Snags in flood compensation

On the cards
Flood affectees of 2010 still await monetary help in the shape of Watan Cards they were promised
By Tahir Ali

Even after almost two years since the devastating 2010 flash-floods hit the country, financial support to flood affected people – the citizens’ damage compensation programme (CDCP) – is still a long way to go as only Rs20 billion of the total payable around Rs48bn have been disbursed by April 5 this year.

Khyber Pakhtunkhwa has exceeded other provinces in the provision of compensation amount to the flood victims, thanks to its expertise in dealing with militancy compensation programme in the militancy-hit Malakand division and the Bajaur and Mohmand agencies.

Out of the total amount of Rs20.03bn distributed in the country so far at the rate of Rs20,000 per head per tranche, KP has distributed Rs9.06bn and almost completed the second phase while Punjab has disbursed Rs7.71bn, Sindh 2.89bn, AJK Rs0.16bn, Gilgit Baltistan Rs0.12bn and Balochistan only Rs0.065bn.

While KP accounts for 45 per cent, Punjab 38 and Sindh 14 per cent of the payment, the rest of the areas each account for less than one per cent.

KP is ahead of other provinces in the processing of Watan Cards too. Out of total 0.79mn flood-hit persons in the country, Watan Cards for 0.739mn have been processed. While in Sindh the cards of 0.14mn out of 0.164mn (or 84 percent) and in Punjab, 0.31mn off the 0.338mn cards or 92 percent have been activated, KP has processed 0.263mn cards off the total 0.276mn or over 95 percent. Balochistan has processed 3271 out of the total 3732 cards.

According to an official of KP government, who spoke on the condition of anonymity, for a flood compensation house damage was made a criterion but it was only flood support and not house compensation as that required huge funds which was beyond KP’s resources.

The government earlier had paid Rs0.4mn for a fully destroyed house and Rs0.16mn for partially destroyed one in militancy in Malakand division but the amount was mostly provided by foreign donors, which was not the case for flood compensation.

“The strategy was approved in the Council of Common Interest (CCI) meeting following the floods. While Punjab, Sindh and Balochistan went for blanket coverage of the affected districts, KP could not do so for its limited resources and, instead, it argued for limited payment after verification on the basis of complete or partial damage to houses,” said the official.

Despite remarkable success, there are allegations of political influence in the registration process of flood affected people and corrupt practices.

Though official data put the number of beneficiaries for compensation at 0.789mn and 0.275 in the country and KP respectively, a worker with a non-governmental organization during the floods, wishing anonymity, said actual flood-hit people were far less than projected.

The official said Watan Cards were even distributed amongst ‘beneficiaries’ from areas not hit by floods altogether or who hailed from those areas of the affected districts that remained safe from floods.

“The number of ‘affected people’ was increased to accommodate the lists given by political leaders. These inflated lists of ‘affected people’ put burden on the meagre financial resources as less money had now to be distributed amongst too many. This explains why the government had to slash the compensation money to Rs60,000 from the earlier pledged Rs100,000 per affected person,” he informs.

A social worker from Nowshera said that 20-30 persons from Zakhi Maiana Nowshera, whose houses were damaged by floods, haven’t been issued cards.

The official rejected the allegation of political registration saying the World Bank’s third party validation had termed the registration process fair and that’s why we were able to begin subsequent phases for compensation across the province.

“The beneficiaries were selected by a committee in each union council, comprising Patwari, teacher, elected public representative, Pak Army personnel (where available as in Swat) and local elders. Later, the PDMA submitted the compiled data to NADRA for verification. After verification, they were granted compensation through Watan Card. Later, after the third party validation by the World Bank on the basis of Phase-I survey, a list of 0.27mn recipients was generated for the payment of 2nd and 3rd tranches under CDCP- Phase-II,” says the official.

“The government and donors have tried their level best to ensure objective and accurate data, exclusion of the well-off and inclusion of legitimate flood affected people but if even then a deserving person has not been issued card during phase-I and Phase-II, he/she may submit his/her appeal at each Nadra grievances cell at Watan Card nominated centres in each district of KP.

However, some problems on the beneficiaries’ side, e.g., their fingerprints mismatched, they provided incorrect CNIC numbers, had another beneficiary in the family, had double entries or provided wrong or incomplete addresses, etc, caused delays,” he added.

As for the allegations of registering recipients from areas not affected during floods, the official explained it was because the compensation was meant both for houses that were damaged by floods and rains in July and August, 2010.

