According to Engro Fertilizers Limited (EFERT), wheat, sugarcane, and basmati rice are estimated to witness a surge in income per acre, while cotton crops have experienced damage.
According to the company’s fourth quarter report for 2022, wheat income per acre increased by 26%, sugarcane income per acre increased by 21%, and basmati rice income per acre increased by 189%. According to management, cotton earnings will decline 12% per acre. Accordingly, the decline is due to the increase in support prices from Rs2,200 to Rs3,000 in Punjab and from Rs2,200 to Rs4,000 in Sindh.
According to JS Global Agriculture Sector Analyst Waqas Ghani Kukaswadia, nearly 90% of fertilizer consumption is accounted for by five major crops: wheat, cotton, sugarcane, rice, and maize. The share of wheat alone is 50%, while the share of cotton is 25%. Sugar cane, despite having the third highest share, requires the most nutrients per hectare.
The Sindh Food Department has set the wheat support price at Rs4,000 per 40 kilograms for the 2023 season, which will result in an improved farm economics as a result of higher grain prices. In addition, strong sugar prices in the local market and improved demand-supply dynamics are expected to increase cane and rice farm incomes. Rice sowing areas may also improve in the next cycle as some areas were affected by the flash floods in 2022.
Although cotton contributes only 2% to the Gross Domestic Product (GDP), any damage to the crop causes a shortage in the textile sector, which contributes 8% to the GDP and accounts for more than 60% of the country’s exports. The productivity of cotton was affected this season by adverse weather conditions and flooding, particularly in Sindh. Poor seed quality, combined with high production costs, is expected to lead to decreased earnings per acre for cotton.
Due to declining textile growth numbers, the textile industry may be unable to pay farmers and ginning units, resulting in low revenue generation for cotton growers. Alternatively, cotton growers may plant high-return rice varieties, such as IRRI-6, IRRI-9, and Kainat, in areas such as Rajanpur, DG Khan, and Sindh.
The co-founder of Agriculture Republic, Aamir Hayat Bhandara, expressed concerns regarding the impact of the International Monetary Fund (IMF) deal on the agricultural economy as input costs have already increased. DAP fertilizer is available at Rs10,500, diesel prices have more than doubled, and one bag of urea is available for Rs3,200 to Rs3500 in the black market. Similarly, electricity, labor, and pesticide costs have also risen.
