January 2016 NEWS COVERAGE PERIOD JANUARY 25TH TO JANUARY 31ST, 2016 PLAN FOR MAKING AGRICULTURE SECTOR ABLE TO MITIGATE IMPACTS OF NATURAL DISASTERS Dawn, January 25th, 2016 ISLAMABAD: The Food and Agriculture Organisation (FAO) of United Nations and the National Disaster Management Authority (NDMA) have finalised an institutional assessment for the integration of disaster risk management and the agriculture sector of Pakistan in an attempt to make the agriculture sector capable of preventing and mitigating the impacts of natural disasters. According to FAO officials in Pakistan, the assessment will serve as a key tool to further develop the capacity of the agriculture sector institutions to mainstream the disaster risk management with a special focus on disaster reduction in their planning and action, and to prepare and respond to emergencies. As a result of interviews with all important stakeholders at federal and provincial levels, including members of vulnerable communities, disaster management officials at provincial, regional and district levels, members of civil society organisations and government officials responsible for the agriculture sector, strengths and weaknesses, as well as needs of disaster risk management systems of all relevant institutions have been identified. The FAO and NDMA after a series of workshops with these stakeholders across the country finalised findings and recommendations of the assessment. The NDMA will work with all stakeholders to implement recommendations of the assessment study. Each year Pakistan is struck by a multitude of natural disasters, such as floods, earthquakes, droughts, landslides and avalanches. Agriculture is one of the sectors most affected by these phenomena. With a 21 per cent share of the national GDP and a 45 per cent share of Pakistan’s total workforce, it is crucial that the agricultural sector is able to prevent and mitigate the impact of disasters. Between 2003 and 2013, disasters triggered by natural hazards caused $1.5 trillion in economic damage worldwide. In developing countries alone, these disasters cost about $550 billion in estimated damage and affected 2 billion people. Such disasters often undermine national economic growth and development goals, as well as agriculture sector growth and sustainable sector development. However, there is no clear understanding of the economic impact of disasters on the agriculture sector. Initial results of a latest FAO study says nearly a quarter of damages wrought by natural disasters on the developing world are borne by the agricultural sector. The FAO has launched a special facility aimed at helping countries better equip their food production sectors to reduce risk exposure, limit impacts, and be better prepared to cope with disasters. Twenty-two per cent of all damages inflicted by natural hazards such as drought, floods or tsunamis are registered within the agriculture sector, according to FAO’s analysis of 78 post-disaster needs assessments in 48 developing countries spanning the 2003-2013 period. These damages and losses are often incurred by poor rural and semi-rural communities without insurance and lacking the financial resources needed to regain lost livelihoods. Yet only 4.5 per cent of post-disaster humanitarian aid in the 2003-2013 period targeted agriculture. http://www.dawn.com/news/1235211/plan-for-making-agriculture-sector-able-to-mitigate-impacts-of-natural-disasters GREEN FIELDS RESURFACE AFTER CANAL LINING STARTS Dawn, January 25th, 2016 MALIK TAHSEEN RAZA MUZAFFARGARH: Though Muzaffargarh canal lining project is nowhere near its completion, the farmers whose land was earlier uncultivable have started benefitting from it as waterlogging has stopped since the launch of the project. Lavish green wheat fields can now be seen on thousands of acres of land which had suffered waterlogging in the district. “I have cultivated wheat on my land after two decades of waterlogging and the crop is in good condition as seeping of the canal water has stopped. Hundreds acres of other farmers are coming back to normal condition because water has receded,” says Malik Shabbir Hanss, a farmer from Mahmoodkot. Ajmal Khan, another farmer from the area, says he is being called a Zamindar once again after a long time, adding his family faced poverty as waterlogging and salinity had damaged his 10 acres land. “I was a good farmer in the 1980s before waterlogging destroyed my land. Now I have again cultivated wheat in my fields,” he says. Khan is grateful to the last PPP government for starting the project. Many other local farmers claim their land value has increased and the project has brought back prosperity for them. The Rs13bn mega project of canal lining will complete in 2017 and its two parts will be completed by April 30, says Project Manager Muhammad Khalid. He says water will be released into the canal on April 30, adding that most of the work has been completed but the project will