IMPROVING VALUE ADDITION IN AGRICULTURE

SHABBIR H. KAZMI
(feedback@pgeconomist.com)
Aug 1 - 7, 2011

Textile and clothing being exported from Pakistan mostly comprise of raw cotton, yarn of low counts, and unprocessed fabrics. Processing of cloth is still done at obsolete outdated plants resulting in poor quality of dying and printing and colors bleed in first/second wash.

In made ups, substandard accessories are used to keep the cost low and attempts are made to sell on price rater than on quality. Less attention is paid on the production of knitwear, usually fetching higher price. Knitting is done on secondhand machines because the government still charges high duty on looms, embroidery, knitting, and sewing machines.

Spinners and large textile plants have remained the biggest beneficiary of bank credit but also emerged the biggest defaulters. Spinners and weavers have failed in undertaking balancing, modernization and replacement (BMR) but preferred producing low counts of yarn and narrow-width cloth. Spindles still use low RPM motors giving lower production and poorer quality. Little attention was being paid on production of dyed-cones, though the technology was introduced in the country two decades ago. Ginning factories still use obsolete technology that damage fiber that does not allow production of medium and fine quality yarn.

Rice contributes a substantial amount in overall export earnings but falls far short of the potential. A lot of rice is broken during processing and polishing.

Broken rice fetches lower price in the domestic as well as international markets. Basmati is the premium quality rice but little effort is made to enhance its production. It is often sold in the global markets as an Indian produce.

Bulk of the rice is exported in jute bags stales while being exported by ship. Lack of effective fumigation also accelerates deterioration process. Little attention is being paid on marketing 'branded' rice but those entrepreneurs who have taken the pain to sell branded rice in the global markets are earning substantial premium.

There is only one company operating in the country producing 'liquid sugar' from the broken rice.

Sugarcane at the best is used for producing refined sugar. In KP and even Punjab a lot of sugarcane is used for producing 'gur' despite the official ban on production of gur. Bulk of the molasses in exported despite country having huge distilleries.

Experts say over 150 products, including bio-fuel and plastic granules can be produced from molasses. Baggase is mostly burnt for producing steam used in the processing and running of turbines installed in the powerhouses. A significant quantity of baggase is also used in brick kilns. Only a small quantity is used for producing fibre board.

Time has come to give sugar mills status of independent power producers (IPPs) as they are capable of generating/dispatching up to 3,000MW electricity at present. New capacities can be added by offering them the bulk power purchase tariff being offered to IPPs.

Ironically, some of the groups are resisting offering sugar mills the status of IPPs and paying them the tariff equivalent to the IPPs because sugar mills will use baggase which has hardly any cost. They forget that it is called 'comparative advantage' and any one can take the advantage by entering into a long-term baggase purchase agreement with any of the sugar mill.

If rental power plants can be offered over 20 cents per unit of electricity, why there is a resistance to paying 10 cents per unit to the sugar mills.

Pakistan produces different oilseeds that include cotton, corn, canola, and sunflower but the country still imports edible oil worth US$2 billion annually. Maize plant is most suitable green fodder for the mammals and provides corn oil and flour for human consumption.

Little attention is paid on livestock in Pakistan, providing a supplementary income to the farmers. Enhancing livestock population will increase number of animals giving milk (buffalos, cows, sheep and goats) more animals for slaughtering to meet protein requirement of people at large, more skins for tanning and more leather to produce shoes, leather garments and other leather products.

A large percentage of fruits and vegetables produced in the country is wasted because of poor farm to market roads.

The country also suffers from very limited fruit processing facilities. Adding facilities to preserve kinnow juice, mango pulp (two of unique varieties produced in the country can help in earning huge foreign exchange.

A little focus of production of dates, their processing, and packing can also help in earning huge foreign exchange. India is the biggest buyer of Pakistani dry dates. However, its massive smuggling deprives the country from foreign exchange. Bulk of dry dates enters India via Wagah border and containing smuggling should be very easy, only if there is a will. This smuggling has been going on for decades right under the nose of border forces responsible for curbing such movement.

Efforts of the producers of squashes, jams, jellies, packed spices and recipes must be appreciated. Some of the brands have earned reputation but still need support of the government in finding new markets and meeting the stringent food standards followed by many importing countries. Packing to milk in tetra packs has helped in extending 'shelf life' of the milk.

Reference to presence of a certain toxin in chilies produced in Pakistan is necessary. While some of the 'short-term gainers' pay less attention to this but testing at the port of entry often creates embarrassment for the country. While the best efforts are made to stop use of chilies containing, testing each and every packet is not possible physically.

Though it does not pertain to value addition, yet it is extremely necessary to preserve the quality of wheat. The country lacks modern storage silos. Storing wheat in open and unsuitable warehouses results in huge wastage and renders wheat suitable for human consumption. Saving wheat from going stale and its export can help the country earn huge foreign exchange.