Monthly Archives: December 2016

Rice imports still under study after typhoons

THE GOVERNMENT is waiting to assess the impact of three typhoons on major rice-producing provinces in the fourth quarter before deciding whether it will resort to rice imports next year, the National Food Authority (NFA) said.
The NFA said it has a pending proposal for another 250,000 metric tons of government-to-government rice imports in the first quarter of 2017, which remains subject to approval.

“The NFA’s recommendation for rice importation is still for evaluation of the NFA Council,” said Marietta J. Ablaza, spokesperson for the state-run agency, in a phone interview last week.

Among the factors being evaluated were the impact on production of typhoons Karen and Lawin, which hit the country in October, and typhoon Nina this week.

The importation deal, should it push through, will be slated under a government-to-government procurement scheme.

Typhoons Karen and Lawin caused estimated losses of 516,133 MT of palay, or unmilled rice, valued at P11.03 billion, according to the Department of Agriculture’s Nov. 4 damage report.

The Philippine Statistics Authority reported that palay output may come in at 17.91 million MT for 2016, lower than the 2015 total of 18.15 million MT, after a prolonged dry spell reduced the area harvested this year.

In a statement released over the weekend, the NFA, however, assured that rice stocks are sufficient in typhoon Nina-affected areas with the agency’s release of more than 10,000 50-kilo bags for distribution to typhoon victims.

The National Economic and Development Authority’s (NEDA) director for agriculture, natural resources and environment, Mercedita A. Sombilla, who chairs the NFA Council, said that the domestic supply and demand situation of rice will still have to be assessed some time in January.

Even in light of the recent typhoon, Ms. Sombilla said that the government sees no urgent need for the Philippines, one of the world’s top rice importers, to open up orders for imports.

“We are still assessing damage to agri. I would think (it is) not necessary since all rice planted are supposed to be harvested now,” Ms. Sombilla, also a NEDA Assistant Secretary, said in a text message on Tuesday.

On Monday, the typhoon cut through southern Luzon and the eastern Visayas, according to the Philippine Atmospheric, Geophysical and Astronomical Services Administration, the weather bureau also known as PAGASA.

The country has 250,000 metric tons remaining from a standby authority to import 500,000 MT approved by the previous government.

As of Nov. 1, rice stocks stood at 3.30 million MT, sufficient for 97 days of consumption.

The initial 250,000 MT standby authority was awarded to the world’s top rice exporters on Aug. 31 — with Thailand and Vietnam winning 100,000 MT and 150,000 MT, respectively, under the government-to-government import scheme.

In addition, the NFA in September opened up to private traders the importation of an additional 805,200 metric tons of rice under the minimum access volume (MAV) scheme.

The MAV rice importation program allows private traders to apply for the delivery of 293,100 MT each from Thailand and Vietnam.

Under the omnibus origin scheme, importers can also buy up to 50,000 MT each from China, top suppliers India and Pakistan, up to 15,000 MT from Australia, up to 4,000 MT from El Salvador, and 50,000 MT from any other country.

In its list of applicants posted Dec. 21 on its Web site, the NFA has so far authorized shipments totaling 641,080 tons from Thailand, Vietnam, Pakistan, and India.

All rice under the MAV importation scheme is expected to arrive in the country not later than Feb. 28 next year and is subject to a 35% tariff.

Pakistan to spend Rs26 billion to promote exports

Pakistan plans to spend Rs26 billion to boost its export competitiveness in the next three fiscals to stem the slide in its product sales abroad.

The government had decided to take up the matter as part of the Strategic Trade Policy Framework 2015-18, which was sponsored by the Ministry of Commerce and approved by the Cabinet headed by Prime Minister Nawaz Sharif three months ago. But instead of moving on a fast track basis, action to implement it has been tardy for no apparent reason.

The decision of the Pakistan government, though late, follows constant protests by the industry and exporters seeking help as business has been declining rapidly. Billions of dollars of potential earnings were lost.

“Exports were down from $25 billion in fy-13 to $19 billion in fy-16,” said the State Bank of Pakistan (SBP), the central bank.

Commerce Minister Khurrum Dastgir said: “Exports were down because the output of various key items was hit due to power and natural gas shortages. But the major external cause was the international oil and commodity price crash which reduced foreign demand for Pakistani products. These include export of textiles.”

The textile industry alone earns 60 per cent of forex for Pakistan.

