Increasing rice output increasing Pakistans exports Pakistan Agricultural

Increasing rice output, increasing Pakistan’s exports Pakistan Agricultural Coalition December 2018

Pakistan Agricultural Coalition (PAC) A non-profit incubator which aims to transform Pakistan’s agriculture PAC’s role is to ‘connect the dots’ 25 leading business groups of Pakistan are PAC’s sponsors 2

PAC’s vision for transformation of Pakistan’s agriculture must become private sector-led, technology-driven, entrepreneurial, and globally competitive This is only possible if farmer profitability rises PAC aims to drive this transformation 3

Today’s goals Overall goal: double rice exports in 5 years by - Increasing rice production, - Reducing post-harvest losses, and - Minimizing water consumption for rice cultivation The proposed interventions can take Sindh’s rice output from 2. 65 to 5. 26 million tons from same acreage in 5 years with efficient water use • The objective of today’s session is to agree on: – What needs to be done for this (and in what phases) – Who needs to do it – What funding is required and who will provide it 4

Acreage in leading rice districts of Sindh 2013 -14 Upper Sindh 75% 10 districts 1. 37 million acres 264, 820 0 135, 398 , 18 242 199, 976 215 21, 228 110, 530 23, Total 1. 84 million acres [same reported for FY 17] 51 183, 1 , 432 0 8 1 14, 969 Lower Sindh 22% 3 districts 0. 41 million acres Rest: 3% 9 districts 0. 06 million acres Source: Government od Sindh 38, 27 173, 262 1 196, 150 5

Rice yields in Sindh Average rice yield in Sindh: 35. 6 maunds/acre Do these numbers look reasonable? Source: Crop Reporting Service Centre, Government of Sindh 6

Farms growing paddy in Sindh (2010 data) • 17% of farms growing paddy have 53% of acreage under paddy – 66, 712 farms larger than 12. 5 acres account for 1. 29 million acres out of total 2. 44 million acres under paddy in 2010 – Average farm sizes • Over 12. 5 acres: 19. 4 acres • Under 12. 5 acres: 3. 6 acres Pick farmers with more than 12. 5 acres to be the first ‘champion farmers’ Source: Agriculture Census 2010

‘Big picture’ calculation for doubling Sindh’s rice output Only farms larger than 12. 5 acres (2017 data) If this an acceptable increase, the program can focus only on farms with more than 12. 5 acres Would it be politically acceptable to ignore smaller farms? 8

‘Big picture’ calculation for doubling Sindh’s rice output All farms (2017 data) Different ways and levels of support are required for large vs. small farms A two-phase program will be required A lot more funding can be secured if small farms are included 9

Key interventions

Sample of farmer practices ü X X ü Hybrid seed Laser land leveling Mechanical transplantation Good practices Kubota harvester Dependence on canal water 11

Proposed interventions Intervention Benefit Yield increase 1. Seed: OP to hybrid Yield: 36 maunds/acre to 70 2. Nursery & mechanical transplantation Avoids 35% loss due to manual transplantation 3. Extension services 15 -20% yield increase with better agronomic practices Water saving 4. Laser land leveling 15 -20% water saving; 10 -12% yield increase Harvest 5. Kubota harvesters Shattering & threshing losses and brokens are half of losses by combine harvester Post-harvest 6. Storage with drying, testing (plus collateral) 7. Buy-back arrangement Reduction in 15 -20% postharvest loss 12

What actions are required to help increase yield? Stage of crop cycle Regular farmer Progressive farmer Action required Adequate water No Yes Small reservoirs Soil & water testing No Yes Input suppliers No Yes Nursery/transplantation No Yes Capital subsidy to service providers Seed quality/treatment Last season’s seed Branded seed Ensure availability Sub-optimal Optimal Ensure supply Yes but imbalanced No Yes: balance Yes Funds, awareness Inadequately applied Applied as needed Weed management Inadequate Adequate Funds, awareness Financing & support From trader Trader and banks Banks, Go. S support Too early No On time Yes Awareness Capital subsidy Land Preparation Laser land leveler Seed rate (kg/acre) Fertilizer Urea & DAP Micronutrients Pesticides etc. Harvesting Timing Mechanical harvesting Funds, awareness 13

