading.However, country has been facing some Rs6 billion loss in revenue every year due to the un-regulated manufacturing of tobacco products.According to official estimates, the informal trade of tobacco products is stands around 20 per cent of total tobacco trade. As official export of cigarettes is not allowed thus legitimate industry does not use any illegal channels for export of cigarettes.Out of total 20 per cent of the tobacco trade in the informal sector, 10 per cent is counterfeit production and smuggling while 90 per cent was duty free import of foreign cigarettes in the personal luggage of travellers. There is a regular inflow of foreign cigarettes on every flight that lands in the country and being in the personal luggage of travellers these are customs cleared without paying duties.Smuggling of international brands of cigarettes has been on the rise in the recent past, which has hit hard local manufacturers in the country and badly affecting the government revenue.Previously, Pakistan’s tobacco and products did not have a good impression in the world markets due to poor quality and standards. However, investments in tobacco industry have been helpful to improve its image and position.Now Pakistan has become the fifth largest producer of some very fine FCV in the world with prospects of producing an optimum of up to 103.2 million kilogram. The investments in improved agronomic practices, use of fertilisers and pesticides, introduction of international grading system and state of the art green leaf threshing plants have led to yields of up to 2500 kilogram per hectare, which is one of the highest in the world. At the same time quality has risen close to the best world leaf standards and prices have also been extremely favourable.On the other hand the trend of exports since the last few years up to 2000-2001 was on the ascendant. During 1999-2000 exports were worth $5.4 million which grew by 85 per cent to $10.03 million during 2000-2001.During 2002-03 exports showed a growth rate of 34 per cent over the previous years and were registered at $6.24 million. It will be further observed that Pakistan exported 8270 tonnes tobacco valuing $11.08 million during the year 2003-2004. Total earnings from export of tobacco and its manufactures amounted to $13.23 million during the year 2003-04 as compared to $6.24 million during 2002-03 and $4.659 million during 2001-02. The exports during 2003-04 were thus 111.68 per cent higher than those of the same period July-June, 2002-03.Counterfeiting of famous brands’ cigarettes is an international phenomenon. In Pakistan, historically, the counterfeiting of cigarettes was started from Federally Administered Tribal Areas (FATA). Latter, it spread to settled areas of NWFP, certain districts of Azad Jammu and Kashmir territory and a few cities of the Punjab.It is need of the time that government should enact strict laws against smuggling and counterfeiting leading to severe punitive measures. There is a wide spread consensus that manufacture, distribution and sale of tobacco products should be regulated. There is a wide spread apprehension that over regulation will marginalise legitimate, tax-paying, regulated businesses employing thousands of people, and risk forcing tobacco products’ illicit, non-taxpaying, unregulated trade to flourish.The government officials somewhat reluctantly agree that in Pakistan, the illicit trade of tobacco manages a share of 20 per cent in the market. However the un-official number is still higher. If severe regulations are put on tobacco industry, without checking the illicit trade, then the inverse effect would lead to low tax collection, high unemployment and increased availability of cheap illicit cigarettes in the market.While legitimate tobacco industry in Pakistan has been compliant working closely with the government and has agreed to a number of steps suggested by the ministry of health, the unregulated sector continues to flout all rules.“While it suits the so called campaigners to target big businesses as this gives them satisfaction they rarely think about the growth potential of illegitimate sector that will eventually come about if the legitimate industry is put out of business,” said other tobacco industry sources.

Price hike to increase gas theft

Thursday, November 27, 2008

By Jawwad Rizvi

LAHORE: The recent hike in gas prices will further increase Unaccounted for Gas (UFG) simply called line losses of the gas companies as chances of gas theft will increase. The gas prices had registered an upwards trend during the last eight months. The new government had twice increased rates of natural gas. First raise in the gas price was made in the backdrop surging trend in international oil prices, while the recent hike was made after increase rupee-dollar parity. After first increase, the line losses of Sui Northern Gas Pipelines Ltd (SNGPL) increased by almost 2 per cent. According to an official of the company, line losses in the last quarter have crossed 8 per cent as compared to the corresponding period of last year. Due to increase in the line losses Oil and Gas Regulatory Authority (OGRA) had also imposed a penalty of Rs2.7 billion as the company UFG losses crossed the minimum bench mark of 6 per cent set by the authority.He said that there are contributors in UFG lose including the gas theft, leakages and measurement. However, gas theft contributes maximum in controlling leakages and company always continued efforts to stop leakages. On the other hand the measurement errors are also minimised, he added.A quantum increase in UFG loses were recorded after first increase in the gas prices, he said adding that the top management of the company had feared the tendency of gas theft increases after surge in gas prices by the government.He said that the top management of the company had issued strict instructions to the GMs of all eight regions to bring down the UFG loses intimating them any disciplinary action in case of failure to achieve the target.The electricity pilferage by ignorance of the previous government has created a monster which is now almost uncontrolled by any of the authority. Now the new government is also committing the same mistake in natural gas. Quantum increase in the prices of natural gas is attracting gas consumers to go for its theft. The electricity theft is visible and easily deducted by the power distribution companies while they also have support of the law to deduct the electricity supply.Contrary to this, to check natural gas theft is an uphill task. The people who theft gas laid down a parallel line from the main supply line with the involvement of companies officials. As the gas pipeline was the laid down underground and not visible to anyone. Thus, the gas companies can not take action without prior information. Big commercial and industry consumers are usually involved in gas theft as compared to the domestic consumers. Thus to take action against such people always remained the issue for gas companies.Only solution to bring down UFG losses would be that government reduces gas prices again by bringing down rupee dollar parity, said and official of ministry of petroleum and natural resources. He said that the crude oil price has registered a declining trend internationally, if the government brings down rupee-dollar parity to Rs60, equal to one US dollar then the prices of gas will be reduced.

Price hike to increase gas theft

Thursday, November 27, 2008


By Jawwad Rizvi
LAHORE: The recent hike in gas prices will further increase Unaccounted for Gas (UFG) simply called line losses of the gas companies as chances of gas theft will increase. The gas prices had registered an upwards trend during the last eight months. The new government had twice increased rates of natural gas. First raise in the gas price was made in the backdrop surging trend in international oil prices, while the recent hike was made after increase rupee-dollar parity. After first increase, the line losses of Sui Northern Gas Pipelines Ltd (SNGPL) increased by almost 2 per cent. According to an official of the company, line losses in the last quarter have crossed 8 per cent as compared to the corresponding period of last year. Due to increase in the line losses Oil and Gas Regulatory Authority (OGRA) had also imposed a penalty of Rs2.7 billion as the company UFG losses crossed the minimum bench mark of 6 per cent set by the authority.He said that there are contributors in UFG lose including the gas theft, leakages and measurement. However, gas theft contributes maximum in controlling leakages and company always continued efforts to stop leakages. On the other hand the measurement errors are also minimised, he added.A quantum increase in UFG loses were recorded after first increase in the gas prices, he said adding that the top management of the company had feared the tendency of gas theft increases after surge in gas prices by the government.He said that the top management of the company had issued strict instructions to the GMs of all eight regions to bring down the UFG loses intimating them any disciplinary action in case of failure to achieve the target.The electricity pilferage by ignorance of the previous government has created a monster which is now almost uncontrolled by any of the authority. Now the new government is also committing the same mistake in natural gas. Quantum increase in the prices of natural gas is attracting gas consumers to go for its theft. The electricity theft is visible and easily deducted by the power distribution companies while they also have support of the law to deduct the electricity supply.Contrary to this, to check natural gas theft is an uphill task. The people who theft gas laid down a parallel line from the main supply line with the involvement of companies officials. As the gas pipeline was the laid down underground and not visible to anyone. Thus, the gas companies can not take action without prior information. Big commercial and industry consumers are usually involved in gas theft as compared to the domestic consumers. Thus to take action against such people always remained the issue for gas companies.Only solution to bring down UFG losses would be that government reduces gas prices again by bringing down rupee dollar parity, said and official of ministry of petroleum and natural resources. He said that the crude oil price has registered a declining trend internationally, if the government brings down rupee-dollar parity to Rs60, equal to one US dollar then the prices of gas will be reduced.