There are also problems on the development side, according to sources. “Despite commendable performance during the emergency relief and early recovery phases, the pace and quality of the third phase of development has been greatly undermined by nepotism, political intervention, mismanagement that has resulted in over-focus on certain areas, duplication in work and wastage of funds, corruption and for lack of accountability owing to the decreased focus of the media and government. And worst, the social work has become a business for many an unscrupulous people,” said the worker.

The official, however, rejected the allegations of corruption and political interference and said that the efforts have been made for transparency and to avoid any duplication of work so that resources may not be wasted. “A separate rehabilitation and reconstruction directorate in the province has also been established to ensure transparency and coordination between the development partners,’ he said.

He defended the NGOs which, he said, helped the government cope with catastrophes and therefore deserved and got every possible support.  “In the early recovery phase, local and international NGOs built makeshift transitional shelters for the flood victims but these were of no use as they started constructing their homes themselves soon after. The phase of building permanent shelters for the people later begun but the facility was mostly availed by those who weren’t hit by floods. And the poor most of the victims couldn’t get shelters as they lived on rented land and the owners/landlords didn’t allow them to have shelters built for them. The government should have allocated state lands for these people,” he added.


Out and waiting.


No end in sight

There are complaints of difficulties in receiving money from banks. Long queues of beneficiaries, including women, are seen in front of designated bank branches.

To offset this, in October 07, 2011, the state bank of Pakistan directed all commercial banks to make special arrangements to ensure that their ATMs were operational, cash was replenished in a timely manner and that no service charges were required on the use of Watan cards from the beneficiaries.

Floods inflicted a loss of around $10bn on Pakistan. Khyber-Pakhtunkhwa suffered $1.2 billion losses and requires $2.2 billion for the flood reconstruction. However, foreign donor support hasn’t arrived as expected. It seems issues of transparency, poor planning, donor fatigue and indifference of local leaders to provide their due in donations are to be blamed for the phenomenon.

According to UN figures, of the $2.6bn funded – actually contributed or committed – so far by foreign countries for flood victims in Pakistan, over $372mn are still to be paid. Strangely, most of the contributions were made by Non-Muslim world and the Muslim countries lagged far behind. Amongst the top 10 donor countries, contributing around $1691mn, $1617 were given by former and only $228mn were funded by Saudi Arabia and United Arab Emirates of which $90mn are still non-committed pledges. The USA, Japan and UK with $683mn, $301 and $224mn are the leading donor countries.


Sluggish wheat harvesting in KP

Issues in wheat harvesting
By Tahir Ali

THE unusually cold, rainy/cloudy and windy weather in April and May in Khyber Pakhtunkhwa has delayed wheat harvesting in various stages across parts of the province.

The harvesting process has been completed in KP’s hot southern climatic zone (Dera Ismail Khan, Tank, Lakki Marwat etc.,) last month and continues in the central zone (Peshawar, Charsadda and Mardan etc.). The crop in the northern zone (Swat, Dir etc) will mature later, farmers say.

According to Sahibzaman and Abdul Jabbar, farmers from Swat, and Nasir Khan, a farmer from Dir, wheat crop will be ready for harvesting in a fortnight in lower Swat and Dir areas but in upper/cooler parts of the districts will be ripe by end of next month where harvesting and threshing usually last till July.

Abdur Rahim Khan, general secretary Chamber of Agriculture KP, said wheat harvesting in central zone would be over within a week or so.
“Harvesting in the area is usually completed by the end of April but this year the cold weather delayed maturity. The farmers also feared that the harvested crop lying in the fields for threshing, may get damaged in case it rains. The manual reaping of the crop takes a lot of time,” he said.

Mr Khan recalled that gone are the days when farmers would reap their crops through Ashar –where farmers would help
each other in harvesting and threshing.

“Farmers in KP now mostly get their crop harvested through labourers. The labourers and farmers share the crop in different ratios. In Peshawar, for example, labourers get 1/10th of the produce as remuneration. In other areas, they are hired on daily wages ranging between Rs250-300 plus meals and stay,” said Khan.

An official of the KP agriculture ministry said government farms and big private farms hired reaper machines for harvesting but it was predominantly done by hands.

“Small landholdings, poverty and illiteracy of farmers in KP have rendered mechanised harvesting difficult and farmers either reap the crop themselves or hire labourers. But the shortage of trained harvesters is adding to their woes,” he said.