Extension strategy Champion farmers - Pick participating mills - Pick growers in areas surrounding participating mills - Farmers surrounding these progressive growers’ farms to be demonstrated good practices - Next season: some of these surrounding farms to become demo farms keep expanding each season in this way Criteria for selection of champion farmers 1. Progressive grower 2. Literacy Preferred 3. Interest in modern technology 4. Able to serve as model grower 14

Saving Sindh’s water through laser leveling • Using FAO CROPWAT model for Sindh rice cultivation, Sindh’s estimated water use by traditional rice cultivation method is 7, 400 cubic meter per acre – Assumption: 70% water use efficiency of flood irrigation • 15% water saving from laser land leveling is 1, 110 cubic meter per acre • For 1. 84 million acre, the saving would be: 2 billion m 3 • This saving is equivalent to 1. 66 million acre feet per season • Sindh’s total water withdrawal: 48 million acre feet • Saving by laser land leveling in rice areas can be 3% of Sindh’s total water withdrawal Laser land leveler Levels farm surface for optimal water use Results in Punjab to date: Area leveled: 15. 8 million acres Annual water savings: 3. 5 -4. 0 MAF Resulting rise in agri-production: 25 -30% Cost: Rs. 5, 000 -6, 000 per acre 15

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(seed, fertilizer, agro-chemicals, credit, etc. ) Farmers On-farm improvements Extension teams Deliver knowledge on practices & monitor Service providers Millers Brokers Quality inputs Traders Rice value chain: Interventions and partners Exporters Guaranteed off-take (if paddy meets specs) Post-harvest Investments (mainly drying/storage with collateralization) Banks Government Donor support 17

Preservation of quality requires proper drying & warehousing Collateral management regime is key for this FARMER OR TRADER CROP COLLATERALIZED AT TIME OF HARVEST • • • Tested product AGRISTORAGE Proper oversight & insurance for crop under CMC accreditation Crop under lien Lending against BANK crop as collateral BUYER OF COMMODITY Sale settled on PMEX CROP SOLD A FEW MONTHS AFTER HARVEST Sale repays MERCANTILE bank EXCHANGE Immediate next steps Benefits of this model • Aim to increase silo capacity in Sindh’s Distress sale by farmer prevented rice production areas by next harvest Farmers’ access to formal credit • Investors are ready to put up ‘drying Compels standardization plus 6 silos’ with right framework Proper storage reduce losses • Banks/State Bank ready to allow lending Price discovery through competition to farmers/traders through this regime Market stability and predictability 18

Testing parameters Minimum standards above which rice exporters can guarantee purchase SPECIFICATIONS: BROKENS BELOW ¾ SIZE GRAIN BASIS 6 MM GRAIN LENGTH 25% MAX MOISTURE 14% MAX DAMAGED, SHRIVELLED & YELLOW GRAINS 2% MAX CHALKY GRAINS 5% MAX FOREIGN GRAINS 2% MAX FOREIGN MATTER 1. 2% MAX PADDY GRAINS 0. 8% MAX RED & UNDERMILLED GRAINS 4% MAX MILLING DEGREE REASONABLY WELL MILLED FREE FROM LIVE INSECTS/WEEVILS FREE FROM ANY FOREIGN/BAD ODOUR How will these specifications be enforced from farm to export? 19

Proposed policy measures • Millers to purchase 10% of their paddy directly from farmers • Other? 20

Building the Sindh rice export program

Identifying partners for each intervention Intervention Who will arrange? On farm 1. Water on time 2. Soil testing 3. Water testing 4. Seed: OP to hybrid 5. Laser land leveling 6. Nursery & mechanical transplantation 7. Extension services 8. Kubota harvesters 9. Machinery parts/svc Post-harvest 10 Storage with drying, testing (plus collateral) 11 Buy-back arrangement 22

Implementing Sindh rice export program Overall coordination: REAP-PAC team in Karachi • Coordinator for upper Sindh with field team • Coordinator for lower Sindh with field team • Others? 23

