KARACHI - The State Bank of Pakistan has said that all the prevalent indications leading that the agricultural growth will be reasonably good during current financial year09, despite 18.5 percent decline in sugarcane output during kharif of this fiscal. SBP in its second quarterly report released on Saturday has pointed out that this assessment was based on an anticipated record wheat harvest that would significantly improve the contribution by major crops, above target performance of minor crops and a reasonably good outturn by the livestock sub-sector. The central bank said the improvement in the crops sub-sector appears to be helped by the significant gains to farmers in the previous cropping season; amidst high commodity prices, as well as supportive government policies. The price signals were so clear in FY09 that farmers worked hard to offset the impact of water shortages and non-availability of urea at controlled prices, SBP said and added that these efforts were also supported by favourable weather conditions. This was particularly true for the rabi crops, which were helped by timely winter rains. The limited available data suggests that growth in minor crops and livestock sub-sectors is also likely to improve during FY09 over the preceding year. Central bank pointed out that the rice harvest surpassed 6 million ton mark for the first time during FY09 which was significantly higher output than estimated domestic rice consumption of about 2.5 million tons. It mainly reflects that farmers were encouraged by the sharp run-up in international prices in the previous year, when price stability concerns had led to the imposition of export restrictions by some major rice producing countries. The attractive prices and lower competition in the international markets led to a surge in exports and a healthy 15.9 percent year on year increase in the cultivated area in FY09. However, SBP reminded that it was important to note that farmers could not realise gains at the scale anticipated, from bumper rice harvest due to an unexpected sharp fall in international rice prices. This disappointment may lead to a smaller crop size in next FY10. However, recent move by Thailand and Vietnam (two major rice exporters) to fix export price is likely to help stabilise rice prices in international market. Stable prices would help farmers to make cultivation decision with some certainty. The SBP report further said that a 6.7 percent fall in cultivated area had initially raised expectations of a substantial decline in cotton output during current FY09 cropping season but the output instead rose by 3.5pc. Here too, it was an improvement in cotton prices that encouraged farmers to put extra efforts, resulting in a 10.9pc gain in cotton yield which more than offset the decline in acreage. Another important reason for the substantial gains in yield is the increased plantation of Bt cotton during FY09. According to SBP, the wheat production target was been revised upwards to 25 million tons for FY09, on the expectation that farmers would respond to a 52 percent increase in support price. An immediate impact of this was seen, as despite irrigation water shortages, wheat plantation target for the year was surpassed by 5.1 percent. This change was also helped by a switch from sugarcane crop to wheat, as price disputes between growers and sugar mills intensified last year.