The missing link

April 25, 2019

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VALUE-addition in agriculture can be defined as enhancing the worth of a product by changing it into different forms to make it more preferred in the marketplace; for instance processing wheat into flour, fruit pulp into juices and jams etc.

Unfortunately Pakistan has not been able to make any major headway in transforming any crop from its original state to a more valuable variety. According to a report, Chile, China and India reaped rich dividends through investment on value-addition in agriculture; even Tanzania, a poor country, was able to make substantial economic strides through investment on value-addition. Also, Bangladesh managed to earn $6 billion by adding value to one million bales of cotton, whereas Pakistan makes only $1.5 billion from the same amount of cotton.

There is a general consensus among stakeholders of the agri-business that value-addition has been ‘the critical missing link’ in Pakistan’s agriculture and horticulture trade.

While Pakistan is focussing on its production digits, the global economies are switching over to quality and value-addition to attract both local and international markets. Pakistan now produces over 30million tonnes of fresh fruits and vegetables but cannot take most of it to the world market because of lack of storage and processing facilities. In fact, in our country, investment in value-addition in agriculture has not picked up due to lack of initiative from the government and unrealistic taxation policy.

According to a report, main challenges facing agro-processing industry in Pakistan are post-harvest losses due to a lack of storage and transport, inability to supply raw materials, inadequate cold chain facilities, poor funding, lack of investment in supply, lack of training facilities for farmers and processors, poor product quality, weak regulatory system, poor technical choices and a lack of innovation, unequipped food analysis laboratories, inefficient market structure and lack of coordination links with academia, industry and research organisations. The report suggested establishment of agro-processing training institutes and small food processing units at district level, revision of Pakistani food standards for food quality, improving process efficiency and decreasing losses and increasing links between industry and research organisations.

Though transforming raw products into consumer-ready goods requires a lot of doing, there is no way out if we want to make agriculture the engine of economic growth.

Pakistan Horticulture Development and Export Company (PHDEC) took some steps, like developing standards for fruits exports and the PakGAP system (on the pattern of GlobalGAP), but failed to implement the same as required support from the government was not available.

According to PHDEC officials, it is essential for value-addition 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.

The PHDEC had also suggested to the government to involve its missions in identifying niche markets to be exploited. However, better late than never, it is high time the government made more serious efforts to encourage local as well as foreign entrepreneurs in investing in value-addition and capture markets, like, for instance, the Halal market currently being dominated by Malaysia and Turkey.

Case in point is guava, a fruit which occupies third position among major fruits grown in the country after citrus and mango. But the crop’s full economic potential could not be attained because of lack of required attention on guava processing, value-addition and exports. Guava, at present, is grown mainly for fresh consumption only. Traders are of the view that there is a lot of potential for fresh guava and the demand is expected to rise with more consumers becoming acquainted with the fruit. The chief executive officer of Harvest Tradings suggests that well-equipped processing units with latest technologies should be installed in guava producing areas with research facilities to improve and increase production of quality guava.

Though with the passage of time food processing and packaging has grown and the names of some locally processed and packaged food brands can be quoted as very successful, there is a huge gap between the output of food crops and the scale on which their value-added products are being produced for local or export market.

According to the officials of Trade Development Authority of Pakistan (TDAP), if we exclude processed meat, fish and manufactured spices, the export earnings of all other value-added food items, including dairy and milk products, cereal-based food items and confectionary, fetch less than $100 million a year.

Agri-traders argue that there are many obstacles to value-addition in Pakistan. These include inadequate supply of inputs, inadequate safety standards, poor financial support, erratic inputs and poor artisan skills, poor technical choices and lack of innovation. So both public and private sectors must cooperate by sharing responsibilities and coordination. On the other hand, for value-addition, it is fundamental to work out comprehensive awareness campaigns for farmers and consumers so that fully developed and monitored cold and supply chains across the country could be set up, preferably on public-private partnership basis, and to achieve the desired result there is also a need to make machinery acquisition less cumbersome through tax relaxation.

Companies involved in food processing business say that local sale volumes can be increased further and export potential can be further realised more effectively if the government comes up with a plan for mapping the domestic food sector and then categorise the market players on different basis.

There is no denying of the fact that agriculture sector continues to be the mainstay of Pakistan’s economy as it makes a substantial contribution to the country’s economic growth and employment. Though transforming raw agricultural products into consumer-ready goods requires lots of managerial expertise, general and specialty labour, packaging, transportation, rent, business taxes, and many other costs, the fact remains that if we want to make agriculture the engine of growth, then we must give all possible incentives to all those entrepreneurs who want to invest in value-addition in agriculture.

In addition to good economic growth potential, value-added activities can also help in diversifying the economic base of rural communities – a community where 75 per cent of our population lives. Therefore, to make our presence felt in the international agri-market local agricultural producers and community leaders have also to work together to attract agribusiness ventures for value-added activities that will utilise local resources intelligently and augment the quality of rural life that is desired by everyone.