Mechanical harvesting is faster and reduces post-harvest losses by a great margin, said the official.

“A farmer with five acres hires labour for manual crop cutting, which costs him 13-14 maunds (over Rs18,000 at the rate of Rs1312/50kg) and takes 7-10 days. And if he goes for mechanised harvesting, it will take him 10 hours and cost him only around Rs10,000 (at the maximum rate of Rs1,000 per hour rent of the harvesting machine),” he argued.

According to farmers, labourers work in groups, visit the fields or hujrah of farmers and make deals with them. These harvesters usually are known in the area and can be contacted on cell phones.

Women harvesters are usually paid less than their male counterparts. A farmer Safdar Ali said a woman in his village single-handedly reaped his crop over five jarib at1/10 the share of the yield

Land under wheat cultivation increased from 0.724 million hectares last year to 0.758mh this year but continuing drought in the province in the critical period of grain formation, especially in the southern zone, hit the crop badly.

Farmers from DIK, Peshawar, Mardan and Swabi say the wheat crop in irrigated lands is healthy but over 50 per cent of the crop in rain-fed areas, that forms 55 per cent of the total wheat acreage in KP, has been lost.

Sabz Ali Shah, a farmer in Mardan, said his five jarib (2.5 acres) of non-irrigated land could produce only 12 maunds of wheat against the output of 60-80 maunds in previous years.

Another farmer Gul Raj Akbar said eight wheat harvesters took two days to cut his crop on six canals at the rate of 1.3 maund/jarib. “The yield was 25 maunds of which the labourers got around two maunds (100kg). Divide this amongst eight labourers and each got only six kg a day. Is it justified for the hard work they do,” he asked.

A farmer Manzur Haider, however, said, five labourers reaped his crop at 10 jarib (five acres) in less than three days and got 14 maunds in return at the rate of 1.4 maunds per jarib harvested.

“More than the lack of rain, the sale and use of substandard DAP has also damaged the crop. And while the prices of DAP and urea have more than doubled in the last two years, wheat support price has been marginally increased from Rs950 to Rs1050 per 40kg,” he added.

Mr Zaman said Swat crop would have been even larger had better seeds been provided to growers and lands hit by floods reclaimed by provincial authority.

An Unhealthy trend: high rate-spread

An unhealthy trend
Unusual banking spread is one of the reasons of the stalled industrial and business growth in the country

 By Tahir Ali

The huge banking/rate spread — the difference between the average rates of returns on deposits and the average rate of interest on loans — in the country may have helped increase the incomes of banks but it surely is one of the biggest reasons of the stalled industrial/business growth and below capacity production in industries that result in increased joblessness. It also leads to less saving, less investment and unjust income distribution.

Despite enhanced net income — after tax income of banks which was minus Rs2.8bn in 2000 rose to Rs54.5bn by 2009 — banks are reluctant to increase the rates of return on deposits as high rate spread is also one of the main tools of profitability for banks.

According to a bank manager at the national bank, who wished not to be named, the average deposit rate is 5 percent against 15 percent average rate of interest in the country.

While the average rate spread is around 3-5 percent in most countries, it is much higher in Pakistan. According to the SBP data, it was 4.63 per cent in June 2003 but increased to 8.90 percent in July, 2011, which means that the lending rate is greater by that extent from the rate of deposits.

If high rate-spread indicates lack of efficiency and competitiveness in the banking system on the one hand, it also signifies the failure of regulatory authority — the State bank of Pakistan.

The SBP, which is authorised under the SBP Act, the Banking Companies Ordinance and some other laws to make sure that banks do not exploit the depositors or the borrowers and earn profits through legitimate business practices, needs to review the existing rate spread and bring it down to a normal range.

Successive SBP governors, including Dr Muhammad Yaqoob and Shamshad Akhtar, while acknowledging that depositors were getting negative returns, had also urged large banks to increase the return on deposits or the State Bank would intervene to get results.

According to one estimate, interest rate in Pakistan is highest in the region. With business and industries already hit hard by terrorism and energy shortage, lending rates need to be brought down to a single digit to save them from bankruptcy, encourage private loans demand and spur economic growth in the country.

But if the banks reduce the rate of interest on loans but simultaneously cut down the deposit rates as well or increase both the rates of interests and rates of return on deposits by the same amount, the spread rate will practically remain high. So, any effort to slash the spread not only requires cutting down the lending rate but also increasing rates on deposits.

