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1- IRAN-PAK REFINERY
2- FREIGHT SUBSIDY ON PERISHABLE ITEMS
3- IMF REVIEW MISSION IN ISLAMABAD
4- TERADATA SEMINAR
5-
ISLAMIC VS TRADITIONAL BANKING

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FREIGHT SUBSIDY ON PERISHABLE ITEMS

 

Vital for promotion of farm products and their exports

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By AMANULLAH BASHAR
Sep 15 - 21, 2003
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Despite having a strong agricultural base, Pakistan still needs consolidation of its resources in this key sector to translate its real potential in the economy.

The present government has taken care of the agriculture sector including improvement in irrigation network, incentives to the growers especially the major crops like cotton, wheat, rice and sugarcane.

Although the export of cotton and cotton products, rice, wheat and some fruits and vegetable are contributing significantly to the economy, yet there is still room for improvement especially on the export side.

Pakistan is a leading producer of quality mangoes, citrus fruits especially kino, grapes and has already carved a respectable place in the world market. This sector was confronted by various irritants especially the heavy freight charges which did not allow this sector to achieve the desired level of exports.

Pakistani fruits and vegetables despite having demand in the world market could not achieve sustainable growth in exports due to heavy freight charges leaving them uncompetitive in the export market.

Recently, over 100,000 tons of potatoes were perished in the store as the exporters were denied freight subsidy on this perishable item. According to reports these potatoes were stored in Karachi, Lahore, Multan, Okara, Gujranwala, Hyderabad and Sukkur by the exporters in anticipation of getting freight subsidy on their exports. However, since the exporters failed to get freight subsidy these potatoes were reportedly rotted in the stores.

The growers had stored these potatoes in the hope that they will sell them to exporters when they get freight subsidy on their exports.

However, their hopes were perished along with the stored potatoes. The grower might not get the actual price in the local market due to decayed quality of the potatoes.

During the current season, over 650,000 potatoes were produced which were not only enough to meet the local demand but could spare a sizeable export surplus. In view of the export surplus, the growers as well as the Fruit and Vegetable Processors and Exporters Association has demanded to the Ministry of Commerce and Export Promotion for freight subsidy on the export of potatoes so that could be able to compete in the international market. Although the request for freight subsidy was made some three months ago yet no heed was paid to their demand. Although the Export Promotion Bureau had moved the proposal for freight subsidy to the Ministry of Commerce, however, the request was simply turned down by the Ministry of Commerce.

According to Mateen Siddiqui, President of Fruit and Vegetable Processors and Exporters Association, India, Netherlands and Turkey are the major exporters of potatoes and have captured the world market due to extremely low prices. In the face of tough competition, Pakistan despite having an edge in terms of quality of the produce was unable to compete with these countries due to freight cost. Due heavy freight charges, the price of Pakistani potatoes comes to around $106 per ton in Colombo as compared to 95 dollars offered by Indian exporters. Pakistan had exported 125,000 tons of potatoes to Sri Lanka, Dubai, Jordan, Muscat, Singapore and Malaysia.

 

 

The loss suffered by the growers this year could have been avoided had the government allowed freight subsidy on their exports which in turn could have contributed significantly.

It may be mentioned here that Pakistan is a major producer of world class mangoes and citrus fruits, but could export only 10 per cent of total production mainly due to heavy freight charges.

Although the government has allowed 25 per cent freight subsidy on the fruits and vegetable exports to the new markets only while the subsidy is not allowed on the traditional or existing international markets. As far as the production of mango was concern, Pakistan produces over one million tons of different varieties. These mangoes have a great market all over the world, yet the exporters could hardly sell some ten per cent of the total produce due to high cost of freight charges.

It is for the first time that the country has achieved the export target which had become a psychological barrier for over 55 years. The trade and industry feels that the country had a great potential to excel in the export market provided they were supported by the government on the genuine grounds.

The available export surplus provided by the agriculture sector deserves timely support of the government policies and decision so that whenever the agriculture sector produces some export surplus in small areas they should be given instant support so that the all export resources could be consolidated in the larger national interest.

Pakistan, being an agricultural country and at the cross roads of India, Central Asia, and Middle East and located in the center of regional markets of great importance. But the potential of country in this field has largely remained untapped so far. We have to remove all bottlenecks of the system so that best results could be achieved for the betterment of the economy as well as the growers who are the backbone of the economy.