Agri Credit Target FY’23, Oilseeds Export Booms, POL Prices Reduced, Record Diesel Import, Pak China MoU, COAS US Visit & IMF on Pak, Global Coal Usag

TOPLINE

• Governor State Bank of Pakistan, Jameel Ahmad, has set a Rs 2.25 trillion agriculture credit target for FY24, urging increased bank outreach to the sector. This is an increase from the Rs1.819 trillion target of last year.
• Rs 33.9 billion was the export value of oilseeds, nuts and kernels in Oct 2023, up 270% from Rs 9.2 billion in Oct 2022.
• The interim government has cut ex-depot prices of petrol by Rs 14 to Rs 267.34 and high-speed diesel by Rs 13.50 per liter to Rs 276.21, respectively, from Dec 16-31, 2023, attributing it to a global oil price drop and a stronger rupee.
• In November, Pakistan imported a record 317,000 tonnes of high-speed diesel, the highest this fiscal year, due to increased demand during the harvesting season and government measures to curb smuggling from Iran.
• Pakistan and China have signed MoUs for a substantial $10 billion investment in key export-oriented sectors. COAS General Munir met with key civilian and military US officials during his visit to the United States. The IMF's Pakistan representative denied reports of asking Pakistan to increase taxes on salaries and the maximum petroleum levy threshold.
• Global coal consumption reached a record high in 2023, reported by the IEA energy watchdog, amid the Earth's hottest recorded year. Russia has declared it will deepen oil export cuts in December by potentially 50,000 barrels per day or more, ahead of schedule, to support global oil prices.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• SBP Governor Targets Agri-Credit: Rs 2.25 Trillion FY24 Goal - Governor of the State Bank of Pakistan, Jameel Ahmad, has set a Rs 2.25 trillion agriculture credit target for FY24, urging increased bank outreach to the sector. Despite challenges, FY23 witnessed a 25% YoY growth in agriculture credit disbursements, reaching Rs 1.776 trillion, achieving 98% of the Rs 1.819 trillion target. [BR] [ET]
• Stable Cotton Prices Amid Low Volume: Quality cotton prices remained stable with low business volume last week. The Textile Export Adviser Committee aims to increase textile exports to $50 billion, expecting a positive impact on cotton production. Urgent government intervention is needed for a strategy to enhance cotton production amid cautious purchases in the local cotton market, resulting in minimal business volume. [BR]
• Pakistan's Growing Fishery: Economic Boost Through Aquaculture - Fishery production in Pakistan is increasing with the expansion of aquaculture, resulting in a notable rise in consumption. According to fishery sector expert Omar Hayat Khan, this growth holds exceptional economic value, contributing significantly to income generation and job creation throughout the supply chain, from fish farms to consumers. [BR]
• Customs Raises Values on Toffees & Candies Imports in Karachi: The Directorate General of Customs Valuation in Karachi has raised customs values on the import of toffees, candies, and sugar confectionery items from various countries, including Thailand, Taiwan, Indonesia, Vietnam, Saudi Arabia, UAE, Oman, Turkey, Europe, and the USA. The new valuation ruling was issued on Friday in this regard. [BR]
• CDA Takes Action to Address Vegetable Shortage: The district administration of Islamabad has issued directives to address the shortage of vegetables in the city and make affordable vegetables more accessible. As part of this initiative, a survey of eleven rural areas has been completed, and vegetables produced in these areas have been registered to implement an extensive strategy to alleviate the shortage. [ET]
• SUP Rejects 'Green Pakistan' Corporate Farming: The Sindh United Party (SUP) has rejected the 'Green Pakistan' project of corporate farming, contending that it is not in the interest of the province and the country. The SUP president, Syed Zain Shah, expressed concerns about allocating 4.8 million acres of land in the country and 1.3 million acres in Sindh to the corporate sector during a protest rally in front of the Karachi Press Club. [Dawn]
• Edible Seeds Export: Rs 33.9 billion was the export value of oilseeds, nuts and kernels in Oct 2023, up 270% from Rs 9.2 billion in Oct 2022. [ET]
• Opinion: Corporate Farming in Pakistan - Opportunities & Pitfalls - “In agriculture, large tracts of land would be provided to companies under long-term lease agreements with the understanding that they would bring in capital, machinery and equipment, skilled technical and managerial manpower, as well as linkages to international markets. These corporate farms would be run on commercial lines by professional managers. This would be in sharp contrast to the current system in Pakistan where agricultural production is predominantly in the hands of small family farmers, or operated by tenants under the supervision of non-technical managers (munshis) who are mostly responsible for collecting payments due to the landlord. Both national and international investors in agriculture would have access to such corporate land leases.” - By Daud Khan & Ghasharib Shoukat [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

