Veg Exports, Solar Energy, AgriTech Solutions, Inflation, Barter Trade, Elections, Oil Supply Cut, India Train Accident

TOPLINE

• Vegetable exports from Pakistan in April 2023 increased by 44.3% compared to the previous year, reaching Rs 7.5 billion.
• Solar energy is expected to surpass oil in global investment, marking a significant shift in the energy landscape. Pakistan is also rapidly embracing solar power installations.
• Sindh AgriTech seminar held at SAU, supported by EU, RSPN, and Growpak, emphasizes small farmers adopting modern technology to tackle food security, land, and water scarcity, aiming for sustainable agriculture through integration of traditional practices with AgriTech advancements.
• SPI-based inflation increased with rising food prices, leading to a 42.67% year-on-year inflation. Cigarettes, tea, gas charges, wheat flour, and bananas witnessed price hikes, while tomatoes and onions saw decreases.
• Pakistan approves barter trade with Afghanistan, Iran, and Russia to address the balance of payments crisis, introducing B2B Barter Trade Mechanism 2023.
• Pakistan's general elections will proceed as scheduled in October, according to Defence Minister Khawaja Asif, dismissing any possibility of a delay.
• Saudi Arabia, an influential OPEC+ member, plans to cut oil supply by 1 million barrels per day in July due to declining prices. This decision led to an increase in oil prices and involved concessions to Russia and the UAE.
• India experienced its deadliest rail accident in over two decades, with 288 deaths and many injured. The rescue effort has concluded.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Sugar Import: Rs 85 million was the import value of sugar in April 2023, up 13% compared to Rs 75 million in April 2022, according to PBS. [ET]
• Rice Export: Rs 63.8 billion was the export value of rice in April 2023, up 33.2% compared to Rs 47.9 billion in April 2022, according to the Pakistan Bureau of Statistics. [ET]
• Vegetables Export: In April 2023, the export value of vegetables in Pakistan reached Rs 7.5 billion, marking a 44.3% increase compared to April 2022. However, despite exporting a record quantity of vegetables in the first nine months of the current fiscal year, Pakistan's earnings have been modest due to declining global prices. From these exports, Pakistan earned $235 million, slightly less than the $240 million earned from fewer exports during the same period last year, primarily due to a significant drop in the average per-tonne price. [ET]? [Dawn]
• Cotton Market: Cotton rate decreased by Rs 1,000, Phutti by Rs 2,000, Banola by Rs 1,000, and oil by Rs 5,000. Textile exports declined by 20% due to a recession in local and international markets. New crop cotton opened at Rs 21,000 per maund, closed at Rs 20,000, while Phutti, Banola, and oil rates decreased as well. Spot Rate Committee maintained cotton rate at Rs 20,000 per maund.[BR]
• High Prices Persist for Kitchen Items: Kitchen items prices remain high in the local market, except for cooking oil/ghee, sugar, and flour. A survey reveals that daily use items like live chicken, vegetables, pulses, fruits, and other food items are available at high rates. However, there is a downward trend in prices of cooking oil/ghee, flour, and sugar. Live chicken is being sold at Rs 430 per kilo, showing a slight increase from the previous week. Farm eggs remain unchanged at Rs 280-300 per dozen, while boneless cow meat is priced at Rs 900 per kilo. [BR]
• Significant Step Against Illegal Trade: A large cache of smuggled cigarettes worth Rs 8 million was seized by Customs and the Ganj Mandi police in Rawalpindi, in line with Prime Minister Shehbaz Sharif's anti-smoking policy. The cigarettes were discovered in a warehouse in the Ganjamundi area, where they were being stored without paying customs duties. This seizure is a significant step in the government's efforts to combat the illegal trade of tobacco products and reduce revenue loss. Acting on a tip-off, the police raided the warehouse and found the foreign brand cigarettes packed in boxes, ready for sale. [BR]
• Thousand Acres of Desert Lands Transformed into Cultivable Farmland: The Ambassador of Kazakhstan in Pakistan, Yerzhan Kistafin, attended a groundbreaking ceremony for the Centre Pivot Hitech Irrigation System and Solar Power Unit at Samson Agri Farm Rangpur Muzaffargarh, hosted by Samsons Group and Haier Group. The joint venture, led by Samsons Group CEO Waseem ur Rehman and Haier Group executives Khalid Afridi and Faisal Afridi, transformed barren desert lands in Muzaffargarh into cultivable farmland, earning praise from Ambassador Kistafin for their transformative efforts and promoting mutual business activities and cooperation among friendly states. [BR]