Fake shares case, investigation takes fresh turn

Sunday, November 23, 2008

By Jawwad Rizvi
LAHORE: The recent arrest of an owner of a Karachi based printing press and graphic designer for printing fake shares of companies listed at stock exchange including Norrie Textile Mills Limited confirmed the initial findings made in the on-going investigations initiated by the Securities and Exchange Commission of Pakistan.

Earlier in September 2008, the Central Depository Company, Karachi (CDC) reported to the SECP that in an attempt to enter its shares on the CDC in electronic format, Norrie Textile Mills Limited had fraudulently represented that it has a paid up capital of Rs598.6 million divided in 59.8 million shares (beyond its actual reported capital of Rs48.6 million).

These were registered with CDC as a result of the fake declaration filed by two directors of Norrie Textile Mills Ltd Zakaria Ghani and Khalid Abid M. Shah. These shares were thereafter entered into the Central Depository System by way of deposit of physical shares through various brokers including 21 million shares by Al-Mal Securities, one of the associated companies of Norrie Textile Mills.

Such physical shares, are deposited with the brokers and are presented to the share registrar as per procedure to be de-materialized and kept in record, however, the recent confiscation of fake printed shares by the FIA substantiates the apprehension that no such physical shares were deposited earlier by the different participants, including the brokerage firm, and that these fake shares were being printed to unlawfully build the share record and to conceal the issue of fake shares by Norrie Textile Mills Ltd.

Earlier the Commission initiated action and the CDC eligibility of Norrie Textile Mills Ltd shares was revoked and the trading status of the share registrar of the company M/s First Investec Modaraba, Al-Mal Securities and other suspected individuals involved was suspended / blocked. The Commission further ordered an inspection under section 231 of the Companies Ordinance, 1984 to inspect the books of accounts and books and papers of Company to verify the issue of 55 million fake shares by the company beyond its reported paid up capital comprising of 4.8 million shares. Simultaneously, another enquiry was authorized under section 21 of the Securities and Exchange Ordinance, 1969, to investigate the dealings and transactions in the shares of the company.

However Norrie Textile Mills Ltd, its share registrar and the brokerage firm involved did not provided the requisite books and records to the authorized officials of the Commission, and instead resorted to legal notices to the Commission. The Commission requested the Honourable High Court of Sindh, Karachi for access to the records of the Norrie Textile Mills Ltd, in a pending matter of J.M. No. 16 of 2006 already filed by the Commission.

The High Court of Sindh directed the Norrie Textile Mills Ltd through its order dated September 25, 2008, to produce all the records before the inquiry officers appointed by the Commission within 15 days of the said order.

Norrie Textile Mills Ltd succeeded to get another extension of 15 days from the Honourable Sindh High Court on October 28, 2008. Upon expiry of this extension, Norrie Textile Mills Ltd was apparently getting the fake certificates printed to build their record for production before the SECP Inspectors or the Court. When approached to the SECP, it was revealed that every time an inspection of record is sought, various companies manage to obtain stay orders, preventing SECP from carrying out inspections, and detect fraudulent activities, if any, taking place, thus undermining the interest of shareholders and public at large. The SECP is empowered to inspect all records and investigate matters related to the company transactions under the Companies Ordinance 1984.

Acute water shortage likely to hit 25m tonnes wheat target

Saturday, November 15, 2008

By Jawwad Rizvi
LAHORE: The ongoing acute water shortage is likely to undermine the federal government’s wheat production target of 25 million tonnes set for this season.
The government and private sector agriculture experts are solely depending upon extraordinary weather pattern, which brings more rain as compared to the historic trend to meet ambitious wheat production targets.
The News gathered information from wheat growers as well as federal minister for food agriculture and livestock, Punjab agriculture and irrigation departments’ officials found a fear of missing wheat production targets due to forecast water shortage during whole Rabi season.
Both MINFAL minister Nazar Muhammad Gondal and Punjab Agriculture Minister Ahmed Ali Aulakh have announced 35 per cent water shortage at two different forums in Lahore two days ago.

The government officially at different forums admitted a water shortage of 35 per cent during the Rabi season at main water supply system ie in dams and canal heads. However, irrigation department experts and growers believed that water shortage would be increased 45 per cent due to water losses in the canal distribution systems, and small distributaries and water channels, which bring water from canals to fields.

According to the data of Punjab Irrigation Department available to The News, the province has consumed 4.19 Million Acre Feet (MAF) water of the total allocated share by the IRSA of 12.75 MAF to the province at the start of the Rabi season.

The irrigation department experts said the country has already shortage of water in its dams. The Tarbela level is 1452.2 feet from the last year 1464 feet registering a decline of 12 feet, which is equal to some 250,000 cusec water loss. Similarly, water shortage of some 420,000 cusecs is faced by the country in Mangla, as the current water level in the dam is 1140 feet as compared to the last year 1161 feet.

The Punjab Irrigation Department is committed to provide smooth water supply for wheat sowing campaign said an official of the department admitting that the department should maintain its water share given by IRSA till March 2009 to ensure water requirements of wheat crop. He further said the department can’t take risk to utilise whole of its share and completely depend on nature.

Progressive farmer Hamid Malhi commenting on wheat production target of 25 million tonnes said it is out of question to meet this target. Country’s wheat yield is likely to equal to the last year or slightly up, he remarked, adding that the wheat production figures were controversial but it will be some 21 million tonnes or a little bit more.

Talking about seeds issue, Malhi said every wheat grower has seeds and there is no such issue. However, there is some wheat replacement issue but it is not crucial. He was of the view that the high wheat price would bailout the country from wheat crisis and viewed that the government had fixed such price to avoid wheat crisis.

On the other hand, the Punjab Agriculture Department has targeted 17000,000 acres of land to sow wheat to achieve the production target of 20 million tonnes. According to the target figures assigned by the agriculture department to different districts, the department has fixed the per acre yield target of 31.52 maund per acre for the wheat crop 2008-09.

The department has fixed sowing target for Attock around 416,000 acres, with production target of almost 256,000 tonnes with per acre yield target at 16.49 maund per acre. In Rawalpindi, wheat sowing is likely on 323,000 acres with production target of 249,000 tonnes and per acre yield target is 20.63 maund.

