PAKISTAN’S exports of agricultural commodities and agro-products remain stymied by falling international prices and high cost of local production with no serious effort to increase per acre yield.

While the global commodity prices are beyond control, the high cost of production can be brought down to an affordable level of the average farmer. What is badly lacking is a policy intervention by the government to break the logjam and bring the sector out of this morass without waste of time. And there are options to choose the way forward.

Pakistan has tried to reduce its reliance on primary commodity export but the diversification took place within a narrow range of products and markets.

Neither foreign missions nor the commerce ministry played an active role in exploring new destinations for domestic goods.

Similarly, there has been little effort to promote food products made of wheat, sugar, rice, fisheries, poultry, fruit and vegetables, etc. Policymakers will have to abandon their traditional approach towards exports. It is time to concentrate on export diversification in both products and markets.

However, there are some positive signals as well. Currently, Pakistan is one of the leading exporters of food products and commodities to the UAE and other Gulf countries which do not produce wheat and other farm commodities and depend on imports. Pakistan has an opportunity to enhance its export of staple food commodities to these countries by offering competitive prices.

Pakistan’s food-products exports touched $500m last year compared to $362.4m in 2012 and $400m in 2013. The UAE’s global imports market is predicted to reach $7bn by 2020. As more than 60pc of trade volume among Gulf countries is routed through the UAE, it will be an ideal re-export destination for the Pakistani food industry.

Rice remains the leading export item to the UAE and its sales have jumped 11-fold to $207.8m compared to the last two years. Meat and processed frozen food exports crossed the $100m mark over the last three years. Exports of fruits and vegetables have almost doubled in three years. Pakistan has not been able to export wheat because high domestic prices and low international rates, making it an unprofitable proposition.

Pakistan has boosted sales of its traditional agricultural products in the UAE while expanding its reach into new product areas such as processed meat and poultry products, tea, concentrated milk and cream, certain fruits and vegetables, spices, herbs and confectioneries.

Exports of onions, garlic, leeks and ginger have also witnessed 300pc growth over the past three years. A Trade Facilitation Centre has also been established by Trade Development Authority of Pakistan in the UAE to facilitate business meetings between exporters and Gulf importers.

A research firm, BMI International, says Pakistan remains a buoyant market for consumer sales and food and beverage investment. The firm has forecast an annual 9.9pc growth rate in food consumption until 2019.

There are enormous business opportunities emerging in Pakistan for both food and beverage imports and exports, as evident from the recent foreign investment in manufacturing plants in Karachi, Multan and Islamabad, says a Dubai official.

An FAO study says agricultural commodities are going through a period of lower and less volatile prices across the world. After several dramatic upward price hikes from 2007 to 2011, most cereal and vegetable oil prices have been on a trajectory that is both steady and declining. The reasons include high inventory levels, sharply lower oil prices and the renewed strength of the dollar, none of these appears likely to be reversed in the short-term, although unexpected weather-driven impacts on harvests remains a possibility.

In Pakistan, exports of sugar, wheat and rice, the key staple commodities, are either stagnant or in decline after having produced bumper crops in recent years which only added to the difficulties of the farmers and officials alike. A similar possibility, predicted for this year as well, failed to materialise because of poorer performance of agriculture sector in the current fiscal year. Its growth rate has been 0.19pc as a whole against the target of 3.9pc.

Published in Dawn, Business & Finance weekly, June 6th, 2016

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