Oil prices rise on ME unrest

LONDON, March 23: World oil prices advanced on Wednesday owing to escalating unrest in Libya and the Middle East, traders said.

Brent North Sea crude for delivery in May climbed 49 cents to $116.19 a barrel in London trade.

New York`s main contract, light sweet crude for May, gained 54 cents to $105.51 per barrel.

“The issues of Libya and Yemen have been driving prices of crude oil up, although Yemen is a small exporter and Libya has been more significant,” said John Vautrain of Purvin and Gertz energy consultancy.

US crude futures extended gains following the release of the US government weekly oil data at 14:30 GMT, pulling up North Sea Brent crude.

US crude rose 67 cents to $105.65 a barrel by 15:50 GMT.

US government data showed a 5.32 million barrel drop in gasoline inventories in the week to March 18, surpassing an analyst forecast of a 1.8 million barrel drop.

For so far in March, the fall in gasoline has already been the biggest since 1990, when the US Energy Information Administration started the weekly report.Gasoline demand over the past four weeks was 1.2 per cent higher than a year earlier.

But some analysts have cautioned that the fall came against the backdrop of a build up in inventories to multi-year highs earlier this year and crude and distillates stocks rose.

“Despite the price point, gasoline demand is relatively

strong at just over nine million barrels (per day),” John Kilduff, partner with Gain Capital in New York, said.

“The drawdown, by contrast, have been substantial, which is due entirely to the persistently low refinery utilisation rate.”

Earlier in the day, prices seesawed due to civil unrest across North Africa and the Middle East and resulted in the shutting in of the bulk of Libya`s oil output.

Brent prices dipped as western warplanes silenced Muammar Qadhafi`s artillery and tanks besieging rebel-held Misrata in western Libya on Wednesday.

Yemen is a very hot topic now. It is not that important to the oil market but unrest in the region gives enough psychological support to prices,” Andy Sommer, energy market analyst with EGL, said.

Its neighbour Saudi Arabia is the world`s top oil exporter and the only Opec member nation with enough spare capacity to compensate for supply disruptions elsewhere.

In West African oil producer Nigeria, some violence has been reported ahead of presidential election in April.

Global markets were also watching a key vote on austerity measures in Portugal that could see the country`s government brought down. The euro slipped ahead of the vote.

Also of concern is the impact of Japan`s earthquake and tsunami.

The cost of the damage could top $300 billion, making them out the world`s costliest natural disaster.

Tax on inputs to hit farm productivity

THE imposition of 17 per cent sales tax and 1–2.5 per cent special excise duty last week on almost all farm inputs including machinery, fertiliser, pesticides and seeds may prove to be a drag on agricultural productivity.

The decision may bring some temporary financial gains to the government, but would negatively impact balanced use of fertiliser, discourage investment in other inputs and stifle agricultural production. Ultimately it has the potential to affect food security, exports and may end up increasing imports.

The three ordinances issued by President Asif Ali Zardari last Tuesday are focused on revenue generation, necessary for continued engagement with the foreign lenders at the cost of agricultural development which needs to be at the centre of the country’s economic growth strategy.

Its indirect and long-term losses may not only neutralise the current financial gains but impact adversely on the overall national economic growth.

To begin with, the imposition of sales tax and special excise duty on all agriculture inputs would hit worst the subsistence farmers, who form over 93 per cent of the community and have been exempted from income tax for social reasons. he government has once again resorted to retrogressive taxation.

There are over six million such farming families in the country which would sink further down the poverty line. The additional revenues would come at very high social cost.

Second, the new taxation would have a multiplier impact on the prices of agri-input. The industry calculates that these taxes would increase cost of inventory keeping, necessitating additional bank loans and interest payments. Every actor in the entire supply chain would need more money, and pay its cost – ultimately passing the cumulative impact on to farmers.

“The final impact may be close to 25 per cent,” assesses Jawed Qureshi, a pesticides and fertiliser manufacturer and owner of an agri-marketing company. He also agrees that receding government writ may add some additional cost, as the increased taxation would be justified for price increase.