Despite inflation of around three percent, the United States decreased interest rates to almost zero percent and the European Union to just above one percent to push growth and create jobs.

High rate of interest, the main factor for huge rate spread on the back of small returns on deposits, is one of the main reasons for the rising loan defaults, below capacity working of industries, job cuts and surging non-performing loans calculated at Rs630bn in September 2011.

The high cost of funds is not only leading to industrial closures and defaults, the government, taking huge loans from commercial banks, is also drastically affected by the trend and is compelled to slash development funds, increasingly rely on borrowing and printing of new currency to meet its fiscal needs.

The difference in the interest rate being paid by the government for the domestic and external loans will illustrate the point. At the current rate of interest (14-15 percent), the government’s debt servicing costs stand at $10bn on domestic loans of$80bn. Conversely, it has to spend only around $2bn on external loans of $61bn given at an average rate of three per cent.

It is worth asking that when some local entrepreneurs in Mardan could offer as much as 50 percent net profit per annum through their investment schemes, why banks can’t increase the amount of profit on deposits for the depositors, the lifeline of the banking system in any society?

“One thought that privatisation of banks would entail better services at reduced cost for most of the customers, but it has, conversely, made banking costlier, exploitative and anti-poor,” argues a lecturer of economics, wishing anonymity.

Commercial banks are earning huge sums of money due to high interest rate on the one hand and giving less profit on deposits on the other. Why would people go for depositing their money in banks when they could reap comparatively higher returns on their savings by spending them in real assets like investment in real estates, transport and other businesses?,” he asks.

While the banks have reduced rate of returns and increased lending rates to augment their financial gains, the poor consumers have been the real losers. High rate of inflation of over 15 percent per year for the last several years has aggravated the problem.

Depositors receive negative returns on savings when the rate of return on savings is less than the rate of inflation. For example, if consumers are given 5 percent of returns on their savings and inflation rate is 15 percent, savers will annually lose 10 percent of the purchasing power of their bank deposits.0

Commercial banks, both public and private, are believed to have deprived the depositors of around Rs1100 billion profit during the last 10 years by only avoiding the inflation rate formula of 2001 applied to fix the profit rate, says a report.

The absence of a genuine investment opportunities or ignorance thereof on part of the people notwithstanding, people have but to keep their savings in these less attractive bank accounts.

Quite a few people in the country, under the urge to avoid Riba (fixed return on savings) keep their savings in current accounts with no interests thereon. But banks are free to use their amounts any way they want and even earn money over these amounts by lending it to others.

According to a news report, bank deposits increased by 269 percent from 2001 to 2010, bank assets by 268 percent whereas growth in pre-tax profit has been 9,991 percent. He said banks earned Rs1.1 billion in 2001 which rose to Rs111bn in 2010 but the real average rate of return (minus rate of inflation) which was 3 per cent positive in 2001 came down to minus 6.5 percent in 2010.

Apparently, depositors are deprived of their due profit share because of the policy of writing off loans to the influential.

Banks, apparently, are more interested in interest profit than affording genuine and high rewarding investment chances to their consumers. And why would the banks increase the deposit rates and decrease interest on loans in the backdrop of excessive government borrowing which could help it overcome the low demand from the private sector.

Loan defaults, frequent withdrawal by the deposit holders from their accounts, less fixed deposits, concessional loans, high rate of inflation and incessant devaluation of currency etc hinder banks from decreasing the spread,” says the manager.

Low-cost loans are opposed for reasons that they trigger inflation that’s why the SBP followed a tight monetary policy that kept the policy rate high. But the question is did this policy succeed? Could inflation be controlled and economy improved?

On affordable and accessible agriculture credit

A small beginning
Banks must simplify and re-structure their lending mechanism
By Tahir Ali

Financial help of farmers is necessary for the modernisation of farming and farmers’ prosperity. But small farmers who, according to some estimates, constitute 85 percent of the total 6.6 million farmers in the country, have negligible share in the agriculture credit disbursed in the country in general and Khyber Pakhtunkhwa in particular. Those residing in the far-flung hilly and tribal areas are particularly affected by it.

Financial exclusion of the small farmers who have little resources to approach the research and extension systems, coupled with their illiteracy and poverty, keep away from commercial farming and expose themselves to low productivity, eventually adding to severe financial hardships.

They, in turn, have to rely on informal sector for their credit needs offered at higher rates, leaving them in a vicious debt-cycle and poverty trap.