In Jhelum, the sowing target is fixed at 139,000 acres and production target of 109,000 tonnes with per acre yield target at about 21 maund per acre. For Chakwal, the sowing area target is 323,000 acres, production targets 175,000 tonnes and per acre yield target is 14.53 maund. For Sargodha district, sowing target is 548,000 acres, production 600,000 tonnes and per acre yield target 29.37. For Khushab, the sowing target is about 227,000 acres, production target is 173,000 tonnes and per acre yield target is 23.50 maund. For Mianwali, the sowing target is 440,000 acres, production target is 390,000 tonnes and per acre yield has been fixed at 23.72 maund.

Likewise, the sowing target for the district Bhakkar is 421,000 acres, production target is 435,000 tonnes and per acre yield is 27.71 maund. Faisalabad’s sowing target is 706,000 acres, production target 894,000 tonnes and per acre yield target is 33.91 maund.

Toba Tek Singh’s sowing target is around 417,000 acres of land, production 584,000 tonnes and per acre yield 37.55 maund. Jhang’s sowing will be on 987,000 acres, production target will be 1235,000 tonnes and per acre yield target is 33.50 maund.

For Gujrat the agriculture department target sowing on an area of 383,000 acres of land, production target about 229,000 tonnes and per acre yield is 20.97 maund. Mandi Bahauddin sowing target is 325,000 acres, production target is about 403,000 tonnes and per acre yield target has been fixed at 33.14 maund. For Sialkot, the sowing target is 539,000 acres, production around 652,000 tonnes and per acre yield target has been fixed at 32.42 maund.

For Narowal, the sowing target is 415,000 acres, production 408,000 tonnes and per acre yield at 26.34 maund. For Gujranwala, the area for sowing has been targeted at 607,000 acres, production about 887,000 tonnes and per acre yield at 39.12 maund.

In Hafizabad, the department has targeted some 393,000 acres land for wheat sowing setting production target of 544,000 tonnes with per acre yield of 37.11 maund.

Wheat is likely to be sowed at some 461,000 acres lands in Sheikhupura with production targets of 548,000 tonnes and per acre yield of 31.84 per maund. Nankana Sahib sowing target is 422,000 acres, production 578,000 tonnes and per acre yield at 36.68 maund. Kasur sowing target 478,000 acres, production 623,000 tonnes and per acre yield at 34.91 maund. Okara around 514,000 acres, production 786,000 tonnes and per acre yield at 41 maund. For Sahiwal, the sowing target is 370,000 acres, production 481,000 tonnes and per acre yield at 34.76 maund.

Need to cut all-powerful arahti down to size

Monday, November 10, 2008

By Jawwad Rizvi
LAHORE: ARAHTIS (middlemen) and beoparis (traders) exploit both growers and consumers as they play a vital role in fixing the market price of agricultural produce.

The institution of arahti is very old and the arahtis have been playing a vital role in determining the prices of agricultural produce since the rule of Hindus in the subcontinent. For growers, arahtis play the role of a private money lender and usually provide agriculture inputs to growers and in return purchase produce at very lower rates. In some cases, they provide growers a little share from his own crop which is hardly enough to meet his requirements. The arahtis also deprive growers of the actual profit, which they could have earned by selling the produce themselves, develop cartels in small markets and manipulate prices. They have the capacity to hoard produce and sell it in off-season and mint huge profits.

The role of arahti in the grain, fruit and vegetable markets has strengthened with the time. He cannot be removed from the scene but his role can be minimised by amending laws.

The main reason for strengthening of arahti in these markets is unavailability of easy liquidity to growers. Lack of information about market prices of grains, fruits and vegetables is another reason. Growers also feel embarrassed about selling their products themselves so arahtis ‘arrange’ it for growers.

In order to diminish the role of arahtis in markets, the government would have to act with sincerity. For credit availability, the central bank must develop a farmer-friendly lending policy.

Unfortunately, in Pakistan, the central bank issues instructions to commercial banks, asking them to ensure issuance of a certain amount of money as agri loans out of total liquidity. In many cases, commercial banks merely reschedule their old agri loans and do not issue fresh loans.

On the other hand, it is an uphill task for growers to get agri loans from commercial banks. Most of the time, growers fail to submit required documents to commercial banks due to their limited knowledge. Farmers do not approach banks as they shy away from getting into lengthy paperwork and complicated procedures. That is why they prefer borrowing money from private money lenders at much higher interest rate.

Another way to rescue growers from the clutches of arahtis is to provide growers with agri inputs rather than loan.

The role of arahti varies in grain, fruit and vegetable markets. In wheat trading, he plays a key role in determining wheat market price. Millers, however, exploit growers when it comes to kharif crops such as rice, cotton and sugarcane. In fruit and vegetable markets, beoparis play a key role while arahti’s share is much less.

In wheat trading, the nexus of government employees responsible for wheat procurement and arahti is behind exploitation of growers. Availability of bardana (jute bags) during wheat selling season is another serious issue growers face. Arahtis usually buy jute bags and cash-strapped growers are left at their mercy. There is a need to end this practice in order to protect growers from arahtis.

The role of arahtis can also be minimised if the government constructs more warehouses for storage of grains. Once the government sets up storage facilities, then it can rent them out to those who need it. Most of the time, small growers have the capacity to store wheat that is enough only for their yearly requirement. They are forced to sell excess produce for whatever price they get as storage of produce out in the open is fraught with risks.

In the case of kharif crops such as rice, sugarcane and cotton, commission agents (part-time arahtis) exploit growers. In Punjab, majority of rice mills, cotton ginning factories and sugar mills are owned by political heavyweights. Mills delay the payment and buy produce from commission agents who purchase produce from growers. Thus commission agents purchase produce at relatively low price and sell it to mills at prevalent rates.

In fruit and vegetable markets, beoparis are the players who determine prices. They operate in almost every village and fruit and vegetable producing areas. Farmers do not want to bring their produce into markets themselves.

They also lack information about the real market price of their produce. Beoparis thus purchase fruit and vegetable below market price and sell it in city markets at much higher rates. This way, they pocket the margin and the grower and the consumer remains at the receiving end.

In fruit and vegetable markets, pharias play a vital role in pushing prices upwards. Pharias usually do nothing but facilitate the process of the produce changing hands. Beoparis bring fruit and vegetable to the market from producing areas and sell it to arahtis. Later, arahtis sell it to pharias in the first bidding. An ordinary bidder can not become a part of the chain of beoparis, arahtis and pharias.

The role of beoparis is crucial in a situation in which farmers are not willing to bring their produce to the market themselves.

Similarly, arahtis arrange biddings and provide credit to beoparis to bring growers produce to the market. Wealthy beoparis, however, are not dependent on credit and purchase produce from growers on their own. It is vital is to eliminate the role of pharias in order to minimise the difference between consumer and grower prices.

There is a need to improve market infrastructure in order to expel pharias from fruit and vegetable markets. In Punjab, market committees face staff shortage whereas in the Indian Punjab, market committees have huge staff to monitor biddings process and handle other issues.