Third and the most dangerous risk would be a drop in crop size. With pesticides and fertiliser prices going up by 25 per cent, they would simply spin out of reach of majority of farmers. It will result in corresponding reduction in final yield and national crop size.

In market terms, the price of DAP, which is hovering around Rs3,200 per bag, might go beyond Rs4,000. In Pakistan rupee denomination, a bag in India costs around Rs1,100. The equation is thus 4-to-1, when compared with Indian farmer on affordability index.

The urea bag, which at present costs around Rs1,100, would jump to Rs1,350. Can the farmers, especially the subsistence ones, absorb that kind of increase? Certainly not! Couple it with increasing international prices of DAP and emerging agriculture picture becomes even scary.

Pakistan ended up subsidising DAP bag, when its international prices went beyond $500 per ton. Currently, they are hovering around $680 per ton. Once peak usage period hits the country in May, DAP price may soar beyond Rs4,500 per bag, making its usage impossible for farmers.

All efforts at diversifying to other high-priced crops and increasing intensification revolve around efficient and balanced application of inputs and farm mechanisation.

If these inputs and farm machinery, which has also been placed in the new tax net, keep slipping beyond the farmers’ reach, the government would find it increasingly difficult to sustain these initiatives in order to boost agriculture development.

The government may face a double jeopardy. On the one hand, drop in sale of inputs may hit its revenue targets. On the other, the decreasing crop size may hamper all its efforts to increase exports. Three crops are crucial for food security and national economy. Wheat provides food security and cotton and rice contribute over 70 per cent foreign exchange earnings. If these crops receive any shocks, the economy country would be in for huge trouble.

There is no denying the fact that the government is hard pressed for cash. However, had it done its homework properly, it could have located avenues for revenue generation even within the agriculture sector.

For example, it could have increased tax on trading. It recently imposed 3.5 per cent tax on middleman, which could have been reasonably increased. Cotton trade has many steps that could come under taxation. Best of all is to tax the farm income, where bigger farmers pay more.

The basic philosophy for any taxation should be that it should not suppress production. It should be designed to help increase output. Production improves chances of more revenue generation. Suppressing production is tantamount to blocking the sources of revenue generation. The new sales tax and excise duty are likely to become a drag on production.

Managing wheat support price

HARVESTING of wheat has started in Sindh, particularly in lower part of the province, with government`s procurement target fixed at 1.3 million tons that is lower than last year`s 1.5 million tons. However, the growers expect a bumper crop and want the target to be scaled up.

Around 2.2 million acres were brought under wheat crop in the vast katcha area of the Indus River with the growers taking advantage of increased fertility and huge silt deposits the Indus brought in the wake of floods last summer. According to reports, weather conditions and water availability even in non-perennial areas remained favourable for the crop.

Last year wheat was grown over 10,92,000 hectares against the target of 10,31,000. According to provincial agriculture officials, this year the area would cross 1.1 million hectares with an expected yield of 3.7 million tons. The growers have been stressing the need for better management of the produce as the province lacks proper storage facility. Timely procurement, appropriate preservation and fumigation of the crop are some of the important measures needed to benefit growers and consumers.

Currently harvesting is in progress in lower Mirpurkhas, Tando Mohammad Khan, Pangrio and Kunri. It would pick up pace once the labour force is free from sugarcane harvesting which is at its fag end.

The present price of wheat in the open market is at around Rs975-1,000 per 40kg against the government`s support price of Rs950. With the harvesting coming in full swing, wheat prices may drop below the procurement price. Consequently the middlemen and hoarders would reap the benefit and some of the crop may be smuggled.

The food department has decided to open procurement centres from April 15, while the growers demand the procurement drive to start from April 1. It has sufficient wheat stocks from last year which has kept flour prices stable in the market.

Sindh Abadgar Board (SAB) general secretary Mehmood Nawaz Shah points out that in the international market wheat price is rising for the last several months. He says wheat price in the international market at $330 per ton is equivalent to Rs28,350 per ton or Rs1140 per 40kg.

Shah says the support price has not been increased over the last three years. The government can purchase the crop at Rs950 and export it for Rs1150 per maund. “PASSCO should also be acti- vated and directed to purchase wheat from Sindh to support the growers” he said.