Acknowledging that agricultural credit disbursement was worse in KP, the SBP launched some agriculture-credit schemes as part of its financial inclusion programme for KP but credit disbursement ratio couldn’t improve.

Countrywide, less than 2 million farmers of the total 6.6 million, get agriculture credit facility. The situation in KP, which accounts for less than 4 percent of the national agriculture credit disbursement and where over 90 percent are characterised as small farmers, is particularly dismal. Khyber Pakhtunkhwa accounted for Rs 7.9bn or only 3.4 percent of the total agriculture credit of Rs233bn in 2009. Only six percent of farmers in Khyber Pakhtunkhwa have access to agriculture credit against 21 percent for the country.

Various easy credit schemes, support price mechanism and subsidy regimes in the past were designed for small and medium scale farmers, but they scarcely benefited from the schemes and big landlords were the main beneficiaries.

One of the main reasons of small farmers’ financial exclusion is their inability to be bankable — to be able to provide collateral (the explicit or implicit guarantee against the possible risk associated with the loan) to banks as most of them are tenants, who don’t have any property registered in their names or own land below the required level.

Plenty of these farmers, especially those in villages, are also influenced and kept from applying for credit by the Riba-element, a necessary part of credit but avoided by most on religious grounds.

Small farmers have been practically neglected in the existing provincial agriculture policy developed in 2005. The policy has, however, yet to be updated to focus them despite several announcements.

As per the prudential regulations for agriculture financing, banks are required to ensure disbursement of working capital/short term loans within seven days but it is usually delayed. “The entire formalities for any agriculture loan require lengthy documentation and procedure and take around two to four months to get the loan,” says a bank manager on condition of anonymity, when asked about the process of loan delivery.

“Small farmers should be given loans on personal guarantee. Group-based credit schemes are being followed by small banks but needs to be taken up by the main private banks as well to improve credit disbursement ratio in the country. Crop and life insurance is the best way to decrease the risk of farming community against losses and of banks against non-repayment,” he adds.

Some farmers hold the banks responsible for low agriculture credit in the province. “The banks are risk-averse. They avoid lending loans to farmers for fear of default. Much has been said of the one-window operation but no bank as yet has come out with a fast track mechanism for credit disbursement. The banks must simplify and re-structure their agriculture lending mechanism and mobile credit officers should reach farmers at their doorsteps to boost credit delivery,” says Shahid Khan, a farmer in Mardan.

Last year, the KP government revived the erstwhile cooperative bank and promised to provide Rs1 billion seed money for easy farm and non-farm loans to small farmers from the bank but practically just Rs200mn were released. This year too, Rs400mn will be released. How can credit ratio be improved with this? 

Under agricultural loans scheme through the passbook system, banks are bound to allocate 70 percent of their loans to subsistence farmers but whether the law is followed is not clear.

In group-based lending, developed by the SBP, small farmer groups are formed by the lenders involving 5-10 members having identical needs and registered with the former. Collateral is generally not used and is replaced by personal guarantee —-a joint liability agreement/undertaking — takes its place wherein each member takes the responsibility of the outstanding debt of all group members. In case of any change in the group, a fresh guarantee would be signed by the members.

A group coordinator acts as facilitator of the group and agent of the bank. The bank ensure that group coordinator is executing the assigned tasks as prescribed like liaison with members, arrangement of meetings, etc, and if need be replace him, with the consensus of the group, in case he fails to deliver. Group members ensure that the bank receives timely repayments from individual borrower/group members. But if a borrower dies, liability lies to remaining group members. However life insurance is urged to safeguard the interests of both the borrowers and lenders.

Everyone who owns or is a tenant or lessee over up to12.5 acres of land or have more than 40 sheep, has computerised national identity card, residence in the village and membership in the village organisation, is eligible for crop or non-crop loans in the scheme. 

Though globally 12.5 acres of land is the threshold of subsistence farming but in Pakistan one having that much land is considered a rich person given the phenomenon of small land holding in the country. According to an estimate, cultivated land per person in Khyber Pakhtunkhwa stands at just at 0.2 acres. The benchmark needs to be brought down for bank credit if small farmers are to be benefited.

Repayment schedule for farm loans may be set as per production cycle of crops and for non-crop activities, like livestock farm establishment, it should be three to five years. 

