Something is wrong with our food exports

Updated July 29, 2019

Email

Pakistan’s food exports were around $4.25 billion in 2011-12.

Seven years later, food exports fetched about $4.61bn — an increase of only $360 million or 8.5 per cent.

Food exports came down 4pc to $4.61bn in 2018-19 from $4.8pc in 2017-18.

Exporting larger volumes of rice, wheat and sugar stokes domestic inflation, sometimes making these items too expensive for the poorer sections of the population

What is more worrying is that food exports have oscillated between $3.7bn and $4.8bn during the past seven years. We never reached the magical mark of $5bn. In food exports, rice is the top earner. Rice export earnings reached the magical mark of $2bn back in 2011-12, but have remained close to that level since then. Something is wrong somewhere.

Taking food exports to $6bn and sustaining that level should not be as difficult as years of misaligned priorities and a lack of pragmatic thinking have made it. Similarly, boosting rice export earnings to $2.5bn-$3bn is not too difficult. All our federal and provincial governments need to do is establish a lasting working relationship and take some much-needed practical and inclusive measures. Both things are missing.

Under the PTI government, the working relationship between the federal and provincial governments has rather deteriorated. As a result, economic decision-making as a whole is suffering. Agriculture and food exports are no exception. Our resources-starved economy is passing through a crucial phase even otherwise. It would be too naïve to hope that things would improve dramatically in the near future.

But one must hope better sense would prevail, the government would align economic decision-making with ground realities and do whatever is needed to boost exports i.e. pushing up food exports would become a priority and measures to ensure sustainable growth in food exports would be initiated.

The first thing to boost food exports is ensuring that it is done while keeping the domestic food security in mind. The second thing is about expanding food export items and moving towards more value addition. The third thing is about increasing our outreach to global markets. With a population growth rate of about 2pc, our domestic food requirements are growing fast. Our inability to expand the cultivable landmass and a perennial shortage of water limit our capacity to grow rice.

That means we will have to increase the per-hectare yield of rice quickly if we want rice exports to grow every year at a decent rate. Besides, we also need to move speedily towards exportable branded rice and rice-based products. On both counts, improvements are taking place but at a snail’s pace.

One proof of this assessment is the fact that whenever we see rice export earnings growing, the rise is more because of an increase in export volumes and less because of a higher per-unit price. That will have to change. Back in 2011-12 when rice exports first hit the $2bn mark, the export volume totalled 3.63m tonnes.

Seven years later, we fetched the same amount after shipping abroad 4.1m tonnes of the commodity. The argument that a massive rupee depreciation during the last fiscal year squeezed dollar earnings cannot conceal our inefficiencies. Haven’t we witnessed this phenomenon of big volumes of shipment fetching high dollar earnings during the years when the rupee was stable?

Wheat and sugar exports also suffer because of this phenomenon, bringing to the fore the need for producing high-yielding food crops and value addition in raw food exports.

Earning more dollars by exporting larger volumes of rice, wheat and sugar also stokes domestic inflation, sometimes making these items too expensive for the poorer sections of the population. From the point of view of inflation management, there is a need to go for constant food export brandings and production of more value-added food products.

Despite the introduction of modern ways of vegetable and fruit farming in some parts of Punjab and in Sindh, their combined export earnings remain below $700m. We earned less than $700m in 2018-19 by exporting no less than 768,000 tonnes of fruits and about 1.03m tonnes of vegetables.

Exporting larger volumes can, of course, push export earnings to $1bn in a year or two, but that would make already pricy fruits and vegetables even pricier. Exporting value-added by-products of fruits and vegetables with higher per-unit prices and exporting more of them to the neighbouring countries and Central Asian states are important. That will cut the cost of trade and help us keep local prices from skyrocketing.

Our annual export earnings of seafood and meat also remain below $700m. And the same is true for them. Despite repeated claims, our exports to China are not growing and a strained relationship with India continues to mar the prospects of exporting more to that country.

Currently, exports of oilseeds, nuts and spices fetch less than $100m each every year. And, despite enough production (6.3m tonnes in 2018-19), exports of maize and maize-based products remain negligible. With some efforts, export earnings in these categories can be increased substantially. Whereas oilseeds and nuts are exported to many countries, main markets of spices are the United Arab Emirates, Saudi Arabia and the United Kingdom where millions of overseas Pakistanis live.

There is enough demand for Pakistani spices in Afghanistan. We export sizable volumes there during the years when Pak-Afghan relations are normal. Pakistan can increase its food exports, particularly those of livestock, meat, maize, nuts and spices, to the Central Asian states as well once the China-Pakistan Economic Corridor becomes fully operational, accelerating trading with these states.

Published in Dawn, The Business and Finance Weekly, July 29th, 2019