According to Director Sindh Food department Talib Hussain Magsi, procurement centres would start functioning from April 15 as the department is not ready to buy wheat with higher moisture level. “We set target as per federal government`s directive,” he said. Wheat purchase would start after the crop gets fully matured, he adds. “We can only store 670,000 tons of wheat in our indoor storage system. The rest would be kept under the open sky,” he says. The food department has purchased 85,000 gunny bags and some of them were already with the procurement department, he says.

The government plans to ban inter-city movement of wheat in Sindh to ensure the procurement target. But SAB president Abdul Majeed Nizamani, opposes the idea on the ground that it would open gates for corruption and the food officials would have a field day. He says that districts which have surplus production, as far as their target is concerned, would have to send crop to other districts. The government should avoid banning crop movement, he pleads.

Managing wheat support price

HARVESTING of wheat has started in Sindh, particularly in lower part of the province, with government`s procurement target fixed at 1.3 million tons that is lower than last year`s 1.5 million tons. However, the growers expect a bumper crop and want the target to be scaled up.

Around 2.2 million acres were brought under wheat crop in the vast katcha area of the Indus River with the growers taking advantage of increased fertility and huge silt deposits the Indus brought in the wake of floods last summer. According to reports, weather conditions and water availability even in non-perennial areas remained favourable for the crop.

Last year wheat was grown over 10,92,000 hectares against the target of 10,31,000. According to provincial agriculture officials, this year the area would cross 1.1 million hectares with an expected yield of 3.7 million tons. The growers have been stressing the need for better management of the produce as the province lacks proper storage facility. Timely procurement, appropriate preservation and fumigation of the crop are some of the important measures needed to benefit growers and consumers.

Currently harvesting is in progress in lower Mirpurkhas, Tando Mohammad Khan, Pangrio and Kunri. It would pick up pace once the labour force is free from sugarcane harvesting which is at its fag end.

The present price of wheat in the open market is at around Rs975-1,000 per 40kg against the government`s support price of Rs950. With the harvesting coming in full swing, wheat prices may drop below the procurement price. Consequently the middlemen and hoarders would reap the benefit and some of the crop may be smuggled.

The food department has decided to open procurement centres from April 15, while the growers demand the procurement drive to start from April 1. It has sufficient wheat stocks from last year which has kept flour prices stable in the market.

Sindh Abadgar Board (SAB) general secretary Mehmood Nawaz Shah points out that in the international market wheat price is rising for the last several months. He says wheat price in the international market at $330 per ton is equivalent to Rs28,350 per ton or Rs1140 per 40kg.

Shah says the support price has not been increased over the last three years. The government can purchase the crop at Rs950 and export it for Rs1150 per maund. “PASSCO should also be acti- vated and directed to purchase wheat from Sindh to support the growers” he said.

According to Director Sindh Food department Talib Hussain Magsi, procurement centres would start functioning from April 15 as the department is not ready to buy wheat with higher moisture level. “We set target as per federal government`s directive,” he said. Wheat purchase would start after the crop gets fully matured, he adds. “We can only store 670,000 tons of wheat in our indoor storage system. The rest would be kept under the open sky,” he says. The food department has purchased 85,000 gunny bags and some of them were already with the procurement department, he says.

The government plans to ban inter-city movement of wheat in Sindh to ensure the procurement target. But SAB president Abdul Majeed Nizamani, opposes the idea on the ground that it would open gates for corruption and the food officials would have a field day. He says that districts which have surplus production, as far as their target is concerned, would have to send crop to other districts. The government should avoid banning crop movement, he pleads.

Rise in input prices impact cotton crop

THE final phutti picking concluded in Sindh last month, showing a crop output lower than targeted by the provincial government.

The overall production of the crop in the province is estimated at around 3.5368 million bales as against the target of 4.2 million bales. The drop is attributed mainly to reduced area under cotton cultivation, down by 193,000 hectares to 457,000 against the target of 650,000 hectares.

According to the Pakistan Cotton Ginners Association (PCGA), the overall phutti production in Sindh during the season stood at 3.785 million bales.