AGRI-INPUTS, WEATHER, WATER & POWER

• Solar Energy Surpasses Oil in Global Investment: The International Energy Agency (IEA) has reported that solar energy is expected to attract more capital investment than traditional oil for the first time ever, marking a significant shift in the global energy landscape. This development holds profound implications for Pakistan, which has been witnessing substantial growth in solar power installations and diversifying its energy mix. With an installed solar capacity of over 2,368 MW as of FY22, Pakistan is embracing renewable energy sources to meet its power production needs. [ET]
• Gaining Insights from Hindsight: Hindsight can offer both satisfaction and regret as it provides clarity on missed opportunities. In the case of Pakistan's oil sector, a decline in output could have been prevented with proactive measures. However, it is crucial to use this realization as motivation to take corrective actions. Looking at the current economic landscape, Pakistan's GDP growth for FY23 is projected to be only 0.29%, a substantial drop from the previous year's expansion of 6.1%. [ET]
• Inclusive Wealth for Sustainability: Pakistan's first-ever Inclusive Wealth Report (IWR) was launched in June 2021 to promote sustainable development. The report expands beyond GDP, considering indicators such as human capital, produced capital, and natural capital. Sustainable development, which balances current and future generation's needs, encompasses social, economic, and environmental aspects. [ET]
• Opinion: Climate Change - “Pakistan, despite being highly vulnerable to climate change, is unprepared to deal with climate catastrophes, risking severe economic crisis and social unrest. The government's inaction and lack of decisive plans to mitigate the risks of climate change-driven disasters reflect ignorance and apathy, with relevant departments failing to implement concrete measures. The Climate Change Ministry, tasked with mainstreaming climate resilience, has shown limited progress, focusing more on attending international meetings rather than taking urgent action.” - By Ajaz Ahmed [Dawn]

