Can Pakistan boost food exports to its neighbouring countries such as Afghanistan, China, India and Iran? The answer is yes. But exploiting the food export potential requires more than meets the eye.
Foreign trade with each of these countries has its own challenges. In Afghanistan, it’s our involvement in the peace process along with the United States and China that have an impact on trade.
In China, we can get a bigger market share only if we produce quality foodstuff that meets high standards of the second largest economy on earth.
Food exports to the neighbouring countries cannot rise unless the government devises a pragmatic strategy with the help of the provinces
In the case of India, both Islamabad and New Delhi need to defuse political tensions first to be able to trade more.
Our food exports to Iran can grow despite the re-imposition of US sanctions on that country as food trade is largely exempt from the sanctions. But the problem is that we have already lost Iranian markets to competitors due to years of lethargy and regaining ground is not that easy.
Keep this in mind and then switch over to the issue of food security. Our fast-growing population continues to erode exportable surplus of food grains and we have not been able to develop our value-added food industries and made them viable for exports.
Political issues aside, it will take a couple of years and exceptional hard work on our part in areas like meeting quarantine and quality standards of China, India and Iran and the production of value-added products to increase our food exports there, officials of the Trade Development Authority of Pakistan (TDAP) say.
In the case of Afghanistan, we will have to be more competitive as India, Iran and the Central Asian countries have lately captured a large part of Afghan food import markets, they say.
The government has so far not rolled out any plan on meeting these and other challenges. The discourse on agriculture and food exports has remained general in nature and specifics are missing.
In the last fiscal year, Pakistan’s food exports grew 29 per cent to $4.8 billion from $3.71bn a year earlier — a substantial gain of $1.08bn. But destination-wise, only a small part of this growth originated from within the neighbouring markets as a whole. For example, rice shipments to China grew to $129 million from $105m. But that was offset by a decline in rice exports to Afghanistan to $54m from $77.5m.
Exports of fish, seafood and their by-products to China went up to $84m in 2017-18 from $59m in 2016-17. But such exports to other three neighbouring countries were next to zilch. Sugar exports to Afghanistan, China and India, however, increased substantially as a bumper sugar cane output created a glut-like situation in Pakistan, forcing millers to export it on reduced rates.
Currently, the implementation of deep-sea fishing policy has brought to a near-halt the operations of fishing trawlers. It has already started affecting fresh supplies of fish in local markets. It is feared that exports of fish and fish products will suffer, too.
This federal policy has annoyed the Sindh government. The provincial assembly has asked the federation to abolish it as it ‘violates’ the 18th constitutional amendment that makes agriculture, including fisheries, a completely provincial subject.
Trading with the neighbours is more cost effective than trading with the rest of the world. Exporters prefer trading with neighbouring countries for several reasons, including a reduced shipment time and smaller overland transportation cost.
We can sell more rice and seafood to China. The potential market for meat and meat products is just too large, but the problem is that Chinese have issues with our meat processing. Officials claim that they have shown interest in setting up large meat processing facilities in special economic zones in Pakistan.
That can help in augmenting meat exports in particular and pushing our total food exports in the process. Officials of TDAP estimate that the share of exports to four neighbouring countries stood around 10pc.
We often forget that our large population (20.7m as of 2017) and high population growth (2pc per annum) is going to leave little exportable surplus in the years to come. Our crop yields are growing slower than those in the rest of the world. We are not investing much in producing high-value cash crops, like oilseeds and pulses. Our food processing industries find it easier to produce value-added products for the local markets where the number of end-consumers is growing as a rise in income levels has enabled them to consume costlier products.
Keeping a check on population growth, boosting crop yields, investing in high-value smaller crops and encouraging food industries to produce more for export markets is, therefore, necessary.
It is also necessary to boost the output of grains and food products suitable for the neighbouring export markets. A diversification of the basket of export items with a greater focus on products that have a higher per-unit price is the key to earn more export dollars.
For the past few years, an increased output of sugar cane, for example, created an exportable surplus of sugar. But the output of brown sugar, the demand for which is growing not only across the globe, including in China and India, remains too little.
Chinese prefer parboiled rice of high quality, but creating a large exportable surplus of this kind of rice is a challenge in the absence of proper technology. In Afghanistan, the use of sugar made from sugar beets, gur (lumps of raw sugar) and corn and corn products is common, but we are not supplying these items to Afghan markets in a big way.
Pakistani veggies and fruits, especially onions, potatoes, kinnows and mangoes, have high demand in Iran, India and China, but the area remains untapped. Even our cooking oil and ghee that used to be exported in large quantities to Afghanistan are now facing a tough competition there from India.
Food exports to the neighbouring countries cannot be boosted unless the government devises a pragmatic strategy with the help of the provinces and the private sector. Just celebrating the Chinese promise to grant us greater market access or offering an olive branch to India or sweet-talking to Iran or helping in the Afghan peace process won’t work in this case.
Published in Dawn, The Business and Finance Weekly, December 10th, 2018