Pakistan

Financial globalisation and wheat prices | The Express Tribune

Published

3 مہینے ago

جون 17, 2024

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LAHORE:

Small and medium farmers have been facing a tough financial situation for the last one year. They earlier experienced lower corn prices and could not get the desired rate. Then they faced lower wheat prices in the domestic market, though the government fixed the price at Rs3,900 per 40 kg.

However, the government could not procure the desired quantity from the farmers since it has imported a reasonable quantity since October 2023 and does not have the capacity to hold surplus wheat.

Under financial globalisation, there is an association between the international commodity prices and the federal funds rate. The federal funds rate is also termed the international policy rate, which was at 0.25% in February 2022.

This policy rate gradually climbed to 5.5% in July 2023 within a span of 18 months and remained stable at that level. This shows that the acceleration in prices has slowed down in the world, specifically in the US.

Similarly, the policy rates of the European Central Bank and the Bank of England have stabilised. Since the inflation rate is low, there is an expectation of a lower policy rate, as anticipated by the international financial markets.

When international policy rates are high, the international commodity prices go down and vice versa. When the policy rate was 0.25% in February 2022, the international wheat price was at $12 per bushel. The global price of wheat dropped to $7.5 per bushel in July 2023. The price kept on dropping and touched the bottom of $5.5 per bushel in February 2024.

The domestic wheat price was around Rs2,200 per 40 kg in 2021. The government had to jack up the wheat price to Rs3,900 per 40 kg in 2022 keeping in view the escalated cost associated with rupee devaluation along with high international wheat prices.

Hence, the enhanced support price covered the impact of devaluation and international price hike. The farming community, including small and medium farmers, rejoiced at the increase in the support price. Since the wheat output was lower last year, the government had to mobilise officials to procure the staple crop from the farmers.

Wheat harvesting started in April 2024 when the international price was around $6 per bushel. Since the value of the rupee remained stable in the last one year, the surplus domestic wheat caused a drop in the market price, which initially came down to Rs3,400 per 40 kg.

Poor farmers anticipated that the price would rebound and tried to hold their produce. However, they had to bring their produce in the market, since wheat is in surplus and its price has dropped to Rs2,700 per 40 kg in certain parts of the country. Now, the international price of wheat is around $7.5 per bushel in anticipation that the Federal Reserve will cut its policy rate going forward. This rebound in the international wheat price will be reflected in the domestic market in the coming months.

When the international wheat price increases, domestic financial capitalists will try to get the benefit out of this price difference. They will press the government to relax border restrictions and make a strong case for export. Hence, there is a high probability that the wheat price will increase in the coming months.

In a nutshell, financial globalisation will keep on affecting small and medium farmers a great deal. However, large farmers will hedge their losses owing to the financial muscle.

A strong political government may safeguard the interests of small and medium farmers. Otherwise, land concentration will continue which has been happening since long.

The writer is an independent economist who has worked at SDSB, Lahore University of Management Sciences (LUMS)

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Pakistan

Pakistan, Russia plan to establish new steel mill in Karachi – Pakistan Observer

Published

8 گھنٹے ago

ستمبر 19, 2024

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ISLAMABAD – The government is considering a proposal to establish a new steel mill in Karachi with Russian cooperation and the both countries agreed to form working groups to move forward on the project.

In this regard, Deputy Minister of Industry and Trade Russian Federation Aleksei Gruzdev met with Minister for Industries, Production and National Food Security Rana Tanveer Hussain.

The minister informed that the government has earmarked 700 acres land of Pakistan Steel Mills for establishing a new steel mill. He said despite being blessed with considerable reserves of iron ore (estimated reserves of 1887 million tons), Pakistan is forced to import around $2.7 billion of iron and steel.

There is perpetual gap between domestic production and demand of iron and steel. For the last year, the gap is estimated at 3.1 million tons, he added.

Pakistan’s per capita steel consumption level is below even those of developing countries indicating significant growth potential over medium and long term.

He said efficiency of Pakistan’s steel industry is limited as it segmented (600 small units) and based on old inefficient technology.

The proposed site is located at Karachi and in closed to Port Qasim that reduces cost of transportation of raw materials.

Pakistan’s industrial and agricultural experts are set to visit Russia, marking a significant step in strengthening bilateral ties between the two nations. During the meeting, they emphasized on balance trade between both countries.

Rana Tanveer stressed the need for modern agricultural machinery to boost crop yields and enhance agricultural productivity.

He said the government will provides all the facilities to the Russian investor in the country. Aleksei Gruzdev said that his country will provide modern agricultural machinery to Pakistan in order to boost crop yields and enhance agricultural productivity across the country.

The meeting was attended by deputy trade representative of the Russian Federation in Pakistan Denis Nevzorov, secretary for industries and production Saif Anjum, secretary national food security and research Ali Tahir, additional secretary national food security Amir Mohyudin, deputy chief industries and production Abdul Samad and Executive Engineer PSM Engr. Muhammad Shoaib.