Agriculture officials link shortfall in sowing of 193,000 hectares to increase in prices of farm inputs. However, most of such land in cotton growing areas was not brought under cultivation of any other crop due to soaring cost of seed, fertiliser and other inputs, they said.

Nevertheless, the 2010 crop showed good performance in terms of yield, which proved helpful in bringing the output closer to the production target.

Agriculture officials said an average yield of 32.9 maunds per hectare had been achieved against the target of 27.475 maunds. Reports of 60-70 maunds per acre also came from areas having good quality of soil, where better farm inputs were available, and proper land preparation was made.

In 2009, cotton in Sindh was sown over 634,700 hectares as against the target of 650,000. The yield stood at around 4.27 million bales against the target of 3.25 million.

Sowing of BT cotton seed was the major cause of surplus phutti production in 2009. As prices of BT cotton seed and other farm inputs increased exorbitantly this year, cotton sowing suffered. The BT seed available at Rs150-200 per kg in 2009 was sold between Rs700-800 per kg in 2010.

The prices of urea and DAP fertilisers in 2009 were Rs700-750 and Rs2,400-2,800 per bag respectively. These were now selling at Rs1,200 and Rs3,400-3,500 per bag respectively. This surge in prices of farm inputs was the major cause of reduced cotton cultivation in the province.

“Because of substantial increase in prices of farm inputs, many growers could not bring their lands under cotton cultivation, which is evident in the decline in its acreage,” said Hubdar Ali, a senior agriculture official.

Situation arising out of the increase in urea prices by producers and black-marketing by dealers are worrying the poor farmers, particularly the smaller ones.

“The uncalled for hike in prices of farm inputs has made it difficult for growers to use the required quantity of seeds, fertilisers and other inputs,” remarked Sindh Chamber of Agriculture officials.

They further said that farming community had already reverted to the use of cattle dung and the refuse available with the sugar mills as fertiliser.

Phutti farmers indicated that in most areas growers had sown cotton in July instead of March due to water shortage. According sowing calendar of the provincial agriculture department, cotton sowing should be completed between April and May. Besides shortage of irrigation water, non-availability of quality seed, fertiliser and adulterated pesticides are the major reasons behind late sowing and output shortfalls.

Agriculture experts say that Phutti sown in June shows substantial fall in per acre yield and becomes prone to viral attacks. They say that different research studies have found that inadequate irrigation supplies, late sowing and application of uncertified fertiliser and pesticides often lead to poor cotton yield or make the crop susceptible to a host of viral and pest attacks.

The same happened with the cotton crop of last Kharif season. Leaf curl virus, pest attacks and reddening of leaves affected the crop, particularly in central and lower Sindh’s cotton growing areas. Besides, shedding of flower also affected the ball setting in plants resulting in loss of first and second pickings, which account for around 65 per cent phutti output.

Most of the farmers, mainly small ones, had no choice but to purchase farm inputs of whatever quality was available in local markets. Small farmers do not have cash and buy farm inputs on credit with very little say in the quality of the inputs.

“Last month more than 230 bags of adulterated DAP were confiscated during raid on a godown in Sanghar district.

Similar raids were also made in districts in January and February this year, from where complaints against sale of impure and counterfeit farm inputs came frequently,” said a senior official in the agriculture department.

He told this scribe that the department had approached the manufacturers to sell farm inputs only to registered dealers.

Farmers, however, warned that the falling trend in cotton output might continue in the coming years, if illegal trading of bogus farm inputs continued unchecked.

They have urged the government to ensure availability of pure farm inputs at fair prices and create awareness among cotton growers for maximising productivity.

Armed forces, other institutions back ‘mini-budget’: Shaikh

Finance Minister said the revised budgetary measures would improve national economy and give a positive signal to the international community.

ISLAMABAD: The Rs173 billion additional budgetary measures through Rs120 billion reduction in allocated expenditures and Rs53 billion additional taxes have come about with full cooperation and belt-tightening of the armed forces and other government institutions, according to Finance Minister Dr Abdul Hafeez Shaikh.

