THOUGH a belated move, Pakistan is exploring the potential of higher exports of agricultural commodities to Russia and a high-level trade delegation recently went there for this purpose.

Eight months ago, Finance Minister Ishaq Dar was upbeat after attending a Pakistan-Russia inter-governmental committee meeting where several Russian companies showed keen interest in trading with Pakistan. He decided not to miss this opportunity provided by a ban imposed by Russia on imports of agricultural commodities from the western countries that have imposed sanctions on it over Ukraine. He directed the food security and commerce ministries to immediately get down to preparing a plan for boosting farm exports to Russia.

The ministry of commerce finally did prepare a plan to tap Russian markets but a year after the Russian ban came into effect and eight months after the finance minister’s directive. The ban imposed on August 7 last year was to last for a year but it is not clear whether it has been lifted or not. In case it is lifted, it will mean a major setback for Pakistan’s efforts to capture a larger share in Russia’s market of farm goods whose imports are worth $43bn.

The plan was approved on August 20 in a meeting jointly chaired by Commerce Minister Khurram Dastagir Khan and Minister for National Food Security Sikandar Hayat Khan Bosan. The meeting which was convened to discuss the opportunities that have come up in the wake of Russian sanctions on Europe’s food products, decided to seek a preferential trade agreement (PTA) with Russia and also a trade agreement with Eurasian Economic Union which includes Russia, Kazakhstan and Belarus. The plan identified citrus, potato, rice, dairy products, meat and tobacco as priority items.

There is a big demand in Russia for seafood such as shrimps, prawns and shellfish and also for hard cheese and marbled beef. There are good prospects of exports of meat but the exporters find air freight too high

Currently, major exports to Russia include woven cotton fabrics, fruit and fruit preparations, synthetic fabrics, various varieties of rice, articles of apparel other than textile material, vegetables, medical and surgical instruments. Pakistani potatoes and citrus fruits are also being exported. There is a big demand in Russia for seafood such as shrimps, prawns and shellfish and also for hard cheese and marbled beef. There are good prospects of exports of meat but the exporters find air freight too high as it costs them Rs180/kg. The government has decided to make special arrangements to facilitate export of fresh and frozen meat, poultry, vegetables and fruits.

Bilateral trade between the two countries was worth $419.34m in 2013-14 compared to $484.47m a year earlier, showing a decline of $65.13m. Meanwhile, Punjab’s exports of kinnow to Russia picked up this season significantly as it is as quite popular in that country.

West’s sanctions over Ukraine had given a major jolt to Russia’s oil-dependent economy. Basically, a tit-for-tat response, the ban was to affect 28 European Union members, and the US, Canada and Australia. It covered all meat, fish, poultry and dairy products, fruits and vegetables but excluded tea, coffee, sugar, grains and seed oil. Russian imports of food-related commodities were worth about $39bn in 2013, about $23.5bn of which was in categories affected by the Russian ban. From the countries covered by the sanctions, Russia imported $17.2bn worth of food which it is now importing from other countries.

A delegation of Russian trade representatives on a visit to Pakistan early this month held a meeting with agriculture minister of Punjab who briefed the Russians about the latest developments in agriculture in his province and the country. Pakistan is exporting high quality agricultural goods and is interested in higher export of potatoes, citrus fruit, and rice to Russian markets, he said. Leader of the delegation said his government, agriculture and technical experts were keen to have a strong trade relationship with Pakistan.

The Pakistani delegation of Trade Development Authority of Pakistan (TDAP), during its stay there, met high officials of the government, customs and ministry of economic development. Pakistani officials complained that the duty on Pakistani kinnow was arbitrarily increased this year from $650 to $1,050 per tonne. Similarly, instead of invoice value, the Russian Customs had considered weight of textile items for calculation of duties, which makes Pakistani products expensive.

The Customs official explained that the value declared by the exporters of Egypt and Turkey was higher than the value declared by Pakistani exporters. On this, he was informed that the labour and production cost in Pakistan was cheaper as compared to Turkey and Egypt, that is why the Pakistani exporters had declared less value.

A meeting with the representatives of the Republic of Bashkortostan, which is one of the eight Muslim republics and also Russia’s richest territory in mineral resources, was held at the Presidency. Bashkortostan has the largest petrochemical industries and 40pc of the area consists of forests. The republic imports cotton, rice and the fruit. The chief executive of TDAP S.M. Muneer assured the hosts that in future a special delegation would be sent for the Republic of Bashkortostan.

Published in Dawn, Business & Finance weekly, September 28th, 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play