All this requires partners Donors World Bank Sindh Agriculture Growth Project Rice component Sindh Irrigated Agriculture Productivity Enhancement Project Asian Development Bank Public Private Partnerships project International Rice Research Institute International technical expertise (Keen to work with industry associations) Government Federal Ministry of Commerce Export Development Fund Sindh Agriculture Department World Bank project Sindh Irrigation Department World Bank project Sindh Finance Department Sindh Enterprise Development Fund Public-Private Partnerships Unit (ADB project) Private sector Seed companies Input suppliers (fertilizer, agro-chemicals, etc. ) Banks Farm machinery providers 24

Possible source of funding: Oil & gas companies operating in rice districts 25

Indicative timeline for program launch S. # Activity Target date 1 Final design of program by REAP/PAC End-Dec 2018 2 Sign MOU with partners Jan 2019 3 Jointly secure interest of provincial government Jan 2019 4 Hiring of implementation team Feb 2019 5 Development of extension materials/printing, etc. Feb 2019 6 Start of field activities Mar 2019 7 Paddy harvest Oct 2019 8 1 st year’s program evaluation Nov 2019 9 Strategy for scale-up Dec 2019 26

Next steps • Identification of millers and farmers for 2019 season • Calculation of funds required for these interventions 27

Pakistan Agricultural Coalition (PAC) Thank you 28

Sample of farmer costs 29

Rice Harvesting 1. Wheat Combines- New Holland, Fiat 2. Kubota Combine Kubota Old Re-furbished Relatively New Re-furbished 25 -30 35 -45 2, 000 -2, 500 5, 500 -6, 000 12 8 -10 3 Disc Plough = 3, 000 1 Rotavator = 1, 200 (Burning becomes necessary) 1 Disc Plough = 1, 000 1 Rotavator = 1, 200 (No Burning, Labor can lift the straw for feeding livestock) Straw Value (Rs. / acre) 0 5, 000 -6, 000 Premium on price (No foreign material) (Rs. / maund) 0 50 -60 Condition Time to harvest (Minutes / acre) Charges (Rs. / acre) Diesel Consumption (Liters / acre) Residue/ Straw Management/ Land Preparation (Rs. / acre)

Rice Harvesting Combine harvesters Kubota harvesters • High grain losses (at moisture contents • Relatively low grain losses (at moisture 20 -24 %) = 3 -7 Maunds/acre contents 20 -24%)= 1 -3. 5 Maunds/acre • Shattering losses: 1. 8 -5. 0 Maunds/acre • Shattering losses: 0. 9 -3. 0 Maunds/acre • Threshing losses: 1. 2 -2. 0 Maunds/acre • Threshing losses: 0. 1 -0. 5 Maunds/acre • Broken Grains (per 100 g) = 130 -175 • Broken Grains (per 100 g) = 40 -50 • Trash = High foreign matter • Trash = Clean (minimal foreign matter)

On-farm improvements Higher yields demand higher expense on inputs Typical comparison of costs and revenue Costs Gross Income Regular farmer (10 Maunds/Acre) Fertiliser Land preparation Cultivation Costs Gross Income Progressive Farmer (25 Maunds/Acre) Agro Chemicals Threshing Transportation This jump needs to be financed 32

What actions are required to help increase yield? Stage of crop cycle Regular farmer Progressive farmer Action required Adequate water No Yes Small reservoirs Soil & water testing No Yes Input suppliers No Yes Nursery/transplantation No Yes Capital subsidy to service providers Seed quality/treatment Last season’s seed Branded seed Ensure availability Sub-optimal Optimal Ensure supply Yes but imbalanced No Yes: balance Yes Funds, awareness Inadequately applied Applied as needed Weed management Inadequate Adequate Funds, awareness Financing & support From trader Trader and banks Banks, Go. S support Too early No On time Yes Awareness Capital subsidy Land Preparation Laser land leveler Seed rate (kg/acre) Fertilizer Urea & DAP Micronutrients Pesticides etc. Harvesting Timing Mechanical harvesting Funds, awareness 33