Dastgir, who has faced the brunt of the industry and exporters, said: “In the wake of international changes, several other initiatives are also being implemented to enhance exports and Pakistan’s share in the global market.”

The sales tax paid by manufacturers on the purchase of inputs for their products will be refunded to industrialists in the case of five products. These products are: textiles, leather and leather products, carpets, surgical instruments and sports goods. These five are the main products in Pakistan’s export list.

Four categories of export items – fine grade basmati fragrant rice, horticultural products, halal meat and meat products and jewellery – will be highlighted for exports, especially to Iran, Afghanistan, China and the European Union (EU).

The government will also spend an additional Rs6 billion to help exporters, as provided under the Textile Policy 2014.

The government said that in order to help increase the industrial output, especially textile output, uninterrupted power supply has been assured since October 2015. Uninterrupted natural gas supply has been assured to the industry since March 2016 this year.

As part of the plan to reduce the cost of doing business and bring down the cost of production, the electricity tariff has been slashed by Rs3 per unit for industries. Additional charges on fuel consumption have been shifted from the industries to consumers.

The National Tariff Commission Act has been revamped to stop smuggling in foreign textiles. Cheaper Indian and Chinese textiles as well as those from South Asian countries are the main source of this smuggling into Pakistan.

The Pakistan government has also upgraded its trade promotion organisations such as the Trade Development Authority of Pakistan. The Pakistan Horticulture Development and Export Company is also being revitalised.

The volume and cost of export finance, the key element in funding this business, has been improved to make Pakistani exports competitive in the global market. The State Bank of Pakistan has reduced the discount rate to 5.75 per cent – the lowest in 42 years. The bank has introduced a special low rate export finance facility of three per cent to lower the export price of Pakistani products.

These new concessions will help boost exports. The cheaper prices of all Pakistani products, ranging from fashion and textiles to fresh fruits and vegetables, will be welcomed by consumers, including those living in the UAE, Saudi Arabia, the Middle East and the EU.

Rice exports drop

Until mid-December this fiscal year, nearly 600,000 tonnes of rice have been exported, about 110,000 tonnes down on last year, according to the Ministry of Commerce.

From April 1 to December 16, the country exported around 590,000 tonnes of rice compared with more than 700,000 tonnes last year.

Myanmar exports rice mainly to China through Muse but also to more than 30 other countries by sea.

This year’s rice exports have fallen as the Chinese authorities imposed tighter controls at Muse and fighting took place between the Tatmadaw and ethnic rebels near Muse in late November.

Muse saw exports worth more than US$2.2 billion and more than US$1.1 billion of imports.

The border trade saw a drop of over US$238 million in exports and more than US$6 million in imports year on year, according to the ministry.

The Myanmar Rice Federation says a greater proportion of rice is now being exported by sea with about 60,000 tonnes sailing to African markets a month.

It is currently the rice harvest.

Two major Asian rice markets seen quiet

Rice export prices in Vietnam widened this week while prices in Thailand were flat in a quiet market ahead of Christmas and New Year holidays, traders said on Wednesday. The prices of Vietnam’s 5-percent broken rice widened to $335-$350 a tonne, FOB basis from $338-$340 a week earlier.

“The market is quiet and we have not seen any moves from Philippine firms, which have been given quota to import rice,” said an exporter based in Ho Chi Minh city. The Philippines’ state grains agency approved permits for local rice traders to import 294,020 tonnes of the staple from Vietnam and 347,060 tonnes from Thailand, Pakistan and India.

“There are no buyers due to New Year holidays,” said another trader. Vietnam’s rice exports are forecast to rebound to 7.1 million tonnes in 2017, after sales were seen dropping 22.6 percent from the previous year to 6.5 million tonnes this year, the UN Food and Agriculture Organization said in its December report. The Thai market was also lacklustre with the benchmark 5-percent broken rice quoted at $360 a tonne on Wednesday, FOB basis, compared with $355-$360 last week.

“There won’t be orders around this time until after the new year,” a trader in Bangkok told Reuters. Thailand has exported 9.3 million tonnes of rice, worth ($4.06 million), so far this year, mostly to China and countries in Africa, the country’s commerce ministry said on Monday. Commerce Minister Apiradee Tantraporn had said earlier this month that rice exports would reach 10.5 million tonnes this year.