Speaking at a “post-mini-budget” news conference on Wednesday, the minister said the economic reforms process would continue to stabilise economy and extend its benefits to people while the reformed general sales tax would become part of next year’s budget.

He said the revised budgetary measures would improve national economy and give a positive signal to the international community, including the International Monetary Fund and other multilateral institutions, but declined to say if the steps would pave the way for disbursement of IMF funds.

Dr Shaikh said last year’s National Finance Commission award resulted in transfer of Rs300-400 billion additional revenue to the provinces during the current financial year which reduced federal government’s fiscal space, resulting in further expenditure controls.

Responding to a question, he said the introduction of new tax measures through presidential ordinances was in no way a violation of the Constitution as described by the PML-N. An ordinance is as good as an act of parliament and the Constitution provided for promulgation of ordinance in special circumstances. Nevertheless, the ordinances would be taken to parliament, he said.

He blamed successive governments for their ‘historic and collective’ failure to mobilise domestic resources, which resulted in dependence on foreign loans and excessive borrowing from the State Bank of Pakistan and raised more risks to the economy like higher inflation.

The minister said that by the end of last month the borrowing from the central bank had been brought down to Rs80 billion while a boom in international prices of wheat, rice, sugar and cotton had resulted in much better returns in the form of exports, which were expected to cross a record $24 billion mark during the current fiscal year.

He said the remittances from overseas Pakistanis were expected to exceed $11 billion, highest in the country’s history, while foreign exchange reserves at $17.5 billion were also a record.

Dr Shaikh said the coalition partners had supported the government in taking difficult economic decisions to control expenditures and increase resources.

Finance Secretary Dr Waqar Masood Khan said the government had cut the expenditure by Rs120 billion, including Rs100 billion reduction in public sector development programme. An amount of Rs20 billion would be saved through a combination of steps, including a ban on fresh recruitments on posts for which it had been made and a ban on the purchase of durable goods like air-conditioners, furniture, computers, etc.

He said the supplementary grants from all institutions, including the armed forces, had been controlled and in the process no institution was spared and even the army had cooperated.

Federal Board of Revenue chairman Salman Siddique said the Rs1,667 billion revenue target under the federal budget was based on the premise of 4.5 per cent growth and introduction of value-added tax, but the VAT could not be implemented and growth was estimated to have been affected by 2 to 2.5 per cent because of floods.

As a result, the normal tax collection should have been Rs1,510 billion, but Rs90 billion worth of taxes were required to be generated to meet a revised target of Rs1,600 billion. He said the FBR would try to yield Rs1,630 billion in revenue, but a conservative collection of Rs1,600 billion was a must.

He said that Rs37 billion would be generated in outstanding recoveries through audit and speedy perusal of court cases, while new taxes of Rs53 billion would be collected, including 15 per cent surcharge on income tax liability and 1.5 per cent increase in special excise duty on fertilisers, pesticides and tractors, besides withdrawal of sales tax exemptions on plant, machinery and equipment and withdrawal of zero-rating of domestic sales of textiles, leather, carpets and sports & surgical goods.

Industry rejects withdrawal of ST exemption

KARACHI, March 16: The business and industry leaders on Wednesday rejected the government decision to withdraw zero-rating of the five major export-oriented industrial sectors from the sales tax.

They lamented that the move had been taken without consulting the stakeholders and it would result in flight of capital and relocation of industry to other regional countries and create massive unemployment.

The textile industry was already passing through a crucial period with frequent increase in raw material price, hike in power and gas tariffs along with massive loadshedding thereby threatening the very existence of the industry.

Leaders of the 11 textile associations under the umbrella of Council of All Pakistan Textile Associations (Capta) in a hurriedly called meeting expressed their resentment over the sudden government move of removing the sales tax exemptions allowed to five export-oriented sectors.

The government through a presidential ordinance issued on Tuesday (March 15) has amended SRO 509(I)/2007 withdrawing zero-rating of five major export oriented industries from sales tax.

The government has also raised special excise duty from one per cent to 25 per cent, imposed 15 per cent surcharge on income tax and has withdrawn sales tax on fertilizer, tractors and pesticides.

