Pakistan’s floods hit global supply chains

Posted by Sino SCS

Severe floods that have left a third of Pakistan under water have also destroyed major exports crops – from cotton to wheat – and put the country’s food and trade security at risk.

According to the vice-president and CEO of the Pakistan Businesses Forum, Ahmad Jawad, several key crops have perished.

As Pakistan does not allow direct trade with India so, he said, the government has sanctioned the import of tomatoes and onions from Afghanistan and Iran to meet an emerging shortage in the domestic market.

Officials are also looking at sourcing vegetables from Dubai, he added.

According to reports, the flooding – dubbed the “monsoon on steroids” – saw twice as much rainfall as is normally expected. To date, 1,150 people have died and around 33m have been affected.

In its wake, flash floods also washed away swathes of vital crops, including onions and tomatoes, as well as chickpeas from the provinces of Singh and Punjab.

Shahzad Cheema, secretary of the Lahore Market Committee, said: “Eighty per cent of the tomato crop in Pakistan has been damaged in the floods, and the onion supply has been badly hit too.”

Tomato and onion prices have since risen by 40%, according to the Pakistan Bureau of Statistics.

Official figures show that Pakistan – which was already suffering from crippling inflation of 25% – only has enough foreign currency reserves for about a month’ worth of imports.

But it is the threat to the country’s export capacity that is causing the greatest concern in terms of long-term recovery.

The government estimates that between 500,000 and 1m hectares of crops have been flooded in the Punjab region alone – the country’s agricultural heartland.

Figures suggest around 200,000 to 300,000 tonnes of rice have been lost in the floods.

Pakistan is also a major global producer of wheat, the third largest in Asia. Last year, a ban on exporting wheat was lifted, but according to Reuters, at least 725,000 tonnes of stored grain, ready for export, has now been washed away.

Reuters quoted one producer who said government plans “to export 2m tonnes of surplus wheat is now likely to be shelved” in order to meet its own internal shortages.

Further, it is also being reported that 45% of Pakistan’s cotton crops have been washed away, while half a million tonnes of sugar have been destroyed.

Pakistan is the world’s fourth largest cotton producer, and around 2m bales of cotton are thought to have been destroyed. The textile sector alone accounts for 60% of the country’s exports.

Commenting on the situation, Pakistan’s climate change minister, Sherry Rehman, said: “Sindh is half of Pakistan’s breadbasket and will not be able to grow anything at all next season. Not only will our exports be impacted, but our food security will take a hit.”

Water from the flash floods is not expected to drain away for another two to three months, which is likely to cause a delay in wheat and edible oil seed sowing.

Agriculture contributes up to 23% of Pakistan’s GDP. The flooding is now predicted to cost Pakistan’s economy $4bn in the current fiscal year.

Pakistan is responsible for less than 1% of global greenhouse gas emissions but is eighth on a list of countries deemed most vulnerable to extreme weather events.

Author Sino SCS
中品供应链-Sino Supply Chain Service