The Punjab government has allowed the private sector to establish fruits and vegetables markets and also evolved modalities. This move may promote competition among public and private sectors fruit and vegetable markets. But steps are needed to improve the market infrastructure and revamp the role of arahtis and beoparis.

PASSCO-procured rice to be exported on govt-to-govt basis

Friday, November 14, 2008
By Jawwad Rizvi

LAHORE: Paddy procured by the Pakistan Agriculture Storage and Services Corporation (PASSCO) will be exported on government-to-government basis.
The Rice Exporters Association of Pakistan (REAP) exports rice from Pakistan, while the federal government has decided to export this grain itself first time.
The decision was made in a meeting held here at PASSCO headquarters Thursday. The meeting was chaired by the Federal Minister for Food Agriculture and Livestock (MINFAL) Nazar Muhammad Gondal. The meeting was attended by Federal Secretary Ministry of Food, Agriculture and Livestock (Minfal) Zia ur Rehman, Managing Director PASSCO Maj. Gen. Anwar Saeed Khan, Chairman Basmati Growers Association Hamid Malhi and others attended the meeting.
The sources privy to the meeting revealed to The News that the government has also decided to supply some 1.5 to 2 lakh tonnes basmati rice in the local market through Utility Store Corporation in order to keep the local market prices in equilibrium. However, the total procured IRRI-6 will be exported by the government and for this the government is already planning to target the specific markets of IRRI-6.
The meeting has also discussed Sindh issues as this province is the major producer of the IRRI-6 rice variety and the international rates of this product have registered a declining trend. Almost more then 40 per cent of IRRI-6 crop is harvested in Sindh.
They disclosed that the minister has instructed the PASSCO to spread its procurement campaign to maximum range. The meeting hoped that number of rice mills in Punjab that will be husking rice procured for PASSCO would cross 100 in next two to three days as the corporation is doing agreements with them. Similarly, in Sindh the PASSCO will make agreements with almost 100 mills.
Latter, addressing a press conference MINFAL minister Nazar Muhammad Gondal announced that the federal government has decided to export rice to be procured by PASSCO. “We have decided to export rice through government-to-government agreements,” he said.
He said Pakistan produces finest quality of Basmati in the world and it is in great demand in the international market. He said Pakistan has demand of one million tonnes of Basmati from Saudi Arabia and also from Iran and matter is being negotiated.
To a query he said that production of rice in the country is expected to be around 6.2 million tonnes.
The Minister said that the government had taken the decision some two months back to buy paddy in case prices decreases in the domestic market. He said that the PASSCO had entered in to agreement with 20 rice mills to buy paddy on behalf of the Corporation at the rate of Rs1,500 per 40 kilograms for Basmati and Rs700 per 40 Kilograms for IRRI variety. The Corporation would then buy rice from these mills at the rate of Rs3,000 per 40 Kilograms Basmati and Rs1,400 per 40 Kilograms IRRI.
The minister said that to date the PASSCO had made agreements with the total 40 rice mills across the country while the corporation is aggressively doing this job and the number will increase till evening (Thursday evening). He said that target initially assigned to the PASSCO was One million tonnes (500,000 tonnes of each Basmati and IRRI). However if the need persists and rates were not stabilized, then PASSCO could got for purchase of another one million tons of rice, he added.
However, he admitted that in the first two days of the procurement no major success was achieved to the PASSCO. The PASSCO had purchased only 900 tonnes in two days, he said announcing that the procurement will pick up from Friday.
He said that mills in agreement with the Corporation had also been assured that their limits of Bank Advances would also be get enhanced to facilitate them in procurement of paddy.
Replying to another query regarding start of crushing season, he said that the sugar mills have assured the government that crushing would start between November 15 to 20. He said that outstanding dues of farmers against sugar mills were now very negligible and government put in all efforts to get the dues of farmers cleared.
Earlier the Minister chaired a meeting at PASSCO head office with regard to paddy procurement.

DCOs to tell farmers about phosphorous use

Tuesday, November 11, 2008

By Jawwad Rizvi

LAHORE: THE Punjab Agriculture department has asked the district coordination officers of the province to create awareness among farmers and take necessary steps to ensure maximum utilization of phosphorus-based fertilizers in Rabi crops. The letter asked DCOs to launch a campaign to motivate the farmers to increase the use of the phosphorus-based fertilizers during sowing for an increased yield. The use of the phosphorus-based fertilizers has sharply declined during the last one year both in Kharif and Rabi crops. According to official figures, a decline of over 60 per cent in use of the fertilizers was registered during the Kharif crop across the province while it has registered a 38 per cent reduction in use in the Rabi crops.Meanwhile, private sector farmers’ organisations claims showed more decline in phosphorus-based fertilizers use as compared to the government’s figures. The farmers claimed that during the last year, use of phosphorus-based fertilizers was reduced by more than 65 per cent and in Rabi, it was over 40 per cent. According to the government figures, the use of phosphorus-based fertilizers during the Rabi season of 2007-08 was recorded at 514,000 tones as compared to 2006-07 wherein it was 833,000 tones which was historic utilization of phosphorus-based fertilizers. The federal government has announced first time subsidy on fertilizers in 2006-07 which was the basic reason of increase in phosphorus-based fertilizers use then. However, in 2007-08, unprecedented hike in fertilizers prices compelled the farmers to reduce phosphorus-based fertilizers intake. An average intake of phosphorus-based fertilizers in Punjab was 606,000 tones. This year the Punjab agriculture department has set phosphorus -based fertilizers intake target of 720,000 which will be the second highest if utilised after 2006-07. Similarly, a reduction in phosphorus-based fertilizers intake had been recorded in Kharif season. Hoarding and smuggling was the main reason of decline in phosphorus-based fertilizers intake in 2007-08 Kharif season. It was very difficult for a common farmer to get fertilizer timely. Now, the Punjab agriculture department in a letter sent to DCOs stated that it was an open secret that the use of the phosphorus-based fertilizers was reduced to a significant extent in previous Kharif and Rabi crops, that is why a hefty subsidy was given to the farmers so that they increase its use in wheat crops in the province because the deficiency of this important nutrient in wheat leads to stunted growth, poor tillering, delayed maturity, reduced root system and also creates susceptibility to moisture stress. Therefore, all the agriculture extension activities now are focused on maximizing the use of phosphorus, timely sowing with certified clean and graded seed of wheat. The agriculture department has asked that the launch of the awareness campaign must be extended to sensitize the use of phosphorus and its recommended brands such as DAP, MAP, TSP, SSP and NP respectively. Moreover, it is apprehended that increase in its use may lure the unscrupulous elements to market spurious brands of this costly fertilizer. Therefore, a watchful eye is also needed to ensure the provision of quality phosphorus fertilizers to the end consumers on notified prices. This targeted anti-adulteration drive will be a part of this campaign. The agriculture department has also asked the DCOs and district agriculture officials concerned to continue anti-adulteration campaign against substandard and spurious fertilizers and pesticide during Rabi season as well.