• Interim Govt Cuts Fuel Prices: Petrol - Rs 14, Diesel - Rs 13.50 - The interim government has cut ex-depot prices of petrol and high-speed diesel by Rs 14 and Rs 13.50 per liter (4.6%), respectively, from December 16-31, 2023, attributing it to a global oil price drop and a stronger rupee against the US dollar. The petrol is available at Rs 267.34 per liter, while HSD at Rs 276.21 per liter. The petroleum levy remained unchanged at a maximum of Rs 60 per liter, with no GST, and adjustments were made in inland freight equalization margin (IFEM) and dealers' margins. [BR]
• Pakistan's LSMI Output Declines: -4.08% YoY in October 2023 - The Large Scale Manufacturing Industries (LSMI) output in Pakistan dropped by 4.08% in October 2023 compared to October 2022 and by 2% compared to September 2023, according to the Pakistan Bureau of Statistics. Over the first four months of the fiscal year 2023-24 (July-October), LSMI output decreased by 0.44% compared to the same period last year. [BR]
• Record Diesel Imports: 317,000 Tonnes in November - In November, Pakistan imported a record 317,000 tonnes of high-speed diesel, the highest this fiscal year, due to increased demand during the harvesting season and government measures to curb smuggling from Iran. Diesel imports rose by 67 percent from October, reaching 737,000 tonnes in the first 5 months of the fiscal year, compared to zero imports in July when Iranian diesel flooded the market. [The News]
• SSGC Plans Sindh Industry Shutdown: Punjab Textile Faces Higher Gas Costs - SSGC plans to shut down industries in Sindh for 2-3 days per week based on line pack conditions and consumer acceptance of RLNG-local gas blend. This anticipates gas supply suspension to Sindh's industries during winter due to low indigenous gas supplies and high demand. Additionally, Punjab's textile industry will face increased gas costs in January as SNGPL switches to supplying more expensive RLNG for captive power plants, following a government decision in October. [BR] [The News]
• Investors Seek Bidding Extension: 600 MW Solar Projects at Kot Addu - Investors, including Atlas Power, Gul Ahmed Energy Group, and Metro Power Group, suggest a two-month extension for bidding on the 600 MWp PV solar power projects at Kot Addu after the 2024 General Elections. They cite Development Financial Institutions' reluctance due to uncertainty and Pakistan's credit rating in letters to the caretaker Minister for Power and Petroleum, Muhammad Ali. [BR]
• Pakistan's Farm Tractor Boom: In the first 5 months of the current financial year, domestic farm tractor production in Pakistan increased by 60.68%, with 20,937 tractors assembled. Sales of locally assembled tractors during this period grew by 98.19%, and Massey Ferguson's production saw a significant rise of 103.91% to 13,085 tractors. [The Nation]
• Financing Gap Looms for Sindh Barrages Project: $72M Shortfall - The "Sindh Barrages Improvement Project," valued at $326.6 million, faces a financing gap of about $72 million. Delays in completing works at Guddu and Sukkur necessitate additional time beyond the current closing date of June 30, 2024, requiring either additional funding from the government of Sindh or increased IDA funding, according to official World Bank documents. [BR]
• Aqueduct Strengthening: Solution for Water Shortage - The installation of sheet piles to strengthen aqueducts and control seepage in Johi and Khairpur Nathan Shah channels is nearly finished. Irrigation authorities aim to commence normal water supply to the two talukas by December 25, testing irrigation on around 125,000 acres. If successful, this could provide a permanent solution to the area's persistent water shortage. [Dawn]

