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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed


17 April 2013

USDA GAIN: Pakistan Oilseeds and Products Annual 2013USDA GAIN: Pakistan Oilseeds and Products Annual 2013

Pakistan’s marketing year (MY) 2013/14 (October/September) vegetable oil imports are forecast at a record 2.44 million metric tons (MMT), six percent higher than MY 2012/13. MY 2013/14 imports of soybean meal are projected at 460,000 tons, up 15 percent from the estimated import level this year. Oilseed production in MY 2013/14 is forecast at a record 5.4 MMT, up four percent from the MY 2012/13 5.1 MMT harvest. Pakistan’s cottonseed production in MY 2013/14 is projected at 4.44 MMT, up eight percent over the previous year production of 4.1 MMT. Imports of oilseeds are forecast at 937,000 tons, up 19 percent from last year’s import level of 790,000 tons
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Commodities:

Oilseed, Cottonseed
Oilseed, Rapeseed
Oilseed, Sunflowerseed
Oilseed, Soybean

Production:

Pakistan has been chronically deficient in edible oil production, as a result imports account for 76 percent of its domestic requirements. Since the 1970’s oilseed import has been on the increase, a trend that will continue to increase in tandem with its burgeoning population growth. Sporadic efforts have been made to increase local oilseed production, but, so far, have proven unsuccessful to narrow the vast gap between production and consumption.

MY 2013/14 (Oct-Sep) oilseed production is forecast at 5.4 MMT, up four percent over MY 2012/13 production estimate due to an anticipated increase in cottonseed production, which is forecast at 4.44 MMT, eight percent higher than MY2012/13 weather affected crop. Sunflower seed production is forecast at 600,000 tons, down 14 percent from last year and rapeseed production is forecast at 320,000 tons, nine percent lower than the previous year’s estimate of 350,000 tons; both as a result in similar reductions in planting area.

Post’s estimate of Pakistan’s total oilseed production in MY 2012/13 was revised down 12 percent to 5.1 MMT, due to a decrease in cotton production, as last year’s unfavorable weather conditions exacerbated the incidence of cotton leaf curl virus (CLCV) in the cotton growing areas of Punjab and Sindh province, with estimated loss of over two million 375 lbs. cotton bales equivalent to 680,000 tons of cotton seed.

Cottonseed:

Cottonseed is the principal oilseed crop grown in Pakistan, accounting for about 80 percent of domestic oilseed production. Cotton is the country’s most important cash crop and is considered the backbone of the national economy, as it provides the key input for Pakistan’s $25 billion textile industry.

MY 2013/14 cottonseed production is forecast at 4.44 million tons, eight percent higher than the MY 2012/13 crop. This increase in production is mainly attributed to increased cotton productivity through best agricultural management practices, and favorable weather conditions.

Rapeseed:

Rapeseed-mustard is an important species of Brassica group grown as oilseed crops in Pakistan, and a major source of edible oil in the sub-continent for centuries. It is sometimes grown as a fodder in mixture with "berseem" (alfalfa/medics). Area under rapeseed-mustard fluctuates depending on the Government of Pakistan’s (GOP) price support policy for wheat crop, and prevailing weather conditions, as moisture availability in marginal areas is key for farmers’ cropping decisions.

MY 2013/14 rapeseed production is forecast at 320,000 tons, a nine percent reduction from MY 2012/13 rapeseed production estimate of 350,000 tons, due to a similar reduction in planted area.

Sunflower Seed:

In Pakistan commercial cultivation of sunflower began in the 1960’s, and its production remains cyclical, due to its competition with major crops such as maize and sugarcane and marketing issues related to the size of crop and offered prices from the private sector.

MY 2013/14 sunflower seed production is forecast at 600,000 tons, 14 percent down from the current year’s estimate due to increased area allocated to maize, sugarcane and rice due to more attractive prices.

Consumption:

Oilseed consumption will continue to be strong in ensuing years due to Pakistan’s high population growth rate and steady growth in the poultry and livestock sectors. Since 2005, the Government of Pakistan (GOP) has implemented a liberalized import policy for oilseeds, in order to meet the country’s growing consumption needs. The oilseed crushing industry, the main beneficiary of these policies, has improved its efficiency by overhauling older machinery and installing high-tech solvent extraction equipment.

Total oilseed crush in 2013/14 is anticipated at 5.6 MMT, 6 percent higher than in 2012/13, as higher local production and imports need to meet the growing oil and oil meal demand. Almost 85 to 90 percent of total oilseed production is crushed for oil with the balance used for food, feed, and seed purposes.

Trade:

Total imports of oilseeds for crushing are forecast at 937,000 tons in MY 2013/14, up 19 percent over last year’s revised estimate, in order to meet the increased demand for edible oil from Pakistan’s burgeoning population, and oilseed meal from the increasingly intensive production systems of the livestock and poultry sectors.

The MY 2013/14 oilseed import forecast includes 827,000 tons of rapeseed/canola–mainly from Canada, Australia and the Ukraine–, 90,000 tons of sunflower seed, and 20,000 tons of soybean from different origins. Since June 2005, under a reformed import policy regime, the GOP exempts oilseeds from import duty, central excise duty, and federal excise duty. The following table shows the duty structure levied on imported edible oils and oilseeds.