Meanwhile, rice prices in India, the world’s biggest rice exporter, edged down due to rising supplies in physical markets from the summer sown crop, while an uptick in export demand put a floor under prices. Prices of India’s 5 percent broken parboiled rice dropped $1 per tonne this week to $343 to $347 per tonne.

“In eastern India, supplies have risen significantly over the last few days,” said an exporter based at Kakinada in the southern Indian state of Andhra Pradesh. “Exports demand has also improved a bit but still it is lower than normal,” he said, adding that it might soften again due to Christmas holidays.

Trading in farm commodities such as cotton, rice and soybeans have been disrupted in the last few weeks after Prime Minister Narendra Modi last month scrapped 500 rupee and 1,000 rupee notes to crack down on corruption. India’s summer-sown rice output is seen at a record 93.88 million tonnes in the crop year to June 2017, 2.81 percent higher than last year, as plentiful monsoon rains help boost yields after back-to-back drought years, the farm ministry said. India exported 10.34 million tonnes of rice in October 2015 to September 2016, according to data compiled by the farm ministry.

Pak can earn huge foreign exchange in furniture export

Federation of Pakistan Chamber of Commerce and Industry (FPCCI) Regional Chairman and Vice President Mian Rehman Aziz Chan on Friday said local furniture sector attached great importance to the national economy and could make a substantial contribution of billions of dollars export annually if the government properly patronizes it on priority for boosting export of Pak-handmade furniture.
Talking to a delegation of Pakistan Furniture Council (PFC) headed by its Chief Executive Mian Kashif Ashfaq here, Mian Rehman Aziz Chan appreciated the PFC for holding successful series of Interiors Pakistan exhibitions in Karachi, Islamabad and Lahore.
He urged the government to establish greater liaison with this sector to fully understand the market conditions and requirements of the industry needs to protect, develop and promote.
He said the government should also provide more visible support to furniture business in terms of simple and easily obtainable grants for exhibiting and travelling to trade shows and promoting Pak export as a success globally.
He said currently, the textile sector was the country’s largest industry in terms of exports, exporting $14 billion worth of goods annually.
The second largest segment is rice, which generates $2 billion through exports, but Pakistan’s furniture exports stand at a meager $51 million.
He said if the government extends its support to furniture companies, the volume of export could touch the figure of $ 5 billions for the next five years.
He suggested that a programme for developing and promoting the furniture sector both in rural and urban areas could be feasible, and also stressed upon urgent need for implementing modern techniques which not only enhance productivity, develop skills of labourers and meet requirements of local and global markets.
PFC Chief Executive Mian Kashif Ashfaq, on this occasion, apprising him of successful exhibitions of Interiors Pakistan said more than 100 leading companies and interior designers displayed their products in 6th mega exhibition held at Expo Centre here recently while as many as 250,000 people visited the exhibition. He said the Pakistan furniture industry had a great potential in future and he predicted that the increased exposure through Interiors Pakistan would highlight the skill and talent in the country.

Pakistan and Malaysia to boost trade by reducing tariffs

Pakistan’s High Commissioner to Malaysia Syed Hassan Raza has said that Pakistan and Malaysia were negotiating to further reduce duties on existing tariff lines under Free Trade Agreement (FTA) to facilitate businesses in both countries.

According to a press statement, Raza was addressing a seminar held in Kuala Lumpur on “Doing Business with Pakistan”, jointly organised by Malaysia External Trade Development Corporation (MATRADE) and High Commission of Pakistan in Malaysia. Over 200 Malaysian companies and Pakistani businessmen attended the seminar.

Raza highlighted the investment opportunities and trade potential in Pakistan and informed the participants that there were numerous opportunities for companies in both countries due to the FTA signed in 2008.

He added that the Malaysian exports to Pakistan included palm oil, fibre board, rubber, electrical and electronic equipment while Pakistani exports to Malaysia included rice, maize, cotton, textile and vegetables. He added that diversification of products was the key to boost trade between the two countries.

Regarding investment opportunities, he mentioned that the present investment regime was the most liberal in the region. He added that foreign equity could be owned fully by foreign investors as almost all sectors were open for investment.

He said special incentives were available for automotive industry investors under the new Auto Policy 2016-21. He emphasised that Pakistan was stable and peaceful and foreign investors were welcome to visit any part of the country.

He also underlined the importance of promoting tourism between the two countries and informed participants about the various scenic locations. He apprised people of the numerous low-cost shopping opportunities in Pakistan that offered textile and other consumer goods.