Pakistan

Anti-money laundering watchdog urges India to speed up prosecutions

Published

9 گھنٹے ago

ستمبر 19, 2024

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A customer hands Indian currency notes to an attendant at a fuel station in Mumbai, India on August 13, 2018. — Reuters

NEW DELHI: Financial Action Task Force (FATF), the global anti-money laundering watchdog, urged India on Thursday to accelerate its prosecutions in financial fraud cases.

FATF, a 40-member task force, in a report has rated India “moderately” effective on its parameter of “money laundering investigation and prosecution”, further adding that the country was compliant in most areas.

The task force sets global standards for national authorities cracking down on illicit funds generated through drug trafficking, illegal arms trade, cyber fraud and other serious crimes.

India became a member in 2010. In its report the task force said the country was “compliant” and “largely compliant” on 37 out of 40 parameters evaluated as part of its assessment.

The number of money laundering convictions over the last five years has been impacted by a series of constitutional challenges and by the saturation of the court system, the global watchdog said in its report on India, released on Thursday. India’s courts have huge backlogs of cases, with many left pending for years.

The Enforcement Directorate, India’s anti-money laundering agency, has seized assets of suspected financial criminals amounting to 9.3 billion euros ($10.4 billion) over the last five years but confiscation based on convictions amounted to less than $5 million, the report said.

“It is critical India addresses these issues in view of accused persons waiting for cases to be tried and prosecutions to be concluded,” it said.

The three areas in which there is partial compliance include bank scrutiny of political figures’ source of wealth and oversight of the finances of non-profit organisations and non-financial businesses and professionals.

The watchdog also noted that India faced financing threats from groups active in the Indian Illegally Occupied Jammu and Kashmir (IIOJK) region and money laundering from illegal activities related to corruption, drug trafficking and cyber crime.

The statement added that India needs to focus on concluding the prosecutions and properly sanction such financiers.

Pakistan

Pakistan, Russia plan free Trade Agreement with Eurasian Economic Union – Pakistan Observer

Published

10 گھنٹے ago

ستمبر 19, 2024

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ISLAMABAD – Pakistan and Russia mulled stern measures to boost economic ties with new trade and energy initiatives, as the Russian Deputy Prime Minister arrived in Islamabad to discuss several key areas of collaboration.

In a press conference with Pakistan’s Deputy PM Dar Ishaq Dar, both sides decide to explore bilateral trade between two countries reached $1 billion last year and highlighted the need to address logistical and other challenges to further enhance trade relations.

Dar stressed that energy cooperation with Russia holds significant promise and expressed Islamabad’s interest to explore more avenues. He underscored importance of developing connectivity projects, including rail and road networks, to strengthen economic ties not just between Pakistan and Russia but extending to other regions as well.

Deputy PM emphasized Pakistan’s view of Russia as a crucial player in West, South, and Central Asia, and reaffirmed that strengthening ties with Russia remains a top priority in Pakistan’s foreign policy. He reiterated Pakistan’s commitment to working with Russia to promote peace and stability in Afghanistan.

In his remarks, he revealed discussions about potential collaboration between Pakistan and the Eurasian Economic Union, which includes Armenia, Belarus, Kazakhstan, Caucasia, and Russia. The two sides explored the possibilities for implementing a free trade agreement involving these five countries and plan to continue discussions to finalize the agreement.

Russian Minister also pointed out that the upcoming inter-governmental commission meeting in Russia will serve as a platform to further enhance trade and economic relations. He further highlighted that both nations share aligned goals within the Shanghai Cooperation Organization (SCO), including in areas such as connectivity, climate action, food security, and energy transition.

Pakistan

Easypaisa introduces Rs99 fee for Biometric, and account upgradation? – Pakistan Observer

Published

12 گھنٹے ago

ستمبر 19, 2024

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EasyPaisa, mobile wallet used by over 9.5 million Pakistanis, lately added Rs99 charges for failed biometric verification with NADRA and account upgradation a fee that lacks clear regulatory justification. Users reported multiple deductions from their accounts after unsuccessful attempts to match their fingerprints.

A recent notification received by Easypaisa users said “Your fingerprints could not be matched with your ID Card from NADRA records”, asking the person to scan fingerprints.

It mentioned you can get your account biometrically verified at your nearest retailer, and that a fee of Rs. 99 will be charges from your account for biometric verfication.

Easypaisa Introduces Rs99 Fee For Biometric And Account Upgradation

The recent move raised question and Easypaisa is yet to share an official statement on the mettter of introducing new charges.

In 2023, the mobile wallet company imposed a monthly SMS alert fee of Rs15, which raised concerns among its vast users. for the unversed, Pakistan’s central bank directed all banks and microbanks to share free SMS and email alerts.