complete in 2017. Chief Engineer Muhammad Hasan says though the project was approved by the PPP government, it started with a two-year delay. Officials said the federal as well as provincial governments had stopped work in 2013 but it started two years later when the federal government released funds for it. According to an estimate, canal lining project will bring 400,000 waterlogged land back to fertility. It was to complete in 2015 but now it will be completed in 2017 due to the delay in its start. According to the original plan, the project was to start in March 2013 when the then prime minister Yousuf Raza Gilani and former foreign minister Hina Rabbani Khar had laid its foundation. http://www.dawn.com/news/1235220 DIP IN FERTILISER SALES Dawn, Business & Finance weekly, January 25th, 2016 FAUJI Fertiliser Company Limited with paid-up capital of Rs12.7bn is 44pc owned by the Fauji Foundation. On the last Thursday’s closing price of the FFC stock at Rs110.90, the outstanding shares at 1,272m, produces the company’s market capitalisation at Rs141bn. The total assets of the company, according to the last released figures for Sept 30, 2015, stood at Rs80bn. Major competitors in the fertiliser industry include Engro Fertiliser; Fatima Fertiliser; Fauji Fertiliser Bin Qasim and National Fertiliser Marketing Ltd (NFML) The. FFC has retained its position among the hundreds of listed companies represented by the fact that the company clinched an award among the ‘KSE top-25 companies’ consecutively for 20 years since 1994. It has earned well and paid generous dividends to the shareholders. Yet, like the rest of the industry, in the recent times the company has been plagued by problems. Gas price hike together with the decline in farmers’ income have put a dent in margins of fertiliser companies across the spectrum. Analyst Tahir Abbas at brokerage Arif Habib Limited said in last week’s report that as per the latest fertiliser offtake numbers urea sales in Dec stood at 778,000 tonnes which took the industry cumulative off-take for CY15 to 5,557 thousand tonnes, reflecting decrease of 1pc YoY. Things do not appear to improve in the short term. Analyst Danish Ali Kazmi who follows the fertiliser sector for brokerage Alfalah Securities says: “The situation for urea players still looks bleak as urea prices are likely to remain on the lower side given lower demand in upcoming quarters owing to seasonality and decline in international urea prices which has limited the industry’s pricing power. For the latest three-quarters ended Sept 30, 2015, FFC posted after tax profit amounting to Rs11.946bn, down from Rs12.961bn in the corresponding period of the previous year. Chairman retired Lt.Gen.Khalid Nawaz Khan stated in the directors’ report that the urea production from the three plants of the company stood at 1,818 thousand tonnes which was higher by 3pc YoY, due to improved operating efficiency. However, substantial increase in feed/fuel gas prices with effect from Sep 1, 2015 led to escalation in urea selling prices. “However, the government announced its intention of reducing the feed gas price to lower the selling prices of urea, through the Prime Minister’s ‘Kissan Package’. Non implementation of this decision resulted in uncertainty in the market, negatively impacting urea off-take. The chairman, however, affirmed that the board of directors remained focused towards sustained profitability and shareholders’ return through cost economisation and improved efficiencies to increase productivity, besides augmenting company earnings through its diversification initiatives. And what are those diversifications? Sector watchers say that FFC has partnered with Tanzania Petroleum Development Corporation (TPDC); Ferrostaal Industrial Projects (of Germany) and Haldor Topsoe (of Denmark) to set up a 1.3m tonne fertiliser plant in Tanzania. The FFC board gave its nod to the project in the autumn last year. In addition, FFC’s wholly owned subsidiary, Fauji Fresh-n-Fresh’s individually quick freeze project (QFP) is like to commence operations in the 1HCY16. In order to remain competitive, the company is also planning to install a coal fired boiler at Goth Machhi which will enhance urea production and lower the fuel stock price. Analyst Muhammad Awais Ashraf at Foundation Securities in his research note issued last week showed concern that despite the strong brand name, weak agronomics made it difficult for FFC to pass on gas tariff hike. “Another probable gas price hike will make the situation worse for the company as we do not see any improvement in farmer’s cash position”. Is there a threat of further hike in gas price? Market watchers remind that the Oil and Gas Regulatory Authority (OGRA) had raised revenue requirements of gas distribution companies by 27pc, which was a prerequisite for determination of consumer tariff, making a strong case for gas price hike as the government was committed to reduce subsidies.