EXPORT OUTLOOK 2011

SEARCHING NEW DESTINATIONS AND VALUE ADDITIONS ARE IN THE AGENDA.

AMANULLAH BASHAR
(feedback@pgeconomist.com)
Nov 1 - 7, 20
10

Impressive demand growth of agriculture commodities especially Irri and other non-basmati rice particularly par boil which earned around $2.5 billion to the total exports of $19.3 billion in 2010 is well poised to pull up total exports to $22 billion at the end of the current fiscal 2010-2011.

The factors which encouraged for assumption of this export figure include rising demand of cement, agriculture commodities, and fuel oil in the neighboring Afghanistan on one hand while revival of gold jewelry demand in UAE countries, demand of automobile especially buses and tractors in African countries.

According to well placed sources in Trade Development Authority the forthcoming new rice plants of bar boil variety is sure to change the complexion of the exports in the coming years as efforts are being made for value addition with diversification in rice products.

The most disturbing factor in the export scenario is the current trend of shortage of energy and unabated rise in prices of electricity, gas and petroleum products which cause uncompetitive prices on one hand while hindering to export surplus.

It will be pertinent to mention here that the permission given to Pakistan's textile products in the Euro zone is of course an encouraging factor and has fulfilled a long-standing demand of the textile sector in Pakistan. Although the cotton crop is feared to face a shortfall of 2.5 million bales in the crop size due to flood devastations across the country, yet the exemption from duty on certain textile items and increasing global price trend would help to achieve the export target this year, said a leading exporter.

Meanwhile the exports posted a remarkable growth of 9.4 per cent during financial year 2010 in contrast to a 7.2 per cent fall observed last year. In absolute terms, exports touched the level of $19.3 billion surpassing the target of $18.9 billion set for the year.

The total exports indicates that exports were consistently moving upward but due to global economic recession compounded with domestic issues exports deteriorated in financial year 2009. However with the improvement in demand exports accelerated during the financial year 2010.

The trend in market diversification that was set out in financial year 2009 further gathered momentum in 2010.

As far as contribution in export growth is concerned, the exporters are now focusing more on Asian export destinations specially China, Russia, Sri Lanka, Iran, Turkey and even Central Asian countries which are likely emerge more conspicuous on the export scene in the coming years. However, the high export to china during 2010 could be a transient phenomenon as the growth was mainly driven by cotton related, low value added products which resulted from low cotton production in China. In case of United Kingdom exports of textile and apparel products increased reflecting the relative improvement in UK's textile demand. High exports of gold jewelry contributed to a rise of UAE's share in Pakistan's overall exports.

In the current financial year African countries are being considered as the potential big markets for products like cement, automobile and pharmaceutical products. The automobile industry is confronted with decline sales numbers. A senior official of a leading automobile manufacturing company told Page that their principals are considering using Pakistan as an export base for exporting vehicles to Bangladesh and African countries mainly to utilise the idle capacity of their plant.

CONTRIBUTION OF AGRICULTURE EXPORTS

In spite of weaker crop production export of agriculture commodities showed a healthy growth in 2010. Strong foreign demand and weaker harvests in other key producing countries supported the growth in exports of IRRI and other non-basmati rice.

The export of livestock is a positive sign to improve this sector, which would ultimately help improve the rural economy in Pakistan while for export of fruits and vegetables, spices and raw cotton the exporters have successfully tapped the new markets.

Among food group exports of rice increased on account of better growth in Irri and other rice varieties contrary to negative growth witnessed in basmati rice. It is interesting to note that the strong exports of rice group dominated the aggregate growth of agriculture exports.

Fruit exports exhibited impressive growth in quantity as well as in value terms, mainly due to strong demand and better production of citrus fruits and mango varieties. Despite slower growth of vegetable quantum exports, higher unit value helps a strong 57.3 per cent increase in value terms during 2010. Exports of raw cotton and yarn also surged in terms of quantum and value as higher international prices amid global supply concerns attracted domestic traders to export aggressively.

The export of meat and meat preparations increased to $100 million while exports of livestock products have doubled since 2008 which is a positive sign for the prospects of livestock growth, rural income as well as economy.

Investment in storage, packaging, and adoption of international standards could help increase exports of fish and fish products to EE, Japan and other countries.

Actually, growth in exports of agriculture commodities is a welcome development given attractive commodity prices. This would not only ease pressures on country's trade deficit, it would also help increase income of farmers also. It is pertinent to point out that substantial exportable surplus of agriculture commodities could be generated by reducing post harvest losses. This requires awareness amongst the farmers, training, investment in infrastructure and construction storage facilities and improvement of the transportation system.