FOOD EXPORTS: OVERLOOKING PUBLIC INTEREST

KANWAL SALEEM
(feedback@pgeconomist.com)

Feb 13 - 19, 20
12

In order to bring down prices in the country, there is a demand from within the country from some circles, Pakistan should impose a ban on export of all basic food items including wheat, rice, sugar, poultry, meat, fish and all vegetable and fruits with a clear warning to all belonging to the production and manufacturing sectors that the ban will remain until the food prices of all these items are brought at a level where the average Pakistani can easily feed a minimum family of five.

As soon as the ban comes into place we will see an immediate reduction in the prices of all consumer based products, they believe.

Local demand for all the basic food items has dropped due to exorbitant prices in the market along with the reduction in the purchasing power of public.

Prices of essential food items fly out of the reach of common peons. Last year, Pakistan exported 153,543 live animals, which are 15 per cent more than the previous year.

Agriculture experts told PAGE that agriculture sector has the great potential to attain high value targets, but the government is not giving due attention to agriculture sector.

"Development of the sector would help enhance competitiveness of our export products and ensure a better return; it would also decrease dependence on imports thereby narrowing the trade gap," they said.

According to them, Pakistan's economy is totally dependant on the sector, but it faces many challenges including low productivity of different crops, traditional means of farming, outdated marketing practices, insufficient agriculture credit, and lack of research.

The demand for Pakistani fruit and vegetables is high across the world. Presently, the country is exporting fruits and vegetables to US, Europe, Middle East, Far East, India, and Sri Lanka. Mango, kinow, apple, dates, oranges, banana and guava are few well exported fruits and among vegetables potato, onion, mushroom, garlic and chillies are major export items.

Dubai is the biggest market for Pakistani mango following England and Saudi Arabia. Sri Lanka is the only market for Pakistani fresh apple as over 90 per cent of the fruit is being exported to Sri Lanka. There is a need to explore new markets for Pakistani fruits and vegetables to expand export base, analysts believe.

Pakistan exported wheat worth Rs56 billion in 2011 to Bangladesh, Dubai, Iran and Afghanistan.

According to official sources, the government permitted Pakistani traders to export two million tons of wheat, adding that Pakistani wheat was exported at $330-$335 per ton. The commodity at present is being traded at $250-258 per ton or Rs928 per 40 kg.

Further, wheat export for Pakistan would only be possible if price in the global market touches $300-350 per ton or Rs1260 per 40 kg.

In 2010-11, the country produced over 25 million tons wheat, 24 million tons in 2009-10 and about nearly 23 million tons in 2008-09, while it is expecting 25 million tons in 2011-12.

Out of expected 25 million tons wheat, Punjab will produce 19 million tons, KP 1.5 million tons, Balochistan 0.8 million tons and Sindh will come up with 3.8 million tons.

The country still has 4.7 million tons carry forward surplus wheat stocks, of which 0.5 million tons are being consumed domestically per month and till February and March, surplus stocks will be 1.7 million tons, which can be replaced with new crop and exported at suitable time as international wheat prices have declined over the past few months.

According to officials of Punjab crop reporting centre, per acre yield in the province reached 30.85 maunds in 2011 while last year it produced 19,041,000 (19.041 million) tons from an area of 16534000 acres, which was 0.5 million acres less than 2010.

While the country is going through its biggest financial crises led by cost-push inflation, our business indices reflect that the country is doing better than last years in all its sectors.

The Basmati Growers Association (BGA) has warned of a declining trend in output of extra long grain and aromatic basmati rice if quarters concerned fail to take drastic measures for introduction of high yielding varieties, minimizing post-harvest losses, focusing on value-addition as well as removing hurdles in its trademark registration.

At present production level, basmati export potential stands at $4 billion while we hardly touch $1 billion mark, said BGA President Hamid Malhi.

Instead of increasing output of basmati rice, Malhi said, its production has seen stagnation for the last several years due to multiple factors and it is feared that it would start reducing gradually if corrective measures are not taken. He added that stagnant prices since 2008 have also resulted in low interest of farmers in its cultivation. He expressed fear that downward trend is also feared in 2012-13.

According to him, basmati rice is part and parcel of our heritage and has a potential to become a high value asset for the national economy. However, we did nothing for adding value to this produce with a view to harnessing its optimal utilization.

Being the third biggest rice exporter, we in fact are underutilizing our overall basmati rice sector as production ranges between 2-2.6 million tons and we export around one million tons. In comparison, there has been considerable increase in India's production and export lately.

Talking about export of rice, he termed bulk sales as one of the biggest hurdles in augmenting export volume, saying that retail marketing should be given priority by giving incentives for developing brands of basmati.

He said registration of Geographical Indication of Basmati should also be pushed besides its trademark registration. He said Pakistan should enhance trade ties with India but basmati exports should not be allowed, as it would be against the interest of Pakistan. We would indirectly contribute in basmati exports of India, as it would be re-exported at much higher rates, he warned.

He stressed the need of adding value to basmati crop by focusing on by-products of rice. He said huge revenue could be generated from rice husk, tips, and powder.

Talking about high cost of inputs, Malhi said urea prices climbed from Rs850 to Rs2,000 in just about two years while diesel price climbed to over Rs100 from Rs60 per liter in three years. Imposition of general sales tax on inputs and high tariff of electricity have virtually made paddy cultivation infeasible for farmers. Other production threats include minimum high-yielding non-basmati varieties and imported hybrids seed that could be disease carriers.

Undoubtedly, Pakistan possesses huge potential in agriculture sector, what we need is good intention and friendly policies of the government, which must protect the interests of local consumers as well as producers. Export of food items is essential to fetch precious forex but efforts also need to be made to create a balance in the interest of public as well as the country.