Water shortages put agriculture sector under pressure: State Bank

KARACHI: Water shortages resulted in decline of area under cultivation and production of mainly cotton and rice in the country in general and Sindh in particular, the first quarterly report of the State Bank of Pakistan (SBP) over the state of the economy said on Tuesday.

Agriculture preliminary estimates for the major kharif crops, namely cotton, rice, sugarcane and maize, reveal a subdued performance of the sector. “This is largely explained by a considerable decline in the area under cultivation, especially in Sindh,” the report said.

Water shortage remained the major reason behind a decline in area under cultivation while the situation would become dangerous in the coming years, the SBP report said.

Thus, the central bank has suggested construction of small reservoirs and adaptation of water conservation measures including imposing higher prices of irrigation water for more water consuming crops, especially, sugarcane.

The total area sown under kharif crops for FY19 stood at 7.54 million hectares, a decline of 7.7 percent over FY18. The contribution of kharif crops in the gross value addition (GVA) of the agriculture sector might fall significantly below the FY18 level.

Going forward, the report said Rabi season was expected to receive 35-40 percent lower canal water flows compared to the actual allotment of 37.0 MAF. The erratic nature of river inflows and monsoon rainfall requires proper management at the provincial level for meeting the crop water requirement. The bank suggested that farmers’ participation in the management of canal infrastructure would increase the accountability.

“Farmers’ organisations and area water boards have been the successful models, as farmers take ownership of the system, resulting in reduced wastages,” the report said.

Situation of major crops

Cotton: The latest estimates for cotton crop reveal a worrying picture, as the total production in FY19 is estimated at 10.8 million bales, a decrease of 9.2 percent over the last year’s production level, and trailing 24.3 percent behind the targeted level of 14.4 million bales for the year.

Given the average mills’ annual consumption of around 14 million bales in the country, the production is expected to remain short by around 23 percent for the ginners, as per their installed capacity for value-addition.

Sugarcane: Estimates place sugarcane production at 68.3 million tons, matching the set target of 68.2 million tons for the year, but falling 16.9 percent short of the production level achieved in the last year.

Rice: Initial estimates indicate that rice production stood at 7.1 million tons during the FY19 kharif season, higher than the target of 6.9 million tons, but 4.4 percent lower than the record crop witnessed during FY18.

While the basmati performance in Punjab was laudable, as the estimated crop exceeded the four million tons mark, the production in Sindh suffered a contraction of 15.2 percent on a year on year basis, largely due to a contraction in the area under cultivation.

Irri and hybrid varieties in Sindh suffered due to exceptional water shortages (a decline of 43 percent during the period under review) and the poor quality of groundwater, resulting in a total area contraction of 17.1 percent compared to FY18.