Engro Analysis

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INTRODUCTION

1. AGRICULTURE

Pakistan is an agricultural country. In the past decades, Pakistan has progressed from a purely agriculture based economy to a relatively balanced economy dependent on services and other commodity producing sectors as well. Although agriculture continues to perform an important role in the overall GDP, however in recent times it has been outpaced by rapid growth in non agricultural sectors.

Share of agriculture output to overall GDP stood at 21% to total GDP in FY08 employing 44 percent of the workforce, whereas industrial sector contributed about 26%. As per experts estimation the share of agriculture cannot go down further, as many industrial sector such textile, sugar and fertilizer are also depend on agriculture. These industries provide input, as well as derived input from agriculture. However, in the future, the share of agriculture in overall GDP is estimated to start rising henceforth as the population demand for food rises.

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2. ECONOMIC ENVIRONMENT

Fertilizer consumption world wide is highly correlated with macroeconomic growth of the country. Likewise, Pakistan has witnessed robust economic growth in the last few years. The country’s GDP has grown at a CAVR of 7.55% over the past 3 years and future prospects are positive. The strong economic performance has been accompanied by an increase in agriculture growth, per acre yield and resultant demand. Pakistan’s agriculture output has suffered in the recent past due to adverse weather conditions and crop spoilage. The government is committed to improve agriculture performance through the following measures:

i. Irrigation system improvement

ii. Subsidy to farmer

iii. Encouraging use of fertilizer

iv. Above average credit disbursement

As a result of these policies, yield per hectare of Pakistan is showing gradual improvement although it is low as compared to the other countries. Currently it stands at 1.44tn per...