MY 2012/13 oilseed imports are estimated at 790,000 tons, made up mostly of rapeseed/canola seed sourced from Canada and Australia.

Policy:

In an attempt to ensure food security, Pakistan’s agriculture policy is largely focused on the enhancement of wheat production. Oilseed production receives less attention than to cash-crops like wheat, rice, cotton and sugarcane, although, in 2012 alone, more than $2.5 billion was spent on imports of oil, oil meal, and oilseeds to meet Pakistan’s consumption needs. In an effort to curb expenditures on imports, and enhance oilseed production in the country, in 1995, the Pakistan Oilseed Development Board (PODB) was established. However, the PODB’s attempts of increasing production have been unsuccessful; additionally it has been unable to implement sustainable policies to develop a long-term approach to increase oilseed production.

With no support price mechanism, and the lack of proper funding to improve research, seed quality, and technology are key constraints that deter farmers to consider oilseeds in their cropping decisions. Additionally, the domestic crushing industry finds it more attractive to import quality oilseeds rather than providing incentives to local growers for increased domestic production, especially, since 2005, when the government facilitated imports by eliminating tariffs and duties on all oilseeds.

Commodities:

Meal, Cottonseed
Meal, Rapeseed
Meal, Sunflowerseed
Meal, Soybean

Production:

MY 2013/14 oilseed meal production is forecast at 3.2 MMT, up seven percent over MY 2012/13 due to the projected increase in local production of cottonseed supplemented with significant imports of oilseeds. Post’s estimate of MY2012/13 oil meal production was revised marginally upward to 3.0 MMT, mainly due to improved production of rapeseed. The domestic crushing industry traditionally produces an oilseed meal ration comprised of 71 percent cottonseed, 19 percent rapeseed/canola, and 10 percent sunflower seed.

Consumption:

MY 2013/14 meal requirements are forecast to increase to 3.8 MMT due to the anticipated expansion of the poultry, dairy and livestock, and aquaculture sectors. Pakistan’s poultry meat production is expected to grow by more than 10 percent per annum. The layer industry is also expanding rapidly as it is able to provide a relatively cheap protein source compared to other sources of protein.

The pace of dairy feed production is increasing at an accelerated pace to meet the demand of the expanding commercial dairy units, that rely on high milk yielding animals, requiring balanced feeds. This has created business opportunities to several poultry feed manufacturers, which have started producing dairy feed and in turn spiking the demand for soybean meal to meet the rations’ needs of high protein content.

This has resulted in a shift in the demand of soybean meal by feed millers from the traditional 5-7 percent to 10-15 percent.

Trade

Virtually all of Pakistan’s meal imports are comprised of soybean meal imported from India. Imports in MY2013/14 are forecast at 460,000 tons, up 15 percent from MY 2012/13 estimate of 400,000 tons. Prospects for imports of U.S. soybean meal, so far, are limited due to higher freight charges and time lag required relative to India, however, the lack of consistency in the quality of Indian soybean meal is a pressing problem for the feed industry.

Commodities:

Oil, Cottonseed
Oil, Rapeseed
Oil, Sunflowerseed
Oil, Soybean
Oil, Palm

Production:

Domestic oil production meets only about 24 percent of the demand with the balance met through imports. Due to a growing population and the inability to expand domestic production, Pakistan will rely on ever larger imports to meet its consumption needs.

Based on an increased crush volume stemming from a larger cotton crop, supplemented with significant imports of canola and sunflower seed, domestic production of vegetable oil in MY 2013/14 is forecast at 1.3 MMT, up four percent over the MY 2012/13 revised estimate.

MY 2012/13 edible oil production is estimated at 1.26 MMT, which includes 564,000 tons of cottonseed oil, 415, 000 tons of rapeseed oil and 282,000 tons of sunflower seed oil.

Consumption:

MY 2013/14 total oil consumption is forecast at 3.7 MMT, up 5 percent over last year’s estimates. The share of imported oil in Pakistan’s total consumption is close to 76 percent, with palm oil accounting for 87 percent of total imports, given that home consumers and food processors prefer it due to its price competitiveness. Additionally, blending palm oil with local oils and selling it as cooking oil is popular in Pakistan. For health reasons, well-to-do consumers are gradually shifting from hydrogenated oils towards soft oils.

Trade:

Pakistan is leading importer of vegetable oil. In MY 2013/14, palm oil imports are forecast at a record 2.4 MMT, up 6 percent from last year’s estimate of 2.26 MMT. Refined palm oil accounts for about 98 percent of Pakistan’s total edible oil imports.

Based on an anticipated oversupply of palm oil both in Malaysia and Indonesia, palm oil will remain competitive and remain the oil of choice over other vegetable oils, as price differential will be the significant factor in increasing palm oil consumption in MY 2013/14. The United States exports only limited quantities of soybean oil to Pakistan in the form of food aid.

April 2013

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