Rise in crops' prices leads to transfer of money to rural areas

Inordinate spike in prices of major crops ie sugarcane, cotton, rice and wheat accounted for an estimated Rs 342 billion transfer to the rural areas in 2010-11 alone, says Economic Survey of Pakistan. According to the Economic Survey, Rs 329 billion was transferred to rural areas on account of higher prices of major crops during eight years (2001-2008).
The highest ever wheat crop led to the attainment of the objective of food security this year. Agriculture sector recorded modest growth of 1.2 percent in 2010-11 but provided much needed support to exports, revival of manufacturing sector and an increase in consumption. Given the enormous price inducement, the agriculture sector is likely to spearhead economic growth in the next fiscal year as well.
Agriculture remained the mainstay of Pakistan's economy providing employment to 45 percent population and input for agro-based industry including textile industry, sugar-mills, flour mills and rice husking mills, as well as yarn, sugar, and wheat flour. Agriculture income has created demand for industrial products and provided an impetus to economic growth by creating additional demand for goods and services as a result of higher prices of agricultural produce.
The prices of important crops like wheat, cotton, sugarcane, paddy, and pulses have seen a significant increase during the past three years which are as fallow: Wheat Rs 950 per kg at farm from Rs 460 per 40 kg in 2008, paddy Irri-6 Rs 800 per 40 kg at farm from Rs 600 per 40 kg, paddy Basmati Rs 1250-1500 per 40 kg at farm from Rs 100 per 40 kg in 2008, prices of different pulses like Masoor, Mash, Moong, gram are ranging Rs 2400 to Rs 6000 per 40 kg. Similarly the price of cotton per bail crossed Rs 13,500 in the market.
In August 2010 large parts of Pakistan were hit by devastating floods, as a result nearly 1700 people were killed, besides destroying more than 1.2 million livestock, 6 million poultry heads worth billions of rupees, about 0.5 million tons of wheat seed for last Rabi season stored at the households' level was completely destroyed.
The floods also damaged cotton and rice. Overall cotton production during the year was recorded at 11.5 million bales against the set target of 14 million bales, which is 11.5 percent less than the target. Last year Pakistan paddy production was reduced by 30 percent.