ISSUES ranging from geographical identification of basmati to lack of standardised processing of seafood to low value-adddition keep taking a toll on Pakistan’s food exports. Limited foreign markets as in case of meat, inability to create sustainable large export surpluses and delayed decisions on whether to allow exports of wheat and sugar also undermine our food export earnings.
It is broadly for these factors that food exports have remained almost stagnant for last five years, with FY15 being no exception (see table).
According to the Pakistan Bureau of Statistics, food exports fell 1pc to $4.251bn in 11 months of FY15 from $4.293bn in a year-ago period.
Penetrating into a larger number of export markets is very much required to enhance forex earnings from meat and meat products
Exports of basmati rice dropped about 23pc in terms of value reflecting primarily a volumetric decline of 26pc. Rice exporters say domestic prices of paddy remained so high and domestic demand for packed basmati rice was so strong that they could not dare competing with Indian exporters. “Besides, non-resolution of the issue of geographical identification also continued haunting us which was another factor that discouraged basmati exporters,” says an official of Rice Exporters Association of Pakistan.
“Paddy production in the country was sufficiently large and a little bit of planning could have averted a price-hike in local market,” he says “but larger than required procurement (by Passco) in the name of reserve stocks and smuggling of basmati to Afghanistan also made a dent in exports.”
Export of non-basmati varieties of rice rose both in volume and value in FY15, which somewhat compensated the decline in exports of basmati. Exporters say this was in continuation of a trend that set in some years ago, adding that with faltering basmati exports, many rely on non-basmati varieties to keep their business running. Unlike basmati, local demand for other varieties does not rise dramatically for two reasons. First, urbanisation and change in life style is replacing demand of coarse rice with that of basmati and secondly production of non-basmati varieties has been growing steadily for last few years.
In 11 months of FY15, fruit exports, the biggest in food category after rice, remained unchanged at the year-ago level as shipments saw a 10pc decline. That happened as mangoes’ shipments were returned from some European destinations due to presence of fruit fly. Wooden crates in which mangoes and other fruits were shipped out were also found infested with bacteria in some cases. Though these two issues have now been taken care of, fall in fruit exports in FY15 keeps the challenge of creating enough exportable fruit surplus alive.
Official stats show a modest increase in fruit production in recent years. So, the decline in export volumes can be explained by higher domestic demand of fruits and rising local cost of exportable fruits. The entire fruit market is dominated by investors, contractors and commission agents who seek higher returns on investment and charge fatter fee for their services every year, exporters maintain.
This is elbowing out small and medium exporters from the scene leaving the export business exclusively in the hands of big players.
Exports of vegetables grew 8.4pc in value in 11 months of FY15 over the same period of FY14. But here again, additional forex earning was far lesser than what it should have been because it came on the back of a huge 24.3pc increase in export volumes. This is indicative of two things, exporters say. First, per-unit price of the exported veggies either remained stagnant or declined and second, export volumes of pricier vegetables didn’t rise as much as that of low-price veggies.
And, it is common knowledge that vegetable export earnings in the last year rose mainly due to one-time high volume export of potatoes whose production at home was high. High-price veggies like cabbages and cauliflower and lady-finger and turnip made little contribution to growth in exports.
Seafood and meat, two other major food export items, generally suffer from the lack of standardised processing and limited foreign markets, respectively. This is reflected in their inconsistent export growth, sometime witnessing a low-level increase and at other times in outright decline. In FY15, seafood exports fell both in terms of volume (4.7pc) and value (3.4pc).
Though the European Union has re-allowed two Pakistani firms to export fish and fish preparations to EU countries a majority of companies are still struggling to meet the EU standards. Recently a EU delegation visited and re-evaluated the fish processing conditions of five companies. According to official sources these companies, too, would be permitted shortly to restart exports to EU. If that happens, seafood exports may recover. But in a broader term, perennial issues like obsolete fishing boats and nets, over-reliance on traditional ways of fishing and least-scientific fish processing would have to be better tackled to push seafood exports.
Meat and meat products are mainly exported to the Gulf countries or Malaysia, though lately some exporters have started exploring such non-traditional markets like China, Bangladesh and Central Asian countries. Penetrating into a larger number of export markets is, thus, very much required to enhance forex earnings from meat and meat products. Besides, issues of proper packaging and development of more value-added meat products also need attention.
Published in Dawn, Economic & Business, July 6th, 2015