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Pakistan Rural Market

Pakistan Rural Market

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Published by Muhammad Bilal

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Published by: Muhammad Bilal on Jul 30, 2011
Copyright:Attribution Non-commercial


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Businesses thriving on rural market
By Mohiuddin Aazim |InpaperMagzine February 14, 2011 (4 weeks ago) 
A SURGE in the agriculture incomes, spurred by high commodity prices, over last few yearshas benefited the industrial economy and services sector in many ways.
Companies providing farm inputs like fertilisers, selling tractors, or engaged in processing andmarketing of food products, or in trading in commodities, are performing better in an otherwisenot so promising growth in the manufacturing sector.Capacity expansion in fertilisers manufacturing is taking place as increased income levels in ruraleconomy has stimulated demand. Launching of Fatima Fertilizer Company last year is anexample. Earnings of companies catering to farm sector are also on the rise.Emboldened by huge profits earned in recent years, Engro Chemicals Pakistan is planning abillion dollar investment overseas. Fauji Fertiliser Company and Fauji Fertiliser Bin Qasim, bothhave also made enormous profits over last two years. And Millat and Al-Ghazi have increaseditheir sales of tractors.With increase in domestic support prices of food crops and with rise in international prices ofagricultural commodities, the appetite and production of agricultural machinery has grown. InFY10, double-digit growth was seen in manufacturing of chaff cutters and power looms andproduction of sugarcane machine surged 68 per cent. Food industry has received fresh domesticinvestment in such areas as grading, processing and packaging of citrus fruits and mangoes and inexpansion of processed meat and poultry projects.The launching of Meat One³a Karachi-based chain of retail meat outlets comes handy as anexample. Similarly, 25 tons of meat were exported from Punjab were exported to Malaysia
recently. Much of the recovery in sales of automobiles and electronic items in last two years canalso be attributed to higher demand in rural and semi-urban localities.Increased income in rural areas and speedy spread of telecommunication technologies across thecountry have also led to more organised livestock breeding and marketing. For last two years,young entrepreneurs in big cities have joined hands with educated youth in villages and towns.They arrange bulk transportation of sacrificial animals from the countryside to urban centres anderect fashionable pavilions in temporarily set up animal markets for selling them.The use of cell phones and internet is becoming popular in marketing of sacrificial animals andseveral websites also offer round-the-year sales of animals to all³including meat exporters whodo not have their own livestock farms.The worst-ever floods in July-September last year may have hit farmers and eroded ruralprosperity. But because of shortages in output so created, prices of sugarcane, cotton andvegetables have gone up, aided by a surging international commodity market. The post-floodrehabilitation and reconstruction would eventually reinvigorate the agricultural economy, and therural prosperity should continue to provide support to industrial and services sector.That the rural income levels had increased substantially in fiscal years 2008-09 and 2009-10and part of that had been reinvested for improving agricultural productivity is evident from thefact that flood-inflicted shortfall in production of crops is for less than originally anticipated. Morethan 11 million bales of cotton crop have reached ginneries and overall output is being estimatedbetween 11.5 and 12 million bales against the initial estimate of 10 million bales.Similarly, wheat crop is all set to yield 25 million tonnes against earlier post-flood estimate of 23million tonnes. And sugarcane crop is expected to touch 47 million tonnes. It was projected afterthe floods that sugarcane production would fall to 43 million tonnes.Prospects of better-than-initially anticipated size of wheat crop along with availability ofsufficient carryover stocks have facilitated exports of wheat and wheat products with the surges inthe international market demand and the prices of the commodity rising. Latest reports are thatChinese wheat crop has been badly hit by a severe draught.´Exports of wheat flour, bread and confectionary items have led to at least half a dozen leadingmills to utilise more of their installed milling capacity,µ says Mr. Akhtar Hussain, a Karachi-basedexporter of wheat flour and its products. Capacity utilisation in this industry has always remainedlow because of mushroom growth.Rice millers say they have also recently invested in making on-farm silos, grading and processingof rice grains as well as in packaging and marketing. ´Today you can find several brands ofquality rice in retail packs of five and 10kg selling not only in big cities but also in semi-urbanand rural areas of Sindh and Punjab,µ says a Jodia Bazar-based trader.´Branded family packs of cooking oils, spices, tea and other fast-moving consumer goods are alsobeing sold there. Only a few years ago, we just used to make bulk supplies. So, the point is thatdomestic trading is becoming more formal in rural Pakistan and better and more fashionable

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