DCOs to tell farmers about phosphorous use

Tuesday, November 11, 2008

By Jawwad Rizvi

LAHORE: THE Punjab Agriculture department has asked the district coordination officers of the province to create awareness among farmers and take necessary steps to ensure maximum utilization of phosphorus-based fertilizers in Rabi crops. The letter asked DCOs to launch a campaign to motivate the farmers to increase the use of the phosphorus-based fertilizers during sowing for an increased yield. The use of the phosphorus-based fertilizers has sharply declined during the last one year both in Kharif and Rabi crops. According to official figures, a decline of over 60 per cent in use of the fertilizers was registered during the Kharif crop across the province while it has registered a 38 per cent reduction in use in the Rabi crops.Meanwhile, private sector farmers’ organisations claims showed more decline in phosphorus-based fertilizers use as compared to the government’s figures. The farmers claimed that during the last year, use of phosphorus-based fertilizers was reduced by more than 65 per cent and in Rabi, it was over 40 per cent. According to the government figures, the use of phosphorus-based fertilizers during the Rabi season of 2007-08 was recorded at 514,000 tones as compared to 2006-07 wherein it was 833,000 tones which was historic utilization of phosphorus-based fertilizers. The federal government has announced first time subsidy on fertilizers in 2006-07 which was the basic reason of increase in phosphorus-based fertilizers use then. However, in 2007-08, unprecedented hike in fertilizers prices compelled the farmers to reduce phosphorus-based fertilizers intake. An average intake of phosphorus-based fertilizers in Punjab was 606,000 tones. This year the Punjab agriculture department has set phosphorus -based fertilizers intake target of 720,000 which will be the second highest if utilised after 2006-07. Similarly, a reduction in phosphorus-based fertilizers intake had been recorded in Kharif season. Hoarding and smuggling was the main reason of decline in phosphorus-based fertilizers intake in 2007-08 Kharif season. It was very difficult for a common farmer to get fertilizer timely. Now, the Punjab agriculture department in a letter sent to DCOs stated that it was an open secret that the use of the phosphorus-based fertilizers was reduced to a significant extent in previous Kharif and Rabi crops, that is why a hefty subsidy was given to the farmers so that they increase its use in wheat crops in the province because the deficiency of this important nutrient in wheat leads to stunted growth, poor tillering, delayed maturity, reduced root system and also creates susceptibility to moisture stress. Therefore, all the agriculture extension activities now are focused on maximizing the use of phosphorus, timely sowing with certified clean and graded seed of wheat. The agriculture department has asked that the launch of the awareness campaign must be extended to sensitize the use of phosphorus and its recommended brands such as DAP, MAP, TSP, SSP and NP respectively. Moreover, it is apprehended that increase in its use may lure the unscrupulous elements to market spurious brands of this costly fertilizer. Therefore, a watchful eye is also needed to ensure the provision of quality phosphorus fertilizers to the end consumers on notified prices. This targeted anti-adulteration drive will be a part of this campaign. The agriculture department has also asked the DCOs and district agriculture officials concerned to continue anti-adulteration campaign against substandard and spurious fertilizers and pesticide during Rabi season as well.

REAP demands more paddy procurement centres

Tuesday, November 11, 2008

By Jawwad Rizvi

LAHORE: Rice Exporters Association of Pakistan (REAP) has requested the government to increase procurement centres for paddy while the Pakistan Agriculture Storage and Supplies Corporation (PASSCO) said it would meet the needs of paddy growers.Chairman REAP, Haji Muhammad Azhar Akhtar talking to The News said that the government would not be able to achieve the paddy procurement target with few procurement centres.Criticising PASSCO’s decision to open only 100 procurement centres for buying paddy from farmers in Punjab, he said that the number of procurement centres were insufficient to meet the target.“The country is expecting almost three million tonnes of Basmati rice crop this year and the 100 procurement centres will not be able to cover the whole rice producing area in the province,” Azhar said. He was of the view that due to improper procurement arrangements made by PASSCO, almost 90 per cent growers of rice would be badly affected, which would have a negative impact on wheat sowing.Talking about the estimated milling capacity of the rice mills in the Punjab, he said that each mill produced almost 25 tonnes daily (approximately), which means that 100 procurement centres will procure 2,500 tonnes of rice daily. He said by this formula, these centres could buy only 50,000 tonnes in next twenty days. He claimed that paddy would not be available with farmers after these 20 days and efforts of the government to stabilise the prices of paddy and help farmers would not bear desired results.REAP Chairman said that there were 1,470 milling units in the province and the government should increase the number of procurement centres to 400 from existing 100 in a way that these units should cater to the requirement of whole of the rice producing area. He said that if PASSCO failed to procure 500,000 tonnes of rice in the next twenty days, it would over-flow the domestic rice market making it hard for the exporters to sell rice abroad on reasonable rates.Azhar Akhtar urged the government to immediately convene a meeting of the exporters, growers and millers to listen to their problems and increase the number of procurement centres.When contacted an official of the PASSCO involved in paddy procurement campaign said that the Corporation is catering the needs of farmers not the REAP. He claimed that soon after the PASSCO officials had started visiting Punjab, the price of paddy has increased to Rs1,100 to Rs1,350 per maund in just one day. He said that the PASSCO has been further checking the availability of rice mills as well. “As many mills will purchase paddy the growers get money and will be able to purchase fertilizers and seeds for next wheat crop”, he added.

Fifteen Chinese brands on world’s top 500 list

Saturday, November 08, 2008


By Jawwad Rizvi
LAHORE: The Chinese products have flooded the world market in last few years outclassing products from other economies due to cheaper rates and variety.China is now the second-largest economy in the world with GDP of over $6.9 trillion (2007), measured on purchasing power parity (PPP) basis.Chinese goods are in demand throughout the world, popular in developed as well as developing economies, because of their low cost and good quality.From roadside vendors to uptown shopping malls Chinese products fill the shelves.Success of Chinese products is due to range of prices offered for particular product to different buyers. A Chinese company selling a particular product in the USA for $10 would be supplying similar product of lower quality to Pakistan and Bangladesh for $2 to $3, these products may look alike but there quality would be different. Better quality, good material and durability would definitely mean higher price.Traders in developing economies mostly import low quality Chinese products keeping in view the low purchasing power of consumers. In developed economies Chinese products have to comply with strict health, quality and safety standards.The World Brand Lab, Chaired by Robert Mundell, 1999 Nobel Prize laureate in Economics, ranked the top 500 brands and announced in July of these fifteen Chinese brands were listed among the world’s top 500 brands in 2008, based on their market shares, brand loyalty and global leadership.The three newcomers on the list were China National Petroleum Corporation, China Merchants Bank and Tsinghua Tongfang, while 12 Chinese brands retained their position from the previous year. The 12 brands include Haier, Lenovo, Industrial and Commercial Bank of China, State Grid, Bank of China, China Life, Changhong, China Railway Group, Air China and Sinopec. Also, in the 2008 list, China ranked the seventh in terms of the number of listed brands. This shows that the Chinese products popularity across the globe.Bilateral trade between China and Pakistan was more than $7 billion in year 2007 and the two sides have set a target of $15 billion annually by 2011. An increasing number of Chinese manufacturers are operating in Pakistan such as white goods maker Haier, telecommunications firm ZTE, electronic giant SVA and a number of motorcycle companies. The demand for Haier’s quality electrical appliances exists all over the world.The IMF predicts that China would grow by more than 11 percent and India at around 9 percent this year, with almost equal rates in 2008. To get advantage of Chinese growth the Pakistan needs closer ties with China. During the recent visit of the president Asif Zardari Chinese leaders vowed to enhance bilateral economic cooperation between industrial and business communities. China will launch a telecommunication satellite, PakSat-1R for Pakistan in year 2011. China Mobile has invested $800 million in its first international venture Zong and plans to expand Zong network in Pakistan.Huawei Technology a telecom solution provider is the only vendor serving all the mainstream telecom operators of Pakistan including PTCL, Ufone, Mobilink, Telenor, Warid and Zong etc. Also, San Ya Fang has donated equipment valued at one million dollars for establishing e-Government project initiative taken by the government of Pakistan.

