THE country is exporting a greater quantity of fruits and vegetables, but forex gains remain limited. The reason is we are not investing in those technologies that are a must for enhancing outputs and improving quality of exports. Besides, our effort to reach out to new export markets needs impetus.
In eight months of this fiscal year i.e. between July 2018 and Feb 2109, forex earnings of fruits and vegetables totalled $479 million. In the same period last year it was $387m. While this gain of $92m or about 24 per cent looks impressive, we achieved this only after exporting much larger quantities of fruits and vegetables, squeezing supplies in local markets.
Between July-Feb FY19, Pakistan’s exports of fruits and vegetables stood in excess of 1.165m tonnes. In July-Feb FY18 it was 1.016m tonnes. In other words, supplies to local markets shrank by no less than 149,000 tonnes. Its effect can be seen in higher prices of almost all fruits and a number of vegetables, minus potato. We had a potato glut this year.
The numbers, reported by the Pakistan Bureau of Statistics, bring a couple of things to the fore:
First, exports of fruits and vegetable are far lower than the country’s potential. Second, the average per tonne export price is low. And third, since this is in continuation of a trend, we need to invest more in revamping and modernising our horticulture sector.
Mobilising local investors for upgrading the horticulture sector is a must. Without this even foreign investment, within or outside the CPEC umbrella, can hardly make a big difference
In the entire last fiscal year, combined export earnings of fruits and vegetables rose to around $641.7m from $565.8m a year ago — or just around 12pc. Meanwhile, export volumes grew to 15.85m tonnes from 12.78m tonnes — or 24pc.
If forex gains grow by just half the rate of the export volume, our export efficiency comes under question. It is time to set our house in order.
Pakistan is famous for its mangoes and citrus though it also exports dates, melons and apples. We also export lots of vegetables but potatoes are our mainstay. Vegetable exports get a boost when we export onions, though exporting large quantities of onion every year is not possible as crop size is highly dependent on climatic conditions, and local demand keeps mounting.
Mango and citrus fruit exports suffer heavily whenever their crops are hit by disease or when pre-export treatment and tests fall short of global standards.
During kinno export season that closed in mid-March, Pakistan failed to meet the export target of 300,000 tonnes, which in itself was below the last season’s actual exports of 370,000 tonnes. Growers say the inability to control the spread of disease in kinno orchards in Sargodha, the main growing area, created this situation.
Apart from the structural flaws in our horticulture sector the ongoing weaker rupee and high-inflation phenomenon is also playing havoc. The cost of growing fruits and vegetables has been on the rise after a substantial rupee depreciation in the past year and headline inflation now scaling new heights every month.
Increased cost of inputs is also making it difficult for fruit and vegetable exporters to remain competitive in international markets.
Over the last few years, Pakistan has lost its key kinno markets such as Australia, Canada, New Zealand, Norway, USA and UK. During the last season we sold kinno mostly to Afghanistan, Indonesia, Philippines, Russia, Saudi Arabia, Ukraine and Uzbekistan, according to the Trade Development Authority of Pakistan.
Mango exports are expected to start from mid-May and an export target is yet to be set. But just as in the case of citrus fruits, mango exports too may come under stress, both on account of quality as well as pricing, exporters fear.
In the vegetable sector, we have just experienced a massive potato glut due to the absence of a reliable system of future price discovery, broken chain of supplies and mismanagement in commodity market operations.
Official warnings of super floods revisiting Pakistan next year amplify fears of a loss of vegetable crops. Growers of these crops are already in trouble as they cannot get a fair price for their produce owing to the continuing practice of advance-selling of entire fields to middlemen. This, by the way, is a problem facing fruit orchards as well.
Pakistan’s export potential of fruits and vegetables is huge, by some estimates up to $5 billion a year. But the reason why the country manages to earn less than $1bn is that despite an increase in volumes of bank credit the to agriculture sector as a whole, the share of horticulture is fractional — less than 5pc.
A very large part of bank loans extended to this sector is used for growing produce and not for acquiring technologies to help upgrade growers’ skills or modernise orchards and farms. In recent years, some funds have flown towards companies engaged in tunnel farming of vegetables.
Just how scary the situation is can be gauged by the fact that the country does not have disease-free nurseries of citrus fruits and mangoes. Facilities for pre-export temperature treatment of both fruits are also scant.
Modern machinery used in speedy fruit picking from trees is a rare commodity. The same is true for machinery meant for economised and efficient watering of fruit trees, for example of apples, growing in high-altitude areas of Balochistan and KP.
Date processing plants are few and not well-equipped. Losses due to fruits falling from trees before or after they have ripened are very common. In case of vegetables, the loss of crop due to rudimentary methods of cultivation and lack of proper on-farm storage facilities is just too high — in some cases up to 30pc.
Published in Dawn, The Business and Finance Weekly, April 15th, 2019