While major opposition parties termed the move as ‘mini-budget’ but trade and industry believed it would hurt the export trade and open up flood gates of corruption and would not give desired results and revenue to the government.

Patron-in-Chief of Pakistan Bedwear Exporters Association (PBEA) Shabir Ahmed told Dawn that the government announcement was confusing and it seemed that all was done in haste.

He said it was not clear that the government had withdrawn exemption on exports of five industrial sectors or only on their local sales and if both were there it would mean that huge refund amount belonging to export trade and industry would be stuck up with the FBR as was the past practice.

Pakistan Readymade Garments Manufactures and Exporters Association (Pregmea) Chairman Javed Chinoy said that the amendment in SRO 509(I) of 2007 would create problem in the supply chain and a number of questions still remain unanswered.

Chairman Pakistan Leather Garments Manufacturers and Exporters Association (Plgmea) Fawad Ijaz Khan said the industry would have no objection over imposition of sales tax on local sales of five export oriented industrial sectors because it was being practiced all over the world.

However, he said since other categories of traders, including commercial importers and local suppliers would have to pay sales tax on imported raw material it will open up floodgates of corruption through ‘flying sales tax invoices’ as was the case in the past.

He suggested that the government should have introduced a flat rate of sales tax at retail-end on local sales of these five zero-rate sectors as being practiced at food outlets and restaurants.

Energy from garbage: Plant’s installation hits snags

RAWALPINDI, March 8: A project to install a plant in Rawalpindi for producing energy from garbage has hit snags over collecting and transporting it to the main dumping site, Dawn has learnt.

On January 8 this year, a committee comprising district and provincial officials had selected a private firm, Waste Management of Pakistan (WMP), for installing the first Refuse Derived Fuel (RDF) plant at Losar, the main garbage dumping site in Rawalpindi.

The committee headed by Commissioner Rawalpindi Division Zahid Saeed comprised DCO Rawalpindi Imdadullah Bosal, and the representatives of Planning and Development (P&D), Public Health Engineering (PHE) and the Urban Unit Punjab (UUP).

But sources said differences have emerged between the Punjab government`s Urban Unit and the firm over the collection and transportation of the garbage to the dumping site. Sources add that the officials are now considering blacklisting the firm for what they call `wasting precious time` of the government.

According to the agreement between the Punjab government`s Urban Unit and the company, the district administration was to sell garbage to the company at Rs50 per ton. The total generation of waste in Rawalpindi city is around 800 tons daily, which means the district administration will earn Rs40,000 a day after the plant is installed and starts working.

Asif Farooqui, chief executive WMP, told Dawn that the provincial government had pledged to hand over garbage to the company at Losar. “But now they want us to lift the garbage on our own,” he said. “It is the responsibility of the district administration to lift and hand over garbage to the company at Losar. This was the main condition in our proposal,” he said.

Dr M Nasir, director general of the Punjab government`s Urban Unit, was hopeful of settling down differences with the company.

He hinted at starting talks with the WMP to get the plant installed for converting waste materials into gas, electricity and fertilisers. “Though there are many things to be cleared between the company and the government, the matters will be settled eventually. I hope the project will materialise,” Dr Nasir said.

According to Mr Farooqui, the RDF plant was worth Rs10 million euros (Rs1.2 billion).

He asked the provincial government to facilitate the project for giving a clean look to Rawalpindi.

Minimum Export Price fixed for 25 surgical items

ISLAMABAD, March 8: Pakistan has slapped minimum export price restrictions on 25 surgical products apparently to regulate the widespread under-invoicing in the sector, a senior official in the commerce ministry told Dawn on Tuesday.

The decision is expected to help Pakistani exporters get better unit prices for their exports of surgical, dental, medical, beauty care and like instruments. Also it would lead to an increase in value of total export proceeds from the sector.

The export of the surgical instruments remains stagnant for the past few years owing to tough competition from Chinese and Indian products in the international market.

Statistics showed that export of surgical goods and medical instruments witnessed a paltry growth of 1.01 per cent as it stood at $139.363 million in the first seven months of the current fiscal year as against $137.969 million over the corresponding period of last year.

