FACTORS UNDERMINING MANGO EXPORTS
The search for finding new markets for mangoes continue
By Syed M. Aslam
July 22 - 28, 2002
Mango exporters are bracing themselves for losing the top foreign markets to competitors in the region as well as extremely low profit margins despite expectation of a substantial quantity-wise increase over the previous year. There is also fear that increased volume of mango export this year would not translate into improved foreign exchange earnings due primarily to shedding of value by dollar against the rupee.
Talking to PAGE, a Karachi-based fruits and vegetables exporter Mateen Siddiqui said that not only the prices of mango this year are on the high side but the freight has also registered a substantial increase. These two factors have pushed the export prices of the Pakistan's signature fruit in the international markets to a level which is uncompetitive against exports from all other rivals, most of whom are located in the region.
Mateen, who is also the chairman of Fruits & Vegetables Processors and Exporters Association, attributed the high mango prices to substantial increase in the prices of farm inputs — pesticides, insecticides, fertilizer and urea. In addition, he also said that increase in prices of such associated costs as petroleum, transportation and electricity have also contributed to increase in mango prices.
"But the high mango prices are just a part of the reasons rendering the export prices of Pakistani mangoes uncompetitive in the foreign markets — the primary beneficiaries of which would be India, Thailand, Indonesia, Thailand and Philippines. While the national flag carrier Pakistan International Airlines (PIA) is charging a comparatively less freight compared to foreign airlines, not only they are still too high but the air spaces are also limited. For instance, the PIA is charging Rs 72 per kilogram the foreign airlines are charging an airfreight of Rs 85 per kilogram. The uncompetitive prices, however, are feared to lose a portion of its most premium market UK to such competitors as rival India, Brazil and Mexico, Mateen added.
Asked if the absence of dedicated freighter service by the PIA this year and the increased freight charges by the national flag carrier and the foreign airlines would have a negative impact on mango exports, Mateen said "No." "In fact", he added, "it would help the exporters not to 'dump' the fruit in the premium-priced markets like the UK thus ensuring to fetch the premium price. However, it would result in reducing the mango exports by air between 20-25 per cent while boosting the exports through sea by around 25-30 per cent, which makes little difference as far as the shipment of the fruit is concerned."
Mateen said that water shortage has taken a heavy toll on mango crop this year, particularly in Sindh. "It rendered Sindri, a variety grown particularly in Sindh, unacceptable in the international markets as shortage of water did not let it grow to its regular shape and size. However, situation in Punjab, which produces 70 per cent of all the mango crop in the country, was not as bad and thus 'Chaunsa' crop has faced no problems as 'Sindhri'."
Mateen claimed that though the high mango prices and increased air freight have forced the exporters to increase the prices, the same would not translate into increased foreign exchange earnings for the country or even enhanced profits for the exporters. "For instance, last year the average price of our mangoes to the Far East was around $ 5.50 per 5 kilogram box. This year, we were forced to increase the price to $ 6.25 per 5 kilogram to the same market. However, this substantial increase of price by 75 cents, which is feared to render our fruit incompetitive in this particular market, today translates into Rs 370 compared to Rs 352 last season when dollar was strong. In addition, the dollar keeps on shedding its value against the rupee and if the situation persists it would mean further erosion of exports earnings and even more reduced margins for the exporters.
"Last year the mango prices were low, the air freight was comparatively cheaper and the dollar was strong trading at Rs 64. This season the exporters have to pay more for the fruit, the air freights have gone up while the dollar has shed a substantial portion of its value against the rupee. Though the exporters are forced to absorb the increased prices of the fruit and the air freight they are unable to revise their export prices upwards due primarily to fear of rendering their product absolutely incompetitive in the international markets for fear of losing. While they are paying increased prices and air freight they are earning less in terms of rupees."
However, the search for finding new markets for mangoes continue as Mateen told PAGE that he is flying to Ashkabad, Azerbaijan and Almati, Qazaqistan on a four-day visit to attend mango show and seminar. The visit of the four-member delegation is organized by the Export Promotion Bureau and is aimed at promoting mangoes in the two countries.