AGRI UPDATES & PAKISTAN POLICY

• AgriTech Solutions for Food Security: Experts highlight food security risks due to land and water scarcity, population growth, settlements, and drought in Sindh. AgriTech seen as crucial for sustainable agriculture, emphasized in a provincial seminar supported by EU, RSPN, and Growpak to encourage small farmers to adopt modern technology for global food security. [BR]
• Pakistan's Barter Trade Expansion: Pakistan approves barter trade with Afghanistan, Iran, and Russia to address the balance of payments crisis. The Ministry of Commerce introduces Business-to-business (B2B) Barter Trade Mechanism 2023, allowing exchange of goods including petroleum and natural gas. Approval required for participation in the trade mechanism. [BR]
• Focus on Key Sectors: The Annual Plan Coordination Committee (APCC) approves Rs 1,100 billion development budget for the next fiscal year. Public-Private Partnerships allocated Rs 150 billion. The target is to achieve a 3.5% GDP growth rate. Key sectors include agriculture, manufacturing, and services. Inflation expected to decrease, while national savings projected to increase. [BR]
• Year-on-Year Inflation Reaches 42.67%: The Sensitive Price Indicator (SPI)-based inflation increased by 0.03% for the week ended June 1, 2023, primarily driven by higher prices of food items. On a year-on-year basis, inflation rose by 42.67%, with significant increases in the prices of cigarettes, tea, gas charges, wheat flour, bananas, and other commodities. However, there were decreases in the prices of tomatoes and onions. [BR]
• PTI Faces Internal Challenges: Pakistan Tehreek-i-Insaf (PTI) is facing internal challenges following the May 9 violence, with party legislators forming a new entity or joining other parties like PPP, PML-Q, or Jahangir Khan Tareen's group. Several PTI stalwarts and legislators have left the party, while PTI dismisses them as opportunists leaving under pressure. In a separate case, PTI leader Dr Yasmin Rashid and 23 others accused of vandalizing the Corps Commander House in Lahore were acquitted due to lack of evidence, while former Punjab chief minister Parvez Elahi of PTI was acquitted in two corruption cases but re-arrested in a fresh case related to "illegal appointments." [Dawn] [ET]
• Revenue Losses & Stakeholder Issues: The recently-launched E-registration system for property deeds is facing operational challenges, leading to a significant decline in transactions and revenue losses. Over the past few days, registration deeds have decreased by 50 to 75%. Stakeholders involved in the process, such as stamp vendors and content writers, have not been properly trained or adjusted to the new method. Local administrations are under pressure to allow manual property deeds alongside E-registration until June 30. [Dawn]
• Crackdown on Tax Evasion: Arrests were made in Lahore regarding a tax evasion scam involving the creation of fake firms using innocent individuals' identities. The estimated amount of tax evasion is around Rs 7 billion, with further arrests anticipated. Evidence was seized during a raid on the suspects' office, facilitated by the monitoring of illegal activities through the Federal Board of Revenue's online system. [Dawn]
• Underutilization of Development Budgets: Finance ministers at both federal and provincial levels in Pakistan are announcing significant increases in development budgets, but a closer look reveals that a large portion of these funds remains unspent. In Sindh, for example, only 62% of the released funds were utilized by the end of May, with Rs38 out of every Rs100 going unspent. Furthermore, the total released funds in the first 11 months of the fiscal year accounted for only 75% of the initially allocated amount. [Dawn]
• PDM Government's Dual Challenge: Pakistan's PDM government is facing a unique challenge as it deals with a political crisis and an uncertain economic situation. The traditional playbook used to handle IMF deals no longer provides a solution, and the country's ability to secure a deal now relies on the support of friendly nations. [ET]
• Election Schedule Confirmed: Defence Minister Khawaja Asif has dismissed speculation of a possible delay in the upcoming general elections in Pakistan. He stated that the elections for the national and provincial legislatures will take place in October as scheduled, within 60 days of the completion of the assembly's five-year term. As per the constitutional requirement, the election results must be declared no later than 14 days before the expiry of the assembly's term. [ET]
• Strengthen Pakistan-Turkey Trade Ties: PM Shehbaz Sharif expressed optimism about the potential for trade between Pakistan and Turkey to reach $5 billion annually within the next three years. During his visit to Ankara, he emphasized the importance of investment and trade in various sectors such as agriculture, energy, information technology, and construction in meetings with Turkish business leaders. [BR] [Dawn] [MG]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• China's Defense Minister Criticizes Alliances: China's defense minister, Li Shangfu, has criticized the formation of NATO-like military alliances in the Asia-Pacific region. He warned that such alliances would create conflicts and turmoil in the region. Li's comments came after a recent incident involving US and Chinese military vessels near Taiwan, which heightened tensions between the two countries. Speaking at a security conference in Singapore, Li stated that these alliances would plunge the Asia-Pacific into a whirlpool of disputes and conflicts. [Dawn]
• India's Deadliest Rail Accident: The death toll from a tragic three-train collision in India has risen to 288, with many more injured. The rescue effort has been declared over, revealing a scene of devastation with mangled train compartments, blood-stained wreckage, and stories of harrowing experiences from survivors. It is India's deadliest rail accident in over two decades. [Dawn]
• Sichuan Province Landslide: Nineteen people who were caught in a landslide in Sichuan province, China, have been confirmed dead, marking the end of rescue operations. The landslide occurred early this morning near a forestry station, causing mud and debris to engulf a nearby construction site, resulting in casualties and damage to the facilities. [ET] [CNA]
• Incident in Strait of Hormuz: The United States Navy and the United Kingdom's Royal Navy assisted a ship in the Strait of Hormuz after it was allegedly harassed by Iran's Revolutionary Guard. Three Iranian vessels approached the merchant ship closely, prompting the response of the USS McFaul and HMS Lancaster, including the deployment of a helicopter from HMS Lancaster. The incident was documented by the US Navy through aerial images taken by a surveillance aircraft. [Al Jazeera] [Al Jazeera]
• Saudi Arabia Makes Bold Move: Saudi Arabia has announced a significant oil supply cut of 1 million barrels per day in July, reducing its production to the lowest level in years due to declining crude prices. This move by the influential OPEC+ member came at the expense of making concessions to Russia, which did not commit to further output cuts, and the United Arab Emirates, which secured a higher production quota for 2024. As a result, oil prices saw an increase on Monday in response to this development. [Bloomberg] [Bloomberg]
• Nature-Based vs. Technological Approaches: A note from an obscure United Nations group has sparked controversy and debate within the carbon removal industry regarding the definition of carbon offsets. The draft document, which aims to define a new global carbon market, emphasizes nature-based solutions such as tree planting while downplaying the importance of technological carbon dioxide removal (CDR) methods. The distinction between natural and technological approaches is significant, as it has implications for the carbon removal industry's viability and future. Both approaches are considered effective in mitigating the severe impacts of climate change. [Bloomberg]

PAKISTAN - REMAINDERS

• World Environment Day is being observed today. [Dawn] [ET]
• Editorial: Acute Food Insecurity - “A UN report has raised concerns about the severe food insecurity in Pakistan, warning that the situation could deteriorate further if the economic and political crises worsen. The report attributes the mounting public debt and ongoing financial crisis as the main factors contributing to food insecurity. Pakistan's need to repay significant external debt puts a tremendous strain on the economy, making the task of reform and recovery challenging.” - [ET]
• Editorial: Local Agri Innovation - “Pakistani scientists have developed an innovative method for assessing the sweetness of citrus fruits using artificial intelligence (AI). Led by Dr. Ayesha Zeb from the National University of Sciences and Technology (NUST), the team utilized near-infrared spectroscopy to measure fruit sweetness without causing any damage. By training AI algorithms, they achieved an 80% accuracy rate in predicting sweetness and classifying the fruits. This breakthrough could have significant implications for the global market, as it offers a non-destructive and efficient way to assess fruit quality. The research has been published in the prestigious scientific journal Nature, showcasing its scientific significance.” - [ET]