Article was published in The News in Business Pages on Saturday.

Action against money changer may affect hundi business

Sunday, November 09, 2008

By Jawwad Rizvi

LAHORE: THE government’s action against one of the biggest money changers in the country is likely to affect the unregulated segment of economy which runs parallel to the documented economy. Informal transfer of funds happens across the globe. However, this has greater impact on South Asian economies as a large number of workers from this region working abroad.Migrant workers especially in East and Southeast Asia send money to their homes through informal channels called hundi or hawala.Hundi is an informal way to send money but this activity is very organised. Hundi was used both as an instrument to remit funds from one place to another as well as to raise short-term credit which would be repaid on maturity at another place. The discount or commission charged at the time of drawing a hundi, therefore, was always greater if a hundi had been bought for remitting the same sum of money. There are three phases in a hundi transaction: the first mile, the intermediary stage and the last mile. The hundi is adopted and transformed through reciprocity. The system is composed of a web of interconnecting social relationships that support the transfer of migrants’ savings internationally. The migrant workers’ usually use a cheap and convenient service which give them a chance to send a little bit extra money to their homes as compared to the formal channels in which they have to pay relatively higher. The informal economy of hundi or hawala amounts to billions of dollars annually across the globe. In Pakistan, according to estimates, four billion were routed through the hundi system in the country every year against less then a billion through official channels. Historically, the hundi got a big international boost in the 70s and the 80s when million of Pakistani, Bangladeshi and Indian landed jobs abroad especially in the Middle East.Interestingly, a crackdown against the informal economy of hundi was also planned during the tenure of the Pervez Musharraf regime as part of war against terror. However, no substantial steps were taken at that time. During the same time, the United Arab Emirates government issued strict instructions to money changers, asking them to keep record of people or institutions that transfer an amount of 2,000 UAE dirham or equivalent to other currencies. This time the government has launched a crackdown on hundi business due to huge outflow of US dollars from Pakistan during the last six to eight weeks.According to official estimates, roughly five to seven billion dollars change hands in Pakistan through Hundi. Hundi system was well-knitted in the 80s and overshadowed formal banking system. In the 70s, Pakistanis used to receive remittances in the range of $3 to $4 billion annually from overseas workers through normal banking channels but the figure dropped to as low as $450 million despite the fact that during all these years more and more Pakistanis went abroad. The reasonable difference between the open market and the kerb market exchange rates are the major reason of the hundi system flourishing in Pakistan and the increase in number of people sending money via informal channels.There are two parallel exchange rates existing in the country: one is the official bank rate and the other is the Kerb market rate. Prior to 9/11, there was a two per cent gap between the Central bank’s official exchange rate and the Kerb rate which promoted the informal sector. Recent quick flow of hundi business was witnessed due to economic uncertainty in the country as well as slump in real estate and stocks markets. The investors took heavy positions and withdrew their money quickly from these markets and transferred funds to Middle East real estate businesses. Due to economic meltdown, rumours of bankruptcy and commercial banks defaults, people transferred huge amounts of foreign exchanges to aboard. Majority of people adopted informal system (hundi) for these transactions as the rates offered by the informal sector was higher then the formal sector and the delivery was quicker as well.In Lahore, after Karachi, the FIA had started a crackdown against money changers involved in hundi business. Sources in the FIA revealed that the agency has arrested one money changer of Lahore, Saleem. They said that a team was investigating and auditing his company’s trading records. They said that the FIA had clues that this person does almost $340 to $440 million hundi transactions in just one month. After Karachi crackdown, the offices of Khanani & Kalia International (KKI) remained closed in Lahore. However, the crackdown has spread panic among money changers and trading activities remained thin.

Article was publihsed in The News in Lahore City pages on Sunday

Market, license fee submission date extended

By Jawwad Rizvi

LAHORE: THE provincial Agriculture Marketing department has extended the date for submission of market and license fees and restricted officials concerned from recovering the same from outside the area of grain and fruits and vegetable markets, The News has learnt.
In a letter issued to Administrators/Secretaries Market Committees of the divisional headquarters of Lahore, Gujranwala, Sargodha, Faisalabad, Multan and Bahawalpur, special secretary of the Agriculture Marketing department has restricted the movement of inspectors and sub inspectors of the markets of these districts only to the notified areas of the markets.
The previous date for submission of the fees was October 31, which has been extended for three months.
The department has received a number of complaints about irregularities and harassments during the recovery process of the fees from traders and dealers working outside the areas of the grain markets and fruits and vegetables markets.
The department has found that in some areas, the market committee officials were still recovering the fees from Kiryana shops despite clear-cut instructions against it.
In order to streamline the process of recovery and remove malpractices, the department has decided that the detailed list of people liable to pay market dues should be prepared along with assessment of dues to be recovered.
The department in a pilot project initially launched this project in the divisional headquarters districts of the Punjab, which would later be extended to the other districts as well.
Under this project, sugar mills, cotton factories and others will asses their market fee and deposit the dues directly to a bank rather the market committee officials.
This practice is operational in India and only in Delhi; the market committee collects over Rs 600 annually under the head of market and license fee as compared to the same collected from whole of the Punjab, which is Rs 530 to Rs 540 million.
Thus the working of market mechanism in India is better then the Pakistan. The department has directed that a detailed list of licensees working outside regular grain/fruit & vegetable markets may be prepared to implement the revised procedure of collection of market fee and other dues.
The list of such licensees to the Agriculture Marketing department should be provided within 15 days as per described forms so that the procedure and schedule of recovery could be evolved.
The department has issued directives to secretaries and administrators of the market committees to stop their subordinates from visiting the premises and offices of businessmen working outside the limits of grain and fruit and vegetable markets and in the jurisdiction of their respective market committees.
They were that disciplinary action would be taken if any complaint was received in this regard.


