The State bank of Pakistan has predicted that agricultural sector will perform well during the Rabi 2011 with the support of high commodity price and favourable weather. According to SBP quarterly report, agriculturs performance during Rabi is likely to compensate for some of the flood-related losses sustained during Kharif. Improved prospects for Rabi stem from better availability of water and higher prices of most agricultural produce, particularly wheat, it added.
"The country is likely to see a record wheat crop of 25 million because of availability of water, high yield certified seeds, and a bullish price. In addition, the government's decision to provide seeds free of cost in the areas worst hit by the floods further supports positive outlook for wheat", the report said.
While a faster than anticipated recovery in agriculture is a welcome development, it does not imply that the adversities of the floods have been entirely overcome; FY11 growth in agriculture apart from wheat will still be substantially lower than the target, it added. Although the cotton crop and rice were adversely impacted by the floods, the impact was not as bad as initially anticipated. On another positive note, the boost to the rural economy from high wheat support prices last year continues in the form of higher cotton prices. Evidence suggests that rural demand for automobiles was higher than anticipated, making up for slightly below target demand from the urban sector, it pointed out.