The high commissioner also highlighted the recent economic cooperation between China and Pakistan which had resulted in the China-Pakistan Economic Corridor (CPEC) project.

Raza said that CPEC was a game changer for the entirety of South and Central Asia in terms of connectivity, access, reduction of distance and time for traffic. He added that the project would enhance development prospects of the region and provide investment and trade opportunities for all.

Earlier, MATRADE CEO Dato Dzulkifli Mahmud highlighted the role of MATRADE in promotion of bilateral investment and trade between Malaysia and Pakistan. Mahmud highlighted the advantages of doing business with Pakistani companies and said that both the countries had Malaysia-Pakistan Closer Economic Partnership Agreement (MDCEPA) since 2007, which became operational in 2008.

Mahmud said that ten Malaysian companies were working in Pakistan in different sectors. He urged the Malaysian service sector to explore opportunities in Pakistan.

Meanwhile, in a panel discussion during the seminar, the panellists highlighted the working environment in Pakistan and explained the ease of doing business. They projected that the recent economic indicators of Pakistan reflected that the country was on the path to development and the future of new investors was promising in terms of security and returns on investment.

Experts express worry over ‘plastic rice’ imported into Nigeria


Agro-business experts have expressed worries over the seizure of 102 bags of plastic rice by officials of the Nigerian Customs on Monday.
In separate interviews with PREMIUM TIMES, the experts enjoined the government to ensure that security is beefed up in the nation’s borders and perpetrators of the criminal acts are prosecuted.
The News Agency of Nigeria reports that officers of the Nigerian Customs Service (NCS), Federal Operations Unit, Ikeja, on Tuesday seized 102 bags of plastic rice branded “Beat Tomato Rice’’ with no date of manufacture.
A Customs Area Comptroller, Mohammed Haruna, said the commodity was stored for distribution as Yuletide gifts for the public.
Mr. Haruna said officers of the unit seized the plastic rice along Ikeja area on Monday, adding that a suspect was arrested in connection with the seizure.
“Before now, I thought it was a rumour that the plastic rice is all over the country but with this seizure, I have been totally convinced that such rice exists.
“We have done the preliminary analysis on the plastic rice. After boiling, it was sticky and only God knows what would have happened if people consumed it,” the customs boss said.
Reacting to the incident in an interview with PREMIUM TIMES on Wednesday, Adewale Ilesanmi, an agri-business consultant, expressed surprise at how such goods got shipped across the borders of the country.

“My immediate impression on this is to say that this is wicked, inhuman, and totally unacceptable. The perpetrators of this crime should be prosecuted.
“It is the height of bad business practice and must send a strong worded message to the state of China and if possible, stop all importation from the people’s Republic of China,” he said.
While explaining the genesis of the ‘plastic rice’, Mr. Ilesanmi disclosed that players in the industry have long suspected that the fake rice is in the Nigerian market.
“We have for sometimes been following this dangerous trends in business and have always expected the Nigerian government to engage the Chinese government on it. We all know that in shortest possible time, it will be here and here we are today,” he said.
While explaining the health implication of consuming the plastic rice, the agro-business consultant said it is poisonous and can result in cancer or death.
“Plastic rice, simply put, is artificial, synthetic or fake rice-like granules which are made from sheet of plastics. They are toxic and inorganic materials and have grave health implications.
“Its implications are mostly health related complications including cancer or death depending on the volume consumed by the individual. They are poisonous and synthetic materials which do not have any metabolic relationship with the metabolic system of humans.”
For Adeniyi Phillips, a farmer and agro-preneur, the interception of the rice confirms the long held suspicion among farmers that the fake rice is being imported into the Nigerian market.
“I find it very disturbing that such rice as “plastic rice” truly exist in Nigeria. I have seen videos corroborating this fact in the past but I never believed those videos. The seizure of 102 bags of the plastic rice by the Nigerian Customs Service is a confirmation that is truly sad.
“I feel sad that some Nigerians in the name of doing business could go that far, to bring in contrabands that could adversely affect the lives of Nigerians, especially in this yuletide season when the demand for rice increases.”
Commenting on how the plastic rice is produced, Mr. Phillips who is also the convener of the Nigerian Youths in Agriculture Forum (NYAF), said that the rice can only be ‘cloned’ as it cannot be
planted or grown on any soil.
“From experience, plastic rice cannot be planted or grown on any soil. Rice formation (planting) goes through different stages. From planting of paddy, to the milking stage and then it becomes solid. I doubt if the plastic rice goes through these stages. It will be hard to believe the fake rice was
planted. Perhaps, it was ‘cloned’,” he said.
The agricultural consultant said that Nigerians should exercise caution on the issue. He also enjoined other agencies of government and the media to monitor the result of the test by NAFDAC.
“According to the NCS, they did some preliminary test on the confiscated rice and they found out that it is sticky and harmful to the consumers. They have also proposed to hand over the “plastic rice” to NAFDAC for further investigations. That tells a lot.”