The news item has published in The News on November 05 2008 in page 3

Market, license fee submission date extended

By Jawwad Rizvi

LAHORE: THE provincial Agriculture Marketing department has extended the date for submission of market and license fees and restricted officials concerned from recovering the same from outside the area of grain and fruits and vegetable markets, The News has learnt.
In a letter issued to Administrators/Secretaries Market Committees of the divisional headquarters of Lahore, Gujranwala, Sargodha, Faisalabad, Multan and Bahawalpur, special secretary of the Agriculture Marketing department has restricted the movement of inspectors and sub inspectors of the markets of these districts only to the notified areas of the markets.
The previous date for submission of the fees was October 31, which has been extended for three months.
The department has received a number of complaints about irregularities and harassments during the recovery process of the fees from traders and dealers working outside the areas of the grain markets and fruits and vegetables markets.
The department has found that in some areas, the market committee officials were still recovering the fees from Kiryana shops despite clear-cut instructions against it.
In order to streamline the process of recovery and remove malpractices, the department has decided that the detailed list of people liable to pay market dues should be prepared along with assessment of dues to be recovered.
The department in a pilot project initially launched this project in the divisional headquarters districts of the Punjab, which would later be extended to the other districts as well.
Under this project, sugar mills, cotton factories and others will asses their market fee and deposit the dues directly to a bank rather the market committee officials.
This practice is operational in India and only in Delhi; the market committee collects over Rs 600 annually under the head of market and license fee as compared to the same collected from whole of the Punjab, which is Rs 530 to Rs 540 million.
Thus the working of market mechanism in India is better then the Pakistan. The department has directed that a detailed list of licensees working outside regular grain/fruit & vegetable markets may be prepared to implement the revised procedure of collection of market fee and other dues.
The list of such licensees to the Agriculture Marketing department should be provided within 15 days as per described forms so that the procedure and schedule of recovery could be evolved.
The department has issued directives to secretaries and administrators of the market committees to stop their subordinates from visiting the premises and offices of businessmen working outside the limits of grain and fruit and vegetable markets and in the jurisdiction of their respective market committees.
They were that disciplinary action would be taken if any complaint was received in this regard.

The news item has published in The News on November 05 2008 in page 3

High tax affects growth of telecommunication industry

Tuesday, November 04, 2008

By Jawwad Rizvi

LAHORE: A discriminating tax regime for different industries is said to have negatively affected the rapidly-growing telecom sector, which has been burdened with 21 per cent federal excise duty instead of 16 per cent for other industries.According to a study conducted by The News, the combined effect of tax on a consumer has increased to 33.1 per cent, causing a fall of at least 7 per cent in the industry’s revenue. Consumers are finding it hard to step up spending in this period of high food inflation and make lesser calls to keep their bills at the same level.This has directly affected around 90 million people and negated the economic theory of supporting industries which drive economic growth. In the past, consumer taxes were kept lower, leading to an increase in consumption and higher volumes of business. That also contributed to the government exchequer in the form of higher revenues.Currently, the telecom sector is paying duties and levies under various heads including licence fee, spectrum charges as well as significant levies ranging from duty on usage to purchase of handsets. Pakistan is one of the highly taxed countries in the world, where specific taxes are applied to telecommunications.Additionally, with the new tax regime, activation tax has been maintained at Rs500 on SIM’s sale contrary to the recommendation of the industry. Besides, a duty of Rs750 has been imposed on the import of handsets, increasing the cost of owning a cheap cellphone.This has made telecommunications more expensive for the least served areas and poor people who are the main drivers of growth. By taking such decisions, the government is trying to treat communications as a luxury and not business utility, which has created opportunities for millions to expand their business and generate employment opportunities.Among those who now use mobile phones, around 90 per cent don’t even fall within the taxable income range set by income tax laws. In a recent GSMA study titled ‘Regulation and the Digital Divide’, data from 28 African countries was analysed. The study concludes that the cost of capital, which is a major proportion of the cost base of a capital-intensive industry, goes up in the face of erratic regulation. On the other hand, if consistent and fair regulatory practices were in place, the cost of capital would be lower and an additional $5 billion would be invested in mobile capacity and infrastructure.In Pakistan, the growth of telecom sector has been phenomenal with a consumer base of almost 90 million. However, extending connectivity to all is still a big challenge for the government and the private sector alike. The industry must cope with a multitude of factors including the sharply rising electricity tariff and the energy crisis which has led to a significant increase in the use of generators. Increase in oil prices has accelerated operational costs by a considerable margin.On the investment side, with the rising cost of doing business and prevailing economic conditions, the return from expansion in rural areas by telecom operators is also on the downside. This is another factor hampering not only the growth of the sector but also restricting accessibility for those yet to benefit from the cellular revolution.According to figures, cellular subscriber growth in the second quarter (April to June) of 2008 was at 7 per cent, which is expected to decline to 4 per cent in the third quarter. Total subscribers grew by 5.5 million in the second quarter. Total revenue of the cellular industry grew by almost Rs5 billion in the second quarter, which is expected to witness a decline of almost Rs2.3 billion due to increase in different taxes.Total growth in revenue in the second quarter was almost 10 per cent, which is expected to witness a negative growth of four per cent in the third quarter. Total taxes collected were almost Rs19.2 billion in the form of GST, withholding tax and activation tax in the second quarter and it is expected to be not more than Rs19 billion in the third quarter. The industry is expected to incur an additional cost of almost Rs150 million per month due to the increase in utility and fuel costs.On the other hand, with the advent of broadband and WiMax already out by key players are precursors to the ensuing communications revolution which brings with it countless benefits and opportunities. Today, a simple facility such as SMS messaging allows rural populace to reach health workers and even conduct financial transactions.As the digital divide is being bridged, not only voice but affordable data communications will be a reality for millions of Pakistanis. However, to achieve this goal, the cost of both ownership and use of mobile services must fall.

The article published in The News on Tuesday, November 04, 2008.

Ghee prices still high despite palm oil dip

Monday, November 03, 2008

By Jawwad Rizvi

LAHORE: It seems the federal government’s decision to fix ghee price at Rs 98 per kilogram is not being observed as low quality ghee brands are still being sold for Rs 100 and famous brands for over Rs 110 per kilogram, The News has learnt. Sources from different agencies collected data of prices for official use across the country which revealed that the no decline in the prices of ghee had been registered. The ghee manufacturers have not lowered down the prices of ghee across the country as they have left the prices of their products according the open market mechanism. They said there had been no decline in the prices of ghee even after the decision of the federal government.The Pakistan Vanaspati Manufacturers Association and Pakistan Solvent Extractors Association cheated the government officials by announcing to reduce the ghee price, but factually, the members of the both the associations refused to accept the new price and conveyed their respective associations that they would follow the open market price mechanism. The federal government, three days ago, fixed ghee prices at Rs 98 per kilogram after consulting with the industry’s stakeholders when the international palm oil prices and domestic ghee prices saw a declining trend.The sources said that ghee prices in Karachi ranged from Rs 110 to Rs 135 per kilogram, in Lahore from Rs 105 to Rs 135 per kilogram, the twin cities from Rs 108 to Rs 140 per kilogram. Similarly, in the small cities of Punjab, the ghee price is varying from Rs 108 to Rs 140 per kilogram and Rs 102 to Rs 138 per kilogram in different cities of Sindh. Interestingly, new official price of ghee was not observed in any makeshift markets organized by the City District Government Lahore (CDGL). In the open market of the city, price of famous ghee brands started from Rs 112 per kilogram and reached 135 per kilogram while that of local brand price ranged from Rs 102 to Rs 110 per kilogram. The government has taken decision of reducing ghee prices keeping the declining trend of international palm oil prices in order to rationalize ghee prices locally. Currently, international palm oil prices were decreased to $550 to $565 per tone from over $1000 per tone. Thus almost over 90 per cent decline has recorded in the international palm oil prices. Similarly, the future trend of the international palm oil prices shows that further decline is likely which will bring down the production cost of ghee at local level. The government decision of fixing ghee price at this time seems unwise decision as market dynamics is predicating a further decline in the international palm oil price. The decrease in the prices will bring down ghee prices locally. There is tough competition among the ghee manufacturers and they are compelled to bring down their prices once international palm oil prices decline.Meanwhile, Chairman Task force on Essential Items S A Hameed instructed the District Coordination Officers to ensure the sale of Ghee at Rs 98 per kilogram. He said that DCOs had also been instructed to take action against the shopkeepers involved in overcharging of ghee. He said that mill owners should also ensure the supply of ghee to retailers at new prices. He said it was the moral duty of ghee mill owners to reduce the prices of ghee after the decrease of palm oil prices in the international market to provide relief to consumers.

