PAKISTAN can boost its food exports to ECO countries as it now leads this 10-nation economic bloc for next five years and as the China Pakistan Economic Corridor opens up a lot of fresh opportunities.
Afghanistan is already one of the country’s biggest food exports market. Food exports to Iran are growing after lifting of US-led international sanctions on that nation. Chances for boosting food exports to Turkey have also brightened after the establishment of Halal certification authority in Pakistan. “And, food exports to Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan are expected to rise as they have start realising that trading with us is easier and strategically important in the CPEC era,” says a senior official of Trade Development Authority of Pakistan. “Already 80pc of our total exports to these countries fall in foods category and demand keeps growing.”
Officials of the ministry of commerce say our food exports to ECO nations that totalled $620m or so in FY16 can hit $1bn, if not this year, maybe next year. Their optimism is rooted in the enthusiasm shown by member countries of this regional bloc during the recently-concluded summit. “But a lot depends on our relationship with Afghanistan,” one senior official conceded in an obvious reference to current unease in Pak-Afghan political ties.
According to an old study conducted by the ECO secretariat, out of the 15 top items that Pakistan can export to ECO countries, five fall in food category. These are: rice, cereals cereal preparations, animal and vegetable fats, fruits and vegetables and live animals.
In the first half of this fiscal year, out of the total $102m earnings from wheat and wheat flour exports, $97m came from Kabul
Currently hundreds of items including these five categories and even more, for example, seafood and meat and meat preparations are exported to the ECO nations.
Meat and meat preparations had long been on the list of export items to Afghanistan. But exports of seafood to Central Asian countries began when exports started diversifying export markets to reduce dependence on the Middle East, exporters say.
“Whenever Pakistan is surplus in wheat the nearest export market is Afghanistan if there is any shortfall there,” says a TDAP official. In the first half of this fiscal year, out of the total $102m earnings from wheat and wheat flour exports, $97m came from Kabul.
And in FY16, $122m, or 98pc of the total $125m earned through wheat and wheat flour exports to Afghanistan.
In the last fiscal year, $191m or more than 10pc of total rice export earnings originated from the ECO nations, chiefly from Afghanistan ($128m) but also from Kazakhstan, Iran and Turkey.
“The potential market is much larger,” says an official of Rice Exporters Association of Pakistan. “But we need to boost our Basmati production (which is in more in demand in the ECO region) and we need stronger branding. Dubai-based Indian traders continue to import Pakistani rice in bulk and resell the same as Indian rice to Iran and other countries.”
In FY15, Iran had bought $9m worth of Pakistani rice mainly long-grain, aromatic super Basmati. But in the last fiscal year, rice exports to Iran fell o $2.4m due to overall inadequate local supplies of Basmati that forced buyers to cater to more permanent rice export markets first (like GCC region), leading exporters say.
Pakistan’s food exports to six ECO Central Asian countries have seen a surge since FY2010 then for two basic reasons. First, Russia began beefing up its food stocks and curbed its food exports to them. And secondly, these countries also witnessed a declining trend in food trade with each other as they started diversifying trading sources.
“In this backdrop, Pakistan entered this market aggressively and now our total food exports of Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan exceeds $50m,” says an official of the Ministry of Commerce citing FY16 statistics.
“Food exports must be prioritised in all our efforts to increase overall exports to ECO countries, because except in case of Turkey and to some extent Iran our key exports to ECO falls in foods category.”
As a gesture of goodwill Iran lifted ban temporarily on imports of kinnow from Pakistan just a day before the March 1 ECO summit in Islamabad. The Federation of Pakistan Chambers of Commerce and Industry has demanded that the ban be lifted permanently.
If it is done, Pakistan will be able to export as much as 60,000 tonnes of kinnow to Iranian markets every year. But for that to happen, we’ll have to remove Iranian concerns regarding the quality of the kinnow we export there, officials say. They say that Pakistan would soon take up this issue with Iran.
Free movement of goods throughout the ECO region using road and rail transport is expected to become easier — thanks to CPEC projects.
Published in Dawn, Economic & Business, March 13th, 2017