Mr. Phillips however lamented the porous state of the Nigerian borders, stressing that the importation of the fake rice into Nigeria is due to the corrupt practices of some officers of the Nigerian Customs Service.
“Unfortunately, for the 102 seized, there are tens of thousands of such rice already in circulation. I ply Sango-Idiroko road regularly and I know the several tonnes of rice coming into Nigeria on a daily basis.
“It is unfortunate that our land borders are porous, so much that this fake rice get into Nigeria unhindered. This nefarious act continues to endure, because the NCS and other regulatory agencies along the border continue to aid these importers after getting some kickbacks.”
Meanwhile, the Nigeria Customs Service has assured Nigerians that the circulation point of the plastic rice has been blocked, debunking suspicions that the fake rice might have saturated the market.
While showing appreciation to well-meaning Nigerians who provided the service with prompt information that led to the discovery of the bags of plastic rice, Mr. Haruna advised the media to educate the public on the existence of plastic rice, adding that it was no longer a rumour.
He said investigation was still ongoing and the unit would hand over the plastic rice to the National Agency for Food and Drug Administration and Control (NAFDAC) for proper investigation.

State rice stocks headed for disposal

State Rice

The government is committed to disposing all 8 million tonnes of state rice stocks next year.
According to Duangporn Rodphaya, director-general of the Foreign Trade Department, most of the existing 8 million tonnes of rice stocks are white rice, and 5 million tonnes of the total is poor-quality grain unfit for human consumption.
The remaining 3 million tonnes are mixed-grade in quality, suitable for human consumption.
The government has been paying 510 million baht a month for rice warehouses.
According to Mrs Duangporn, the Commerce Ministry is in talks with the Energy and Industry Ministry to find proper ways to use rice stocks unsuitable for human consumption for industrial purposes, such as biomass and ethanol production.
For good-quality grain, she said, the authorities will call general auctions at opportune periods.
Since the May 2014 coup, 8.68 million tonnes of rice has been sold via 23 auctions, fetching 89.2 billion baht.
Government-to-government rice deals have unloaded an estimated 3.8 million tonnes worth 50 billion baht.
The state-held rice stocks have fallen sharply from the 18.7 million tonnes accumulated through various rice-pledging schemes during 2011-14.
According to Mrs Duangporn, lower rice supply will benefit the government if it succeeds in selling existing state-held stocks.
The government expects Thailand’s rice shipments to remain strong, with this year’s figures possibly exceeding the Commerce Ministry’s target of 9.5 million tonnes.
As of Dec 14, she said Thailand had shipped 9.3 million tonnes, up 2% from the same period last year, fetching US$4.17 billion.
The top five importers were Benin, China, Ivory Coast, South Africa and Cameroon.
Of the total exports, white rice made up for 50%, hom mali rice 25% and parboiled, glutinous and Pathum Thani fragrant rice comprised the rest.
Mrs Duangporn said hom mali rice shipments have risen this year to 2 million tonnes from 1.5 million tonnes last year, mainly to China, Indonesia and the Philippines.
“Thailand’s rice prices have gradually improved thanks to the government’s myriad measures, teamed with the private sector promoting rice sales,” Mrs Duangporn said.

Pakistan, Iran to discuss FTA prospects

Commerce Minister Engineer Khurram Dastgir Khan will visit Iran on December 28-29, 2016 on the invitation of Iranian Minister for Industries, Mines and Trade Mohammed Reza Nematzadeh to discuss modus operandi for much talked-about Free Trade Agreement (FTA) aimed at expanding bilateral trade, well informed sources told Business Recorder on Tuesday.

Both countries have recently held the first initial meeting on FTA in Tehran convened to discuss the drafts of the pact shared by both the countries. According to the provisions of the five-year plan, both countries have shared draft text of framework on Pak-Iran Free Trade Agreement (FTA).

