ISLAMABAD, Nov 16: The Competitiveness Support Fund (CSF) has decided to develop an effective food processing industry in Pakistan by proposing viable recommendations aimed at removing critical bottlenecks and obstacles hence making the sector internally and internationally competitive.

CSF, which is a joint initiative of the ministry of finance and the United States Agency for International Development (USAID), will launch a study to give clear policy recommendations to the Pakistan government on how industry should be structured and how competition can be fostered.

Given its geographic location and natural endowment, the fund officials believed that there were good reasons that Pakistan should develop a competitive food processing industry.

Pakistan is ideally located for trade with the Middle-East, China and India. To capitalise on these advantages, the country must focus on the twin aspects of competition and technical innovation, or at least the ability to catch up with and adopt advanced food processing technology, and development of market conditions that encourage investment, both domestic and foreign.

A policy analysis on competitive aspects of the food processing sector in Pakistan will be carried out.

The CSF will work on the study with all the keys stakeholders dealing with the sector, including the government agencies, private sector representatives and the educational and research institutions in Pakistan.

The CSF, which is based on international best practices (prevailing in India, Thailand, Turkey, Ireland, Finland etc) and has been tailored to the current Pakistani economic environment to strengthen and make the private sector more competitive and to improve the policy framework needed for innovation-based competitiveness.

Pakistan is primarily an agricultural country with a high proportion of its population living in rural areas. Agriculture and fisheries provide the raw material for an extensively developed food processing industry that accounts for between 25 and 30 per cent of the GDP.

With a host of sub-sectors it is the largest industry in Pakistan, and it continues to grow as the use of processed food becomes popular, particularly in the cities. The list of sub-sectors includes beverages, dairy, fruits and vegetables, snack foods and cereal-based foods (wheat and rice), meat, confectionery and vegetable oil (including vegetable ghee).

In this respect, the success of the Pakistani food industry, the CSF argues, depends on wider aspects of the economy and of governance.

The food processing sector depends on a highly vertical integrated structure. The study of the competitive advantage of the food processing sector will take into account the entire industry structure and the value chain, including the supply of raw material, its intermediate processing, the core industry itself and the market environment, both domestic and external, along with other essential inputs.

It will also examine the structure of key sub-sectors, including a value-chain analysis of primary post-harvest processing through secondary to tertiary processing, comparative costs of production within the value chain, import parity pricing and technical and innovation aspects of individual sub-sectors, including factors affecting adoption of technology.

A fundamental aspect of this approach is to understand the basic advantage (or disadvantage) with which the specific industry is endowed.

On the marketing side, the study will look into packaging, eco-labelling, design, distribution and market access.