Flood compensation highest in KP

Flood compensation highest in KP

By Tahir Ali
2nd April, 2012
UNDER the damage compensation programme for citizens, Khyber Pakhtunkhwa has so far disbursed the high amount as compared to other provinces.

KP has benefited from its experience in providing relief to affectees in militancy-hit areas.

Out of the total of Rs18.61 billion distributed in the country by March 20 at the rate of Rs20,000 per tranche, KP has distributed Rs8.48 billion, followed by Punjab Rs7.16 billion, Sindh 2.66 billion, AJK Rs0.1 billion, Gilgit Baltistan Rs0.12 billion and Balochistan Rs0.052 million. Total sum allocated for the country is Rs48 billion.

While KP accounts for 46 per cent, Punjab 39 and Sindh 14 per cent of the cash disbursed, the rest of the areas each account for less than one per cent.

KP is ahead of other provinces in the processing of Watan Cards too. Out of a total 0.79mn flood affected people in the country, Watan Cards for 0.72mn have been processed. While in Sindh cards of 0.13mn out of 0.164mn or 84 per cent and in Punjab, 0.31mn of the 0.338mn or 92 per cent have been activated. KP, however, has processed 0.261mn cards off the total 0.276mn or over 94 per cent. Balochistan has processed 3,271 out of the total 3,732 applications.

According to an official of the Provincial Disaster Management Authority (PDMA), for flood compensation house damage was made a criterion but it was only flood support and not house compensation as given in Malakand as it required an enormous fund which was beyond KP’s resources.

“The strategy was approved in the Council of Common Interest meeting following the floods. While Punjab, Sindh and Balochistan went for blanket coverage of the affected districts, KP could not do so for its limited resources and instead argued for limited payment after verification on the basis of complete or partial damage to houses,” said the official.

Despite remarkable achievements, there are allegations of political based registration of the flood-affected people and corrupt practices. According to allegations, elected peoples’ representatives and political parties gave the lists of their blue-eyed, not necessarily deserving ones. “Some areas which had not been affected by floods were also included in the compensation regime,” he said.

The PDMA official rejected the allegations and said the World Bank’s third party validation had termed it fair and unbiased and that’s the reason that they were able to start the second and the third phase in the province.

“The affected people were selected by a committee in each union council, comprising Patwari, teacher, elected public representative, army personnel (where necessary as in Swat) and local elders. Later, after verification of the data by Nadra, the affectees were given compensation through Watan Card. Later after third party validation by the World Bank on the basis of Phase-I survey, a list of 0.27mn affectees was prepared for the payment of second and third tranches under the CDCP- Phase-II,” he said.

“The government and donors have tried their best to ensure an accurate data, exclusion of the well-off and inclusion of legitimate affected people, but even then if any legitimate affectee has been left out during phase-I and Phase-II, he/she may submit appeal at the Nadra grievances cell at Watan Card nominated centres in each district of KP,” he added.

As far the allegation of registering affectees from areas not affected during floods, the official explained the compensation was not meant only for flood-affected houses but for any house that was damaged during the torrential rains and floods in the last week of July and first week of August, 2010. People have mostly ignored this fact.

Though official data put the number of affected entitled to compensation at 0.789mn and 0.275mn in the country and KP respectively, the IOM worker said actual flood affectees are fewer — around 0.080-0.090mn at the most.

Though the government had earlier resolved to provide Rs0.1mn as floods compensation, it had to slash it to Rs0.06mn later for shortage of funds.

Floods inflicted a loss of around $10bn on Pakistan. Khyber-Pakhtunkhwa suffered $1.2 billion losses and required $2.2 billion for the flood reconstruction.

However, foreign donors’ support hasn’t arrived in promised quantities as expected. It seems the issues of transparency, fiscal incompetence, poor planning, donor fatigue and indifference of local leaders to provide their due in donations has kept the world from it.

There are complaints of difficulties in the receipt of money from banks. To offset this, in October 07, 2011, the state bank of Pakistan directed all commercial banks to make special arrangements to ensure that their ATMs were operational and cash was replenished in a timely manner and that no service charges were recovered on the use of Watan Cards.

KP farmers for review of tobacco prices

Review of tobacco prices

By Tahir Ali

TOBACCO growers in Khyber Pakhtunkhwa hope to get a ‘fair’ support price for their crop following a positive response from both the federal and provincial governments to their call for a review of an earlier decision of the Pakistan Tobacco Board in this regard.

