THE Shahid Javed Burki Institute of Public Policy’s recent report — ‘The State of Economy: agriculture and water (2016)’ — narrates the plight of Pakistan’s agriculture sector, saying the sector grew by only 2pc in the last decade.
During the same period, value-addition in main crops remained only 1.5pc. Horticulture, being a vulnerable sub-sector where value-addition is critical, performed even worse as value-addition dropped from 14.50pc, in 2005-06, to 11.30pc, in 2015-16.
Throwing light on the importance of value addition, the report says “transformation from subsistence to commercial agriculture could only be achieved by fully availing the synergy among pre-, production and post-production cycles.
That could only come by adding value at each stage. The strategic thrust, thus, needs to be on value-addition and value-chain investment. Only then, could agriculture become the engine of economic growth and poverty alleviation.”
Listing international examples, the report says that Chile, China and India reaped rich dividends through investment on value-addition in agriculture, and (especially in) horticulture products. Tanzania, a poor country, was able to make massive economic strides through investment on value-addition.
The reports says that Bangladesh earns $6bn by adding value to 1m bales of cotton, whereas Pakistan makes only $1.5bn from the same amount of cotton.
For value addition, it is essential to devise awareness campaigns for farmers and consumers, create a fully developed and monitored cold- and supply-chains across the country and make machinery acquisition less cumbersome through tax relaxation
Besides this report, there has been a general consensus among stakeholders of the agri-trade that value-addition has been ‘the critical missing link’ in Pakistan’s agriculture and horticulture trade, which is especially true for fresh produce, where value-addition is most needed to contain the losses and diversify the industry.
If seen in the historical context, this lack is owing to the policymakers’ focus being increasing production, even at the cost of quality. As Pakistan focused on its production digits, the global economies shifted theirs to quality. What made matters worse is the fact that we did not turn to value-addition of agricultural commodities which could off-set the impact of low production.
To ensure quality, elaborate standard-systems are being used across the world like: Sanitary and Phyto-Sanitary measures, traceability of agro-chemicals residues, Good Agricultural Practices, quarantine treatments and of food packaging safety materials.
Besides these, there are certification systems like the Hazard Analysis and Critical Control Points, the GlobalGAP, the British Retailer’s Consortium and Monitoring of Maximum Residues Limits, which make the exports competitive in the global markets.
Pakistan now produces over 30m tonnes of fresh (fruits and vegetables) produce but cannot take most of it to the world market because of quality issues. The exports are growing — from around $230m at the turn of the decade to over $700m now — but they are coming down in percentage to increasing domestic production and their potential. That is where warnings (like this report) have a role to play as an occasional reminder of what needs to save the day.
Most of the country’s horticulture exports are going to lower-end markets, where quality checks are not as strict as in some western countries. But quality issues have popped up even in those markets. The Russian and Iranian bans on agriculture exports are examples of threats that could keep creating crisis for the country’s exports.
“The fact has not been lost on successive governments that they need to do something urgently but, unfortunately, the results leave much to be desired,” says Shamood Saddique — former head of the Pakistan Horticulture Development and Export Company (PHDEC).
The PHDEC took some steps like creating standards for fruits exports and the PakGAP system (on the pattern of GlobalGAP), but they could not be implemented due to lack of government’s support.
For value-addition, it is essential to: devise awareness campaigns for farmers and consumers, create a fully developed and monitored cold- and supply-chains across the country and make machinery acquisition less burdensome through tax relaxation.
The PHDEC had suggested the government to involve its missions in identifying niche markets to be exploited. However, the government needs to make more serious efforts to support value-addition and meeting the global sensibilities on quality issues.
Published in Dawn, The Business and Finance Weekly, June 19th, 2017