TCP seeks Rs424bln loan to import commodities

KARACHI: State-owned Trading Corporation of Pakistan (TCP) has sought Rs424 billion worth of commodity financing from banks to import sugar, wheat, urea and cotton next year, it was learnt on Tuesday.

Sources said all banks under the licencing terms of the State Bank of Pakistan (SBP) could participate in the loan required for three-month commodity financing for up to March at the 3-month Karachi interbank offered rate as of December 31.

“TCP has already obtained approval from the ministry of finance for the planned commodity operation financing, and banks would provide financing against government guarantees,” an official said, requesting anonymity.

The TCP is a large trading house in the public sector with a primary focus to import essential items to stabilise the prices in the local market and bulk industrial raw materials to achieve economies of scale and to introduce/promote trade of non-traditional items with socialist countries.

TCP is already conducting a study to determine the country’s actual need of various commodities in the next five years. The research study will focus commodities demand in the country from 2020 to 2025 for the purpose of getting best possible estimation.

Understanding the structure and growth in demand of commodities is important for decision-making within the existing operating environment, as well as for expansion strategies. Therefore, a study is being conducted that envisages market research and data collection through authentic national and international sources; preparation of sector-wise demand considering all market variables; and preparation of total national demand.

According to latest report issued by the State Bank of Pakistan, while setting the target for agriculture growth in FY2021, the government had pinned its hopes on an improved showing of important crops.

“While the important crops are not expected to achieve the FY2021 target, they were nonetheless able to post a turnaround compared to last year,” said the report.

During the summer season, pest attacks and untimely rains hurt cotton production, which clocked in at 9.2 million bales against the target of 12.7 million bales. Farmers also dedicated lesser area to sugarcane production, mainly due to delayed payments in earlier seasons; resultantly, sugarcane output of 66.9 million tons was around 1.8 million tons short of its annual target.

Subsequently, during winter season, wheat production was unable to deliver the bumper crop that seemed to be in sight based on greater area under cultivation, primarily due to heavy rains and unfavorable temperature at harvest time. Provisional estimates indicate wheat output of 24.9 million tons, short of its 27 million tons target for the year.