To kick up exports from the sector, the officer said it was decided in consultation with Pakistan Surgical Association to fix minimum export price that would lead to higher value for exportable products from the country.

As per decision, the government has fixed minimum export price (MEP) at $0.45 for export of adson dressing forceps 4”, and adson tissue forceps 1*1 4 ¾; $1.50 on allis tissue forceps 6” 4:5 teeth; $0.35 on b.p handle number 3 and 4”; $1.50 on barber scissors 7 ½”; $0.75 on college tweezer 6”; $0.50 on dressing forceps 4 ½” to 5 ½” and dressing forceps; $0.55 on dressing scissor 4 ½” S/B-B/B.

An MEP of $0.70 was fixed for export of dressing scissor 5 ¼” S/B-B/B; $0.50 on Iris Scissors 4 ½”; $0.75 on Kelly/crile/Rochester Pean/Artery Forceps 5 ¼” and lister bandage scissors 5; $1.25 lister bandage scissors 7 ½”; $1 on mayo hegar needle holders 5”-6”; $0.85 on mayo scissors; $0.50 on nail cuticle, embroidery, manicure medium and all scissors 3 ½ to 4”; $0.60 on probes and explorers, scalers/filing instruments, excavator.

And minimum export price at the rate of $2.50 fixed on export of spectrum grave large cusco medium small; $2 on sponge holding forceps 7”; $2.50 on sponge holding forceps 9 ½” forceps / ram play/ Bozeman uterine / dressing / teneculm; $0.65 on stitch scissors 4 ½”; $3.5 on tooth extraction forceps S/Joint, B/Joint; $0.90 on towel clamp 3 ½” to 5 ¼” and $1.5 on Webster needle holders 5” to 6” Baumgartner needle holder 5/1/2.

Cotton prices soar to Rs14,500

KARACHI, March 8: The cotton market on Tuesday maintained a bullish trend but physical business remained light as spinners and mills were not inclined to chase prices further higher, floor brokers said.

Fine lint both from the upper Sindh and southern Punjab cotton belts changed hands at Rs14,000 per maund but a forward deal of 2,200 bales from some upper Sindh ginneries was done at Rs14,500 per maund indicating prices could rise further higher amid reports of falling unsold stocks with the ginners, they said.

After having hit all-time intra-session highs of 227.00 and 219.70 cents per lb the New York cotton features seemed to have stabilised around 214.50 and 214.14 cents for both the maturing March and the ruling May contracts respectively.

Market sources said there was no possibility of any improvement in global supplies as some producer countries with surplus exportable were sitting pretty comfortable on the perception that the buyers would have no option but to buy from them at higher prices.

The new crop is still far away and persistent rise in prices reflects there is no near-term fixed target which could be final as supply and demand factors will continue to determine ready prices, they added.

Meanwhile, registration of cotton on the export front up to Feb 23, 2011 since Aug 1, 2010 totalled 0.545m bales against which 0.317m bales had been physically shipped to various destinations including China.

Official spot rates were again firmly held at the overnight level of Rs12,500 per maund for an average quality lint.

The following are some of the deals reported by the Karachi Brokers` Forum on Tuesday.

SINDH TYPE:800 bales, Sanghar at Rs13,000, 400 bales, Ghotki at Rs14,000 and 2,200 bales, upper Sindh at Rs14,500 on credit.

PUNJAB VARIETY:400 bales each Bahawalpur and Khanpur and 600 bales, Ahmedpur East at Rs14,000.

Agriculture Tax in Pakistan

THE imposition of tax on income from agriculture may involve political risks but is necessary. The distinction made between incomes from agricultural and non-agricultural sources for the purpose of taxation runs counter to the principle of an equitable tax system and forces the state, in its effort to boost revenues, to overtax a few, and to even tax those who should not be paying any taxes at all. A country like Pakistan, with one of the lowest tax-to-GDP ratios (less than nine per cent) in the world, cannot afford to exempt agriculture or, for that matter, income from other sources from taxation. That is, not unless the state is totally unresponsive to the development needs of the people.

