August 13, 2010

Pakistan floods ravage crops, may cost billions

Flood recovery costs for Pakistan's agriculture industry could be in the billions of dollars, as 0.5 million tonnes each of wheat and sugar had been destroyed.

Agriculture is the mainstay of Pakistan's fragile economy, while wheat markets are on edge about crop losses after a drought in the major exporting Black Sea region sent prices <Wc1> to a near two-year high last week.

"The devastation to crops is immense. I think it's safe to say it will take some billions of dollars to recover. I am referring to livelihood for agriculture and farming to get back in shape," said UN humanitarian operations spokesman Maurizio Giuliano.

The Finance Ministry said this week the floods would hit growth and this year's gross domestic product growth target of 4.5% would be missed, though it was not clear by how much. Growth was 4.1% in the last fiscal year.

The floods, triggered by unusually heavy monsoon rain, have scoured the Indus river basin, killing more than 1,600 people, forcing two million from their homes and disrupting the lives of about 14 million people, or 8% of the population.

Pakistan's agricultural heartland Punjab province has been hit hard. "I think it's safe to say between 500,000 and one million hectares of crops have been flooded," said Giuliano.

The United Nation's Food and Agricultural Organisation (FAO) on Wednesday (Aug 11) warned of serious threats to the livelihoods and food security of millions.

Ibrahim Mughal, president of a national farmers' association, estimated that up to 500,000 tonnes of wheat stocked with farmers has been washed away in Pakistan, Asia's third-largest wheat producer. A Food Ministry official said up to 600,000 tonnes of wheat stocks had been damaged or destroyed in the flood.

Pakistan, Asia's third-largest wheat producer, harvested 23.80 million tonnes of wheat in the 2009/10 crop, as well as a carryover stock of 4.22 million tonnes, and was expected to export this year after a ban on exports last year.