Pakistan floods destroy crops and could cost billions

ISLAMABAD (Reuters) – Flood recovery costs for Pakistan’s vital agriculture sector and farmers could be in the billions of dollars, as a farmers association said half a 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 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,” U.N. humanitarian operations spokesman Maurizio Giuliano told Reuters on Thursday.

The Finance Ministry said this week the floods would hit growth and this year’s gross domestic product growth target of 4.5 percent would be missed, though it was not clear by how much. Growth was 4.1 percent 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 2 million from their homes and disrupting the lives of about 14 million people, or 8 percent of the population.

Improving the economic plight of Pakistanis is vital for government efforts to win public support in the fight against homegrown Taliban insurgents.

Militants often try to capitalize on frustrations with the state to recruit people to take up arms against the U.S.-backed government, heavily criticized by many flood victims, including farmers, for its perceived sluggish response to the disaster.

Farmers have been reluctant to leave flooded areas. Some of those who do walk neck-deep in water pulling their buffalos to reach safety.

“I was growing sugar cane and cotton. Everything is lost. Six to seven feet water is covering my fields,” said Abdul Ghani Soomro, a farmer in southern Sindh province.

“It will take another six months for that water to dry, maybe even more. I have lost not only my standing crop, but my whole year is wasted.”

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 Organization (FAO) on Wednesday 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.

Pakistan, the world’s fourth biggest cotton producer, has also seen that commodity hit hard, with up to 2 million bales of destroyed, industry officials said, out of an expected crop of 14 million bales in the 2010/11 season.

Pakistan, which produced about 12.7 million 170 kg bales last year, often has to turn to imports to feed its textile sector, which accounts for about 60 percent of its exports. The country imported about 2 million bales in the 2009/10 financial year that ended in June.

Output of refined sugar could fall by 500,000 tonnes because of damage to the crop, farmers’ association official Mughal said.

Luke Mathews, a commodity strategist at Commonwealth Bank of Australia in Sydney, expects global sugar levels to swing back to a substantial surplus in the coming year. Nevertheless production hiccups may support prices in raw and white markets.

“Recent developments in Russia, parts of Europe and now Pakistan are certainly a little bit supportive for international sugar pricing,” said Mathews.

On damage to the rice crop, the farmers’ association put the losses at about 200,000 tonnes of rice, an estimate also supported by a Singapore-based trading company.

“We are estimating around 200,000 to 300,000 tonnes of rice lost in these floods which will be reflected in Pakistan’s exports,” said the head of rice business at an international trading company in Singapore.

(Additional reporting by Naveen Thukral and Lewa Pardomun in SINGAPORE and Faisal Aziz in SUKKUR; Writing by Michael Georgy; Editing by Michael Urquhart)

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