AGRI UPDATES & PAKISTAN POLICY

• Election Schedule Released: The uncertainty around general elections in the country has been cleared as the electoral body issued a schedule. Returning officers will issue a public notice on December 19, candidates can file nomination papers from December 20 to 22, and the names of nominated candidates will be published on December 23. The scrutiny of nomination papers is set for December 24-30. [BR]
• COAS General Munir US Visit: General Syed Asim Munir, Chief of Army Staff, discussed bilateral interests, global security, and ongoing conflicts with key US officials during his visit to the United States, including meetings with Secretary of State Blinken, Secretary of Defense General Austin, Deputy Secretary of State Nuland, Deputy National Security Adviser Finer, and Chairman of Joint Chiefs of Staff General Brown. [BR]
• IMF Denies Tax Hike Plans: The IMF's representative in Pakistan, Esther Perez Ruiz, has denied reports of the IMF planning to ask Pakistan to increase taxes on salaries and business income, as well as raise the maximum petroleum levy threshold. Ruiz stated that there are no current plans for such measures, countering media reports that suggested changes to tax slabs for the salaried class. [BR]
• PPP Open to Alliances, Except with PTI, in Upcoming Elections: The PPP is open to forming electoral alliances with all parties except the PTI in the upcoming general elections. PPP Co-chairman Asif Ali Zardari has directed the party's provincial leadership not to engage in any electoral deals with Imran Khan's PTI, particularly in light of the scrutiny following the May 9 incidents. [ET]
• PTI's Online Rally Faces Disruptions Amid Ban on Public Gatherings: Facing an unspoken ban on public gatherings and rallies, the Pakistan Tehreek-i-Insaf (PTI) organized an online power show on social media to energize its supporters ahead of polls. However, the online gathering experienced disruptions, with users reporting difficulty accessing social media platforms. Complaints about slow internet services were also noted. [Dawn]
• Pakistan-China Sign $10 Billion Investment MoUs in Key Sectors: Pakistan and China have signed MoUs for a substantial $10 billion investment in key export-oriented sectors, including textiles, agriculture, food, and car spare parts manufacturing. The joint ventures reflect a strong commitment to Pakistan's economic growth. [Dawn]
• Government Debt Soars: 92% of Bank Deposits in November - In November 2023, bank deposits in safe-haven government debt securities reached a new high of 92%, limiting financing for the private sector, a crucial driver of economic growth in Pakistan. Commercial banks lent Rs 24.58 trillion to the government through debt securities, constituting about 92% of the total bank deposits of Rs 26.79 trillion by the end of November, according to the State Bank of Pakistan's data. [ET]
• PKR Devaluation in 2024: Experts warn of a potential significant devaluation of the Pakistani rupee next year, citing unstable economic fundamentals despite its current appearance of stability. Remittances have dropped by 10.3% year-on-year in the first 5 months of the current fiscal year, resulting in a $1.3 billion loss compared to the same period last year, following a $4 billion decrease in the previous fiscal year. [Dawn]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• Israeli Genocide: Despite international calls for a ceasefire, Israel continued deadly strikes on Gaza on Sunday. In the north, 24 Palestinians were reported killed in Jabalia camp by Israeli bombardment, with many still missing under the rubble, according to the health ministry in Gaza. [BR] [Dawn] [Reuters] [CNN] [Al Jazeera]
• Record High Global Coal Consumption in 2023 Amid Climate Urgency: Global coal consumption reached a record high in 2023, reported by the IEA energy watchdog, amid the Earth's hottest recorded year. Projections indicate that nations will burn even more coal this year than the previous record set in 2022. Scientists stress the urgency of cutting greenhouse gas emissions by nearly half this decade to meet global targets for limiting global heating and avoiding catastrophic impacts on the Earth's climate. [BR] [Reuters] [IEA] [Forbes] [Al Jazeera]
• China Stocks Dip, Hong Kong Rises on Property Boost: China stocks closed lower on Friday as Beijing announced a 2024 budget deficit lower than expected. The CSI 300 Index ended 0.3% down, and the Shanghai Composite Index lost 0.6%. In Hong Kong, shares rose with the Hang Seng Index gaining 2.4%, its largest daily increase in a month, and the Hang Seng China Enterprises Index advancing 2.3%, supported by authorities' decision to bolster the property market. [BR] [CNBC] [WSJ] [News] [ST]
• Russia Accelerates Oil Export Cuts to Boost Global Prices: Russia has declared it will deepen oil export cuts in December by potentially 50,000 barrels per day or more, ahead of schedule, in an effort to support global oil prices. This decision follows a joint call by Saudi Arabia and Russia, the world's two largest oil exporters, for all OPEC+ members to agree on output cuts in December after a challenging meeting among producers. [BR] [Reuters] [Rferl] [FB] [Forexlive]
• Australian Commodity Exports: Australia’s commodity export earnings are set to contract over the next couple of years as the prices of iron ore, liquefied natural gas and coal slump, according to government forecasts. Fewer supply disruptions and “relatively soft” global economic growth, together with an expected strengthening in the Australian dollar, will push down revenue, the Department of Industry, Science and Resources said in a quarterly report released Monday. [BBG] [Bloomberg Law] [Nasdaq] [Industry] [Ajot]
• Exodus in Sudan: Sudan's paramilitary Rapid Support Forces engaged in a battle with the army outside the central city of Wad Madani, marking a new front in the eight-month-old war and prompting thousands to flee. Witnesses reported crowds of people, many of whom had sought refuge in the city from violence in Khartoum, packing up belongings and leaving on foot, as seen in videos posted on social media. [Dawn] [Reuters] [Al Jazeera] [PBS] [AP]
• 61 Migrants Presumed Dead in Mediterranean Incidents: In two incidents within 24 hours in the Mediterranean Sea, 61 migrants are missing and presumed dead, with 76 others rescued. The first incident occurred off Libya's coast, where high waves caused a boat to sink after departing from Zuwara, leading to the disappearance of at least 61 migrants, as reported by the IOM. [Dawn] [DW] [BBC] [CNN] [The Guardian]
• Global Refugee Forum Secures Over $2.2 Billion in Pledges: The Global Refugee Forum in Geneva concluded on Friday, securing over $2.2 billion in pledges to improve the lives of refugees and support host countries. The 3 day event, attended by over 4,200 participants from 168 countries, received more than 1,600 pledges, surpassing the 2019 forum. [ET] [AA]

