FIVE years after getting approval for zero rating duty under the generalised system of preferences and investing high hopes in the US market, mangoes are failing to make any impact. Exporters have not been able to access a major market which spends well over $0.5bn on imports.
Exporters complain the process of export to the US is lengthy and costly. The highest freight charges calculated at Rs370 for each kilogramme is the biggest deterrence. What makes exports virtually impossible is the fact that mangoes have to be irradiated at the US facilities, which involves booking and trucking the cargo to a particular facility; completing the irradiation process and taking it back to the market.
Each step costs huge money and delay at any stage threatens the entire consignment’s quality and sale prospects. In all, according to exporters, each kilogramme costs around $8 for making it saleable in the US market. Add to this the cost of the mango itself and the rate of the fruit spins out of the fiscal reach of the ethnic clientele.
The only option is to get local irradiation facilities approved by the US as has been the case with South Korea
The only option is to get local irradiation facilities approved by the US as has been the case with South Korea. A representative of the Korean government travels to the irradiation plant near Lahore and monitors the entire process before clearing the fruit for the Korean market. The exporter or processor pays for the visit. Such an approval saves almost half of the procedural price of the US market and helps cut costs correspondingly.
In fact, that was the original plan: a modern irradiation facility was to be set up by Pakistan Atomic Energy Commission near Lahore. The Pakistan Horticulture Development and Export Company (PHDEC) leading the initiative was rendered virtually dormant.
The commerce ministry, under which the PHDEC works, now thinks that it should not be running organisations like PHDEC because the entire agriculture sector — horticulture being only a part of it — now rests with the province. That is why, the company has been without a full time head for the last one-and-a-half year, and going without a sufficient and regular budget. Punjab, where PHDEC is headquartered, has a counter argument: the agriculture sector, along with horticulture being a sub-sector, might have been devolved, but export is still a federal subject. So, it should be the federation which should create, own and run all forums related to exports.
Exporters say each kilogramme of mango costs an additional $8 for making it saleable in the US market. Add to this the cost of the mango itself and the rate of the fruit spins out of the fiscal reach of the ethnic clientele
Only the federal government has the wherewithal, international linkages and mutual and multi-lateral agreements to facilitate exports. On the domestic front, the federal government needs to come up with a National Horticulture Policy — a vital but still missing component — to set and enforce domestic production standards for fruits.
Only the federal government can take both these essential steps to meet international requirements. The provinces on their parts can help the federal government implement those policy and standards.
Published in Dawn, Business & Finance weekly, July 25th, 2016