First, it was the KP Chief Minister Amir Haider Khan Hoti who recently had called a special meeting of all stakeholders — tobacco growers, dealers, companies and the Pakistan Tobacco Board (PTB) — to resolve the grievances of farmers about
the support price for their crop.

And now, following legal action and agitation by the growers, a high-powered committee sent by the federal government is talking to them to asses the cost of production (CoP) of the crop that earns billions for the federal government.

Farmers said Federal Minister for Food Security and Research Israrullah Khan Zehri had sent the committee headed by Director-General National Agriculture Research Council Dr Muhammad Sharif to suggest a new support price for tobacco, if needed.

The committee was given a warm welcome by tobacco growers in Swabi. “ It met and interviewed tobacco growers here and would do the same in Mardan, Charsadda and Mansehra,” a farmer said.

“We hope the committee will assess the actual cost of production and recommend a fair tobacco support price and the federal ministry of commerce will notify the new price for this season,” said Liaqat Yousafzai, general secretary of the Kashtkar Coordination Council.

When contacted, Dr Sharif said the CoP assessment process would continue for 10 days in various tobacco-growing districts and views of growers would be sought.

“The terms of reference of our committee are to assess the actual per kg cost of production and identify factors for stated low tobacco support price. Later on the basis of the data collected and empirical evidence, the committee would present its
findings and recommendations to the federal government,” he said.

Mr Sharif said “farmers have told us that CoP for tobacco has increased while they are receiving very low support price. We are collecting data. It will be analysed and hopefully the committee will put forward its report to the chairman Pakistan
Agriculture Research Council after six days.”

The committee doesn’t intend to take views of national and multinational tobacco companies and tobacco dealers on the CoP. But, according to a source, tobacco companies also plan to prepare a counter-report which they will present to the

Mr Yousafzai said farmers in Swabi had informed the committee members that while their average CoP was around Rs240/kg, the PTB had fixed the minimum price at Rs117/kg. “We want to be paid as per the CoP and the minimum price must be fixed taking into account the increase in the minimum and weighted average prices last year, rate of inflation, global tobacco prices, surge in prices of other crops and raw materials and our profit margin,” he said.

Four months ago, the PTB had fixed minimum price of tobacco at Rs117/kg but the growers had rejected it. Later they challenged it in the Peshawar High Court and also started agitation against it.

Asked why the earlier price should be revised, Mr Yousafzai said it had to be. “The Rs117/kg price is very low, unrealistic and illegal as it was announced when the PTB had neither a chairman nor sufficient members, which was a mandatory legal
requirement. The last PTB Chairman had retired one and a half years ago and since then the board was run by its secretary.

We had challenged the lacuna in the court and its decision has come. This is why the committee was sent,” Mr Yousafzai added.

“The PTB is the root cause of all of farmers’ woes. It’s an open secret that some PTB officials have formed tobacco companies. They make sure that tobacco prices are fixed to benefit them. The committee report, we are hopeful, would expose the mutual connections between tobacco companies and some PTB officials,” he added.

Another farmer from Swabi alleged that “some PTB and commerce ministry officials own unregistered tobacco firms and were conniving with the powerful tobacco companies against growers.”

A farmer from Mardan complained that now 29 members have been appointed in the PTB on political basis mostly from Sindh.

Mr Yousafzai, who is also a member of the KP Chief Minister’s committee on tobacco, says “the committee has recommended disbandment of the PTB, awarding crop status to tobacco, and handing over it to the province after the 18th Constitutional Amendment.”

The Khyber Pakhtunkhwa assembly in December 2010 had, through a resolution, resented the alleged exploitation of growers by tobacco companies.

Increasing walnuts production in Malakand

Growing nuts
There is a great potential for planting walnut trees in Malakand and other areas of Khyber Pakhtunkhwa
By Tahir Ali

The Malakand Division, according to one estimate, accounts for roughly 95 percent of Khyber Pakhtunkhwa’s walnut yield. Walnut of different sizes, quality, and colour are produced here which are marketed in whole form or its flesh taken out and packed, and is sold in the market. What is being done to increase the yield of dry fruits after the militancy days are over?

In Dir, these days per kilogramme prices of different qualities of walnuts range between Rs100-250 for whole and Rs400-700 for walnut flesh, of pistachio between Rs600-800, of almond Rs150-400 and chilghoza being the costliest of all with Rs1400, according to Saeedur Rehman, a dry fruit dealer in Dir.

