Pakistan has witnessed improvement in exporting food products during the last seven months of the current fiscal year 2018. It has exported food products worth $2.395 million in just 7 months which was up by 18.8 percent as compared to corresponding period in the last fiscal year. Last year during the same period Pakistan’s food exports were standing at $2.016 billion.
Food exports are increasing faster this fiscal year, but the quality of exports is not up to the mark to have the immediate impact on high food trade deficit. Food exports data published by the Pakistan Bureau of Statistics (PBS) every month does not give a real proof about the pace of growth in value-added food products.
The export of rice from the country surged by 22.14 percent during first eight months (July-February) of the current fiscal year as compared to same period of last year. According to details, the rice export jumped to $1.262 billion in July-February (2017-18) as against the export worth $1.003 billion in the same period of the preceding year. In terms of quantity, the rice export increased to 2.67 million metric ton from 2.334 million MT in July-February (2016-17), showing an increase of 11.48 percent, according to the latest data released by Pakistan Bureau of Statistics (PBS). On yearly basis, the rice export also increased by 24.24 percent as it rose to $194.342 million in February 2018 from $156.43 million in the same month of the year 2017.
On a month-on-month basis, the exports, however, witnessed a decrease of 10.8 percent as the exports during January 2018 were recorded at $217.9 million. The overall food group export also witnessed an increase of 21.7 percent during July-February (2017-18) as compared to same period of last year.
During the period under review, the food exports jumped to $2.84 billion as compared to the exports of $2.334 billion in the same period of last year. According to the data published by Pakistan Bureau of Statistics PBS, around 2,292,348 metric ton of rice was exported from Pakistan to various countries.
Rice exports were accounted for $1.061 billion as compared to corresponding period last year having exports of 2,048,037 metric ton valued at $876.75 million. Rice export alone increased by 21.7 percent during the period under review. Basmati rice exports also increased by 6.83 percent during the last 7 months as compared to the period last year.
Pakistan has the opportunity to increase the rice exports further because of the ban on Indian Basmati Rice in European countries. However, the recent data on rice exports doesn’t reflect the market which Pakistan can seize; EU put a ban on Indian rice due to inferior quality and high presence of tricyclazole last year. If Pakistan is able to conquer this market gap, the rice exports can be increased to an unprecedented level.
Pakistan’s food commodities imports are also on the rise, the food imports in the country grew by 9.77 percent reaching $3.77 billion as compared to the $3.44 billion same period last year. The food imports decreased by 7.21 percent and stood at $535.34 million in January 2018 as compared to $576.88 million in the month of January last year.
Pakistan and Saudi Arabia agreed to set up a working group to promote food exports and training centre to meet job market needs in the Arab country. The decisions were taken in a high-level 11th Pak-Saudi joint-ministerial commission. The decisions, taken during the meeting, include establishment of a working group for export of halal food from Pakistan to Saudi Arabia.
Finally, Pakistan’s food exports, after recording a tremendous 28 percent increase in terms of dollar earnings during nine months of this fiscal year, are set to grow further in the next year.
Encouragement announced in the federal budget and increased cooperation of Chinese companies in the modernization of agriculture and production of value-added food products should give food exports a real breakthrough. A Chinese working group may visit Pakistan in mid-August to evaluate the work done under the Pak-China joint working group on agriculture for development of seed sector, drip irrigation, horticulture and meat industry.
There will be accelerating activity in each of these areas, higher engagement of Chinese companies in agriculture and foreign direct investment in this sector.
According to the Pakistan Bureau of Statistics (PBS), in nine months of fiscal year 2018, food exports grew 28 percent to $3.43billionn from $2.68billion a year ago. Rice, wheat and sugar were the three main export sectors responsible for the volumetric increase of $750 million during this period.
Vegetables’ exports showed a huge 53 percent growth in earnings; fruits’ exports grew a modest 4 percent in value terms.
In the next fiscal year’s budget, the outgoing government has proposed setting up an agriculture research support fund and an agriculture technology fund, each with an initial allocation of Rs5 billion. Budgetary encouragement such as import duty cuts on agriculture machinery and a reduced uniform GST on fertilizer, as well as an allocation of Rs5billion to set up an agriculture research support fund and agriculture technology fund can create larger food export surplus.
Fund will be used for providing financial grants for promotion of research on high-yielding seed varieties of crops and for development of modern dairy plants. The other fund will be utilized for subsidizing acquisition of modern technologies in all sub-sectors of agriculture.
The above measures and some others including cut in import duty on agriculture machinery and application of a reduced uniform general sales tax on fertilizer will possibly help in creation of a larger exportable surplus of grains. Reduced tariff on agriculture tube-wells, freight subsidy on fruits’ exports, and removal of an existing 10 percent duty on the sales tax on fish feed, and some concessions accorded to the livestock sector will boost exports food export.
The livestock concessions include withdrawal of 3 percent customs duty on imports of bulls meant for breeding purposes. Dairy Association and exemption from sales tax currently charged on animal feed of dairy farms. Exports of meat and meat preparations that have so far remained declining, as well as exports of all dairy products will start growing from next fiscal year on the back of this incentive package.
Planned increase in agricultural lending for the next fiscal year, and the stress on promotion of the small and medium sector will be helpful in boosting food exports. The duty and taxes refunds regime of exports of cooking oil and ghee was in the past limited to Afghanistan some time ago, the situation was different.
Now the increase in the cost of production in the UAE, Pakistani brands of cooking oil and ghee have become quite competitive there. By allowing exporters of cooking oil and ghee to GCC and to African countries where demand is rising there can be more competition now as UAE-based food manufacturing has become expensive
Bolstering food exports’ growth of this fiscal year in the future requires taking several aggressive measures, and keeping an eye on the changing export. There is definitely a need to promote exports of fish and fish preparation, fruits and vegetables, meat and meat preparations, spices and oilseeds, and nuts and kernels.
These are the categories wherein volumetric increase in export earnings remains far below than that of rice.
The government, with input from stakeholders will soon announce an export incentive package. This will include measures to push food exports.