The importance of ridding the economy of tax exemptions for the rich and powerful has become more visible in recent years because of the yawning gap between the government’s falling revenues and expenses. Even massive cuts in development and non-development spending are not helping, while the fiscal deficit is projected to balloon to above eight per cent unless tax revenues are boosted. Growers are so sensitive about the issue that the slightest mention of tax on their incomes brings them together on one platform across the political divide — even if it means standing up to their party’s leadership. The question thus arises: will the provinces heed Finance Minister Abdul Hafeez Shaikh’s latest piece of advice and take action to effectively bring income from agriculture into the tax net to boost revenues and the country’s abysmally low tax ratio? The provincial governments may well avoid treading this thorny path if they can at a time when speculations of early elections are rife. It is hard to imagine the PML-N government in Punjab and the PPP government in Sindh taxing agricultural income at the moment, and risk losing the support of the influential lobby of big land-holders in parliament.

The provinces did not take any action to tax agricultural income in the budget for the current financial year — in spite of the fact that they had made a commitment at the time of the finalisation of the current NFC awards to tax agriculture, real estate and other untaxed areas of the economy. The leadership of all political parties must realise that their failure to support equity in taxation for short-term political gains would be disastrous for the economy and add to the hardship of the common man. The more they delay taking the tough decision, the more difficult it will become for them to stop the economic rot.

Asian markets climb higher

HONG KONG, March 8: Asian markets climbed higher on Tuesday as the surge in world oil prices abated at least temporarily, with members of OPEC holding consultations in the light of turmoil in a swathe of Arab states.

Tokyo`s Nikkei ended the session up 0.19 per cent, or 20.17 points, at 10,525.19, Sydney rose 0.21 per cent, or 10.30 points, to 4,808.20 and Hong Kong climbed 1.71 per cent, or 398.51 points, to 23,711.70.

Shanghai made a late recovery to end up 0.12 per cent, or 3.73 points, at 2,999.94 after officials sought Monday to allay fears of an imminent interest rate hike.

Crude prices slipped after the United States refused to rule out tapping its oil reserves to ease the impact of high oil prices.

The Financial Times also reported that Opec members Kuwait, the United Arab Emirates and Nigeria were joining Saudi Arabia in raising output to calm markets.

Kuwaiti oil minister Sheikh Ahmad Abdullah al-Sabah told journalists that members of the Organisation of the Petroleum Exporting countries were holding consultations over the oil market, but denied Kuwait had increased production.

We are in consultation but have not yet decided which direction,” we are heading, he said when asked if Opec was discussing whether to raise production.

New York`s main contract, light sweet crude for April delivery, fell 70 cents to $104.74 per barrel in Asian trade, while Brent North Sea crude for April dropped 64 cents to $114.40.

Risk aversion is likely to be the dominant theme until there is reasonable certainty that oil prices can retreat to $90 or below, Ric Spooner, chief market analyst at CMC Markets in Sydney, told Dow Jones Newswires.

The threat of a permanent rise in oil prices has hit at a time when equity markets were priced on the assumption of solid earnings growth over the next 12 to 18 months.

Oil at over $100 per barrel for any length of time is likely to lead to reduced expectations for consumer discretionary spending and corporate profitability.

COTTON: New varieties

ISLAMABAD, March 4: The Cotton Committee formed by the president has tasked the country`s agricultural research institutions to introduce new varieties of cotton.

The first meeting of the committee on Friday decided that the research institutions coming up with new varieties would be given a major share in the marketing rights apart from bonus for individual scientists with a view to promote research in agriculture.

Former minister Nazar Muhammad Gondal chaired the meeting of the committee which was attended by Federal Minister for Food and Agriculture Mir Israrullah Zehri, Textile Minister Makhdoom Shahabuddin, and deputy chairman Planning Commission.

The meeting was also attended by Gauhar Ijaz and Shahzad Ahmad of Aptma who offered to finance research on equity basis with the public sector so that cotton production is enhanced to meet the 16 million bales requirement of the industry.

It added that the association can patronise one of the cotton research centres as a model for the country.

The committee noted that the Leaf Curl virus and White Fly were the main threats to the cotton crop, especially in the Punjab and asked the scientists to work on varieties that resist these viruses.