Rehman says chilghoza (pine-nut) prices have surged to over Rs70,000 per 50kg (Rs1400) in the whole sale market and it may be sold around for Rs1500-1800 in the open market after adding the transportation charges, dealers’ commission, shopkeepers’ profit and imposition of various taxes.”

Contrary to the general impression, he says, militancy hadn’t badly impacted on the dry fruit production and businesses and opined that prices have come down as compared to last year.

“Prices of whole walnut were around Rs13-14000-50kg last year but this year these have come down to Rs11-12000. It is because there was bumper production this year. While we still have last year’s stock, the produce for this year has arrived in the market.” He believes, “There is no hope for the price-surge as the market is sluggish at the moment. The government needs to make arrangements for purchasing and exporting the commodity. I am sure the country would earn a lot of money in the global dry fruit market by exporting this quality commodity.”

He says, “The price of walnut, a Dir speciality, ranges between Rs5000-12000 per 50kg while that of its pure flesh ranges between Rs22000-35000-50kg. Walnut from Barawal and Bamboret are liked for their big size and taste. The brighter the fleshy part, the higher the price. And the cooler the area where it is produced, the better the taste and quality of the walnut,” he adds.

The sale of the walnut flesh fetches more income for the dealers. That is why people in Dir, rather than selling standing walnut trees or the whole fruit with cover, have started taking out its flesh and packing and selling it. A 50kg sac of whole walnut produces around 22-25kg pure fruit which fetches around Rs22000-35000 in the market, much higher than the whole fruit prices.

The importance of the walnuts cannot be overstated. Dry fruits and winters go hand in hand. While watching movies, reading books or newspapers or partying with friends, dry fruits help warm the body. Dry fruit are not only health-friendly but are also taken as gifts to friends and officials in beautiful packing. But skyrocketing prices are making them an unaffordable luxury for the majority.

Hundreds of tonnes of walnut, pine-nut and other dry fruit are produced in Dir and surrounding districts. Barawal, Dir Kohistan and Garam Chashma, Bamboret and Bony valleys in Chitral produce the best walnut and pine nut. The walnut from Nooristan Afghanistan also reaches the local market.” Experts say walnut helps improve memory, is useful for treating stomach, liver and kidney diseases, for cardiovascular diseases and high blood pressure. It helps control cholesterol level, strengthens the walls of blood vessels and prevents diabetes and supports immune system.

Lack of official support, negligence of the concerned departments, continuous deforestation of the existing trees for getting ‘Dandansa’ and other purposes, and non-cultivation of new ones have badly affected the produce.

The government should provide technical advice and support to grow more walnut trees as these are depleting and about 90 per cent of the potential in the area is yet to be utilised.

Rehman was particularly unhappy over cutting walnut trees for getting “dandansa”. “The problem is for dandansa you have to cut down the younger trees whose stem-cover and roots are the best.

Shah Abdar, a Swat-based grower of walnut, says hundreds of tons of walnuts are grown in Bahrain, Kalam and other valleys of Swat, adding that the potential of walnut in the area is not being explored.

Swat is the ideal place for walnut. It usually grows on mountain ridges, in the gorges and river-banks and thus doesn’t impact the already less cultivable land. Walnut could be the greatest source of income for the area people. But despite being the main asset along with fruit, vegetable and livestock, the number of walnut trees has been on the decline and only about 5 to 10 percent of the area in Swat suitable for walnut is utilised..

“The reason for this is absence of personal ownership. The trees so cultivated are often destroyed by the people as there is no sufficient care and security for them. The government and non-governmental organisations need to provide expert advice, walnut plantlets /seeds, and insecticides to farmers to grow more trees. It is only then that the problem will be solved once and for all. In the hope of huge returns, they will do whatever is possible to keep it safe and healthy,” Shah argues.

It can have great financial benefits for the poverty, militancy, and floods-stricken farmers. “Around 5 big walnut trees grow in one canal of land. Farming families usually own less cultivable but much more non-cultivable lands in Swat. If we take the average land per family at 50 canals and the family grows walnut trees on it, it can become millionaire within no time. Just leave the 300kg yield per tree, even if the per tree yield is just 50kg, it will earn the family around Rs2.5million at the current market rate.”

“Though main roads in the area have been repaired to some extent, the link roads to far flung areas are still inaccessible. It leaves the poor people with no choice but to sell their standing walnut trees to dealers on meagre prices, thus incurring losses,” according to him.

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