PAKISTAN - REMAINDERS

• PC Board OKs Direct Sales for PIA Privatization - The Privatisation Commission (PC) board has approved new rules allowing the sale of state entities to foreign nations through direct negotiations, establishing a minimum price through a competitive process to expedite the privatization of Pakistan International Airlines (PIA). [ET]
• Decade-Low Electoral Gender Gap: Below 10 Million - With over 128 million voters in Pakistan, the electoral gender gap is now less than 10 million for the first time in a decade. Out of these voters, 46.13% are women (59.32 million), and 53.87% are men (69.26 million). [Dawn]
• Sindh Digitizes Land Records: E-Services App for Online Access - The Sindh government has digitized land records and maps for estates in Karachi, Nooriabad, Hyderabad, Kotri, and Sukkur, belonging to SITE Limited and Sindh Small Industries Corporation. The E-services Sindh mobile app now allows online access to services, including no-objection certificates, permissions, and transfers, inaugurated by Caretaker Minister Mohammad Younus Dagha. [ET]
• Opinion: Is the Stock Market in a Bubble? - “The KSE-100 index, which is the benchmark index of the Pakistan Stock Exchange (PSX), has increased by roughly 18,000 points or 37% over the last 10 weeks. The earlier high in the range of 52,000 points that was set in 2017 has been far exceeded by the recent run-up in prices.” - By Ammar Habib Khan [Dawn]
• Opinion: Fertilizer: A Subsidy for Dealers? - “This article highlights the growing delta between the urea market price (at which farmers buy) to the dealer transfer price (at which fertilizer companies sell), and today, local urea prices are almost at par with the international prices, while the major benefit of low gas prices is in essence being accrued by dealers (the middlemen).” - By Ali Khizer [BR]
• Opinion: Sex Education, Lies & Pakistan - “Rise in abortions shows rise in unwanted pregnancies that can be linked to poverty, illiteracy, lack of govt support and lack of awareness of proper use of contraceptives. In Pakistan, sex education continues to be regarded as a taboo subject. But the harm that is being done to the citizens of this country, and the myths that continue to be perpetuated by not talking about such matters, far outweighs any potential ‘embarrassment’ caused by openly addressing this topic.” - By Khadija Imran [Dawn]