IN FY16, Pakistan’s food trade deficit almost tripled to $1.4bn, from $470m in FY15 as the trade surplus seen in FY13 and FY14 could not be sustained.

And, in seven months of this fiscal year, the deficit has already crossed $1.4bn mark. Market watchers say full FY17 food trade gap might touch $2bn (see table). This is alarming. So, what’s wrong and where?

Increasing population and higher per-capita intake of food, craze for protein-rich fast food, increase in income levels and resultant additional demand for diversified and higher quality eatables all are putting pressure on food imports.

On the other hand, low per-acre yields of food crops, limited productivity of dairy and meat sectors, issues in fish hauling and processing and inefficiencies in food processing industries keep export surpluses from growing fast. And, poor export marketing impedes faster food export growth.

“No short-term solution is in sight. Imports will keep growing and exports cannot catch up for a few years,” admits a senior official of Trade Development Authority of Pakistan.

“Economy is growing faster and with it is growing demand for food imports in all three categories, raw materials, semi-finished and finished food products. Besides, retailing of imported food items in local markets has become quite profitable and less-bothering than food export business.”

“Wholesale markets across Pakistan now remain flooded with food items from China and India throughout the year. Businessmen earn decent profits on distribution and retailing of imported food stuff.

Imports of vegetables and vegetable products from the two neighboring countries have shown a rising trend in recent years also because they are cheaper and help wholesalers earn higher profits than they could by selling local items.


Increasing population and higher per-capita intake of food, craze for protein-rich fast food, increase in income levels and resultant additional demand for diversified and higher quality eatables all are putting pressure on food imports


With online marketing being a big help, thousands of jobless men in Karachi and Lahore are engaged in this business.”

The irony is that our imports not only include animal feed, oilseeds, seed plants, vegetables, pulses, fresh and dry fruits, and confectionary items—but also rice and maize.

In nine months of the last fiscal year, $12m worth of rice and $5m worth of maize were imported from China. During the same period, we imported $28m worth of tomatoes from India—thanks to mismanagement in local tomato marketing. Growers say our last tomato crop was not bad. But delayed supply to local markets created shortage leading to hurried imports from India.

Pakistan’s main food imports include edible oils and oilseeds, tea, coffee, vegetables, and vegetable oils, live animals ad animal products and prepared food products and beverages.

Despite some growth in local oilseed production, edible oil imports continue to remain high chiefly due to less efficient oil extraction industry and smuggling of local edible oil to Afghanistan.

Inefficiencies and uncertainties in farm-to-market supply of domestic veggies make them pricier in wholesale markets, traders say.

Exports of basmati varieties have suffered lately. Branding has made it possible for Indian traders to make bulk purchases of Pakistani rice and sell them to the world under Indian brands.

Small wonder then our rice export earnings declined 8.6pc in FY16 to $1.86bn even though export volumes recorded a 10.4pc increase. Besides, the fact that more than 45pc of our food export revenue comes from rice exports shows the need for developing more market brands.

Over the years, successive governments have promoted local production of cooking oil and ghee. But that is yet to translate into sufficing domestic demand and creating some export surplus. Instead we remain stuck up in issues of industry’s inefficiency and under-reporting.

Our combined annual output of cooking oil and ghee rose to 1.6m tonnes in FY16, from 1.4m tonnes in FY11, showing a total growth of 14pc. On the other hand, our combined imports of palm oil and soybean oil grew close to 2.8m tonnes from a little over 2.1m tonnes during this period, showing a cumulative increase of 33pc.

“Ideally, the growth rate of raw material (palm oil and soybean oil) and the final output (cooking oil and ghee) should vary this much,” says a former chairman of Trade Development Authority of Pakistan.

“The mismatch in numbers indicates either edible oil manufacturing industry is less efficient or cooking oil and ghee production is being under-reported whether due to expanding informal sector or due to avoidance of taxes by those in the formal sector.”

In meat exports, our export promotion efforts are yet to produce desired results. Over 80pc meat export earnings still originate from six countries: UAE, Saudi Arabia, Bahrain, Oman and Qatar.

Iran, Iraq, Vietnam, Thailand and Germany are some of the other markets where Pakistani meat exporters have made inroads. “But there is a need to diversify the market base further while focusing more on Saudi market where Pakistani meat sells at premium and where our meat exports are growing at the fastest pace,” says a TDAP official.

Published in Dawn, Economic & Business, March 20th, 2017

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