It was publihsed on Monday November 03 2008 in The News Lahore City pages.

Easing ADR condition may hurt depositors’ interest

Banks having huge exposure to commodity operations and lending to IPPs could end up reaching an advance to deposit ratio of 90 per cent

Sunday, November 02, 2008

By Mansoor Ahmad

LAHORE: The central bank’s move to ease the advance to deposit ratio of 70 per cent for commercial banks may hurt depositors’ interest, senior bankers warned on Saturday.For calculating the 70 per cent ADR the central bank has excluded the advances for export refinance, Long Term Financing Facility (LTFF), commodity operations, IPPs and lending amongst banks.This measure would inject substantial liquidity in the banking system and help ease the liquidity crunch faced by the banking industry. However these steps would put pressure on the central bank to be extra vigilant as relaxing conditions means that the ratio of advances would in fact increase beyond 70 per cent of the actual banking deposits.The banks have high exposures in advances compared to deposits. The central bank instead of increasing the advance to deposit ratio did just the opposite. Instead of convincing banks to increase deposits by offering lucrative returns in order to enhance liquidity the central bank increased their capacity to lend, banking experts said.Former vice president Allied Bank Limited Mohammad Ashraf said liquidity for a bank means the ability to meet its financial obligations as they come due. He said it is for this reason that the central bank requires the commercial banks not to go beyond reasonable limits while giving advances.He said bank lendings are relatively liquid assets, but it funds its loans with mostly short-term liabilities. He said advance to deposit ratio should be fixed on realistic basis.He said some banks have huge exposures in commodity operations and lending to IPPs compared with their total deposits. He said such banks could end up reaching an advance to deposit ratio of even 90 per cent. Thus one of the main challenges to such banks of ensuring enough liquidity under all reasonable conditions to honour their commitment to their depositors would be badly hurt, he concluded.Spokesman SBP Syed Wasimuddin in reply to an email said that the revised circular (BSD Circular No. 28) on the subject was issued to support the extraordinary circumstances prevailing presently.In last few weeks the banks did face some slow down in deposits, while growth in advances persisted. ADR continues to be under monitoring at SBP but given the current unusual trends, SBP on request of Pakistan Banks Association (PBA) decided to streamline the instructions for some period, he said.In this perspective, the amount of refinance availed by the banks from SBP under Export Refinance and Long Term Financing Facility Schemes basically provides the banks with matching funding for on-lending under these schemes to export oriented projects. Thus, a bank does not have to raise any additional deposits and incur any liquidity risk in respect of the export finance and long-term lending that have been refinanced from SBP.The spokesman did not mention the rationale for excluding commodity operation and IPP funding from advances.Similarly he added, paid up capital received from shareholders constitutes a significant part of the Tier 1 capital, and this capital represents the most stable source of long-term funding.A well-capitalized bank could have a significant cushion available in the form of capital for financing its lending portfolio. Presently the aggregate Tier I capital stands at 7.4 percent of total assets of banks. Therefore, the Tier 1 capital has been combined in the definition of deposits for ADR calculation. The question is that if this is true then why was it excluded from deposits earlier.

Govt urged to make sure growers get official rates

Sunday, November 02, 2008

By Jawwad Rizvi

LAHORE: The government should ensure that farmers get the indicative minimum price of paddy at around Rs1,500 per maund as its price has dropped to Rs1,200 in the different grain markets of Punjab.The arrival of Super Basmati paddy started last week and its prices have not increased from Rs1,300 per maund instead they have dropped with the inflow of crop.The situation will further worsen if the government does not intervene the market, and farmer may not be able to get even minimum price announced by the federal government.“This is the right time for the government to intervene and help stabilise prices, otherwise coming wheat crop would also be hit hard if farmers could not get a suitable compensation for their produce,” said the Basmati Growers Association (BGA) President, Hamid Malhi.The representative body of basmati growers has demanded government to provide equitable returns and level playing filed to basmati growers. The federal government has announced Rs1,500 per 40 kilogram for Super Basmati paddy despite the growers’ demand of Rs2,000 per 40 kilogram.On the other hand PASSCO has not procured even a single grain of IRRI-6 despite almost one month has passed since the rice variety has arrived in the market. He said that in such scenario when PASSCO has not started IRRI-6 paddy procurement the federal government should facilitate the corporation.The rising costs of production have fleeced the farmer and now he is being left at the mercy of exploitative forces. The government should intervene immediately to save this $4 billion crop and export the same for bridging its foreign exchange needs. The timely action will have a dual positive impact on the economy.Malhi has pointed out that the Basmati Rice is being exported at much higher rates as compared to the rates of Basmati Rice in the domestic market. The exports of Basmati during 2007-08 have also increase by 20 per cent in quantity. Average export price of Basmati during May-September 2008 was $1577.11 per tonne while current export price is $1331.52 per tonne as the country has exported some 82 tonne rice during the last one week at current price.He said the Basmati growers are not asking the government to provide relief from its exchequer but to give due share of growers. He said that the dealers will purchase paddy from the growers at lower rates while taking their margin will sold it relatively higher rates to exporters. The current export rate is $1331.52 and if converted into the rupees then it is over Rs4000 per maund. Thus the growers are asking their share from it, he added.He claimed that Basmati rice was being exported at present at Rs4500 per maund, while prices of Basmati rice in the domestic market was Rs3000 per maund. He said that millers get 22 kilograms of rice and 3-4 kilograms of broken rice besides powder and other by products out of one maund of paddy.BGA has urged the government to pay attention towards declining trend in Super Basmati paddy prices and observed that government can earn $3 billion by ensuring export of 75 per cent of the total production of basmati at the rate of US$1500.And if the government could ensure export of 75 per cent of the total 2.7 million tonnes production of Basmati rice, it could fetch precious foreign exchange for the country. He said that the government should not look towards other to get the most wanted foreign exchange and instead pay attention towards export of this commodity.He said that farmers could not sell their produce below than this rate as input cost had increased. He also alleged that Minimum Export Price (MEP) was waived off to conceal the actual export prices and under invoicing. He claimed that basmati rice was still being exported at US$1700 per tonne but it was shown less in the domestic market to loot the farmers.

It was published on Sunday November 02 in The News Business Pages