According to sources, FTA between Iran and Pakistan would be based on the basis of draft prepared by Islamabad and expected to be finalised with one year. Both countries would share their tariff data with each other so that a consensus list of tradable items could be prepared.

The sources said in view of opening up of post-sanctions Iranian economy, the Ministry of Commerce is exploring various avenues to enhance bilateral trade to $5 billion in five years, in accordance with the vision of the top political leadership of the two countries.

The proposed measures include initiation of negotiations on Pakistan-Iran Free Trade Agreement (FTA), holding of single country exhibitions in each other’s country, visits of delegations to and from Iran, removal of tariff barriers, regular holding of meetings of Joint Border Trade and Joint Trade Committee, reactivation of joint Business Council, opening of additional international border crossing points and establishment of border markets.

Iran, which has been a closed economy since long due to international sanctions, has signed FTA only with Syria which is considered as ‘political FTA.’Pakistan will also organise single country exhibition “Aalishan Pakistan” in Tehran in March 2017. Iran has already granted permission for the exhibition. Iran was not willing to allow on spot sale of Pakistan products in the exhibition but after the intervention of Pakistani Commerce Minister, Iranian Minister has accepted Pakistan’s request.

Presently, Pakistan and Iran have Preferential Trade Agreement (PTA) which has been effective since September 1, 2006. Under the PTA Pakistan has granted tariff concessions to Iran on 338 tariff lines while Iran has granted tariff concessions on 309 tariff lines. Average tariff concessions are around 18 per cent. However, due to Iran’s restrictive tariff regime, tariff applied by Iran on Pakistani exports are much higher than tariffs on Iranian exports to Pakistan.

Due to Iran’s high tariffs as well as limited product coverage, substantial increase in bilateral trade has not come through in wake of Pak-Iran PTA. Iran even raises tariffs on the products included in Pak-Iran PTA in violation of the agreement. Although international sanctions against Iran have been lifted, yet Pakistani banks are still hesitant to carry out transactions with Iranian banks. The absence of banking channels is the single largest obstacle to enhancing Pakistan-Iran trade. The US has not lifted sanctions against Iran so far whereas European Union (EU) has relaxed some conditions.

The Federal Cabinet recently cleared MoU of State Bank of Pakistan (SBP), allowing it to start negotiations with Iran on opening of banking channels so that both countries could start economic activities legally.

Iran maintains high tariffs on Pakistani exports. For instance on textiles and clothing, Iranian tariff are as high as 120 per cent and 100 per cent respectively. Similarly on leather and footwear Iranian maximum tariffs are 120 per cent, on fruits and vegetables, 200 per cent, and 90 per cent on rice. These high tariffs are serious obstacles to Pakistan’s market access in Iran. Iran also maintains a permit system for importers and when the Iranian government wants to restrict imports, it simply stops issuing permits.

Value-addition in agriculture sector

Greater value-addition in agriculture is handicapped by low level investment in modernising farming and forging its backward and forward linkages. The net output of value-added agriculture has surged over the past 10 years, rising from less than $25bn in FY06 to more than $62bn in FY16, according to official statistics.
But, in terms of diversity and quality and not just the quantum of the GDP, the value-addition in our agriculture is inferior to China, India and many other countries. “Going for greater, higher-quality, high-end value-addition in agriculture needs lots of investment—in agriculture research and development and in technologies etc.—and that’s where we’re lacking,” concedes a senior official of the Ministry of National Food Security and Research.
One way of probing this issue could be through capital formation in agriculture sector. At constant market price of 2005-06, private sector’s fixed capital formation in agriculture grew just 5pc in the last three years — from FY13 to FY16, though at current market prices the increase was obviously higher.
Another way of examining this issue could be through disbursement of bank loans for agricultural development and corporate farming. The last four years’ average of both kinds of loans comes to just Rs30bn a year. Clearly, banks need to do much more to spur value-addition.
Food processing and packaging has grown over time and the names of some locally processed and packaged food items can be cited as a big success. This shows that forward linkages (of agricultural value-addition) are being shaped, food companies’ executives point out
However, food processing and packaging has grown over time and the names of some locally processed and packaged food items can be cited as a big success. And that shows that the forward linkages (of agricultural value-addition) are being shaped up, the food companies’ executives point out.
But there is a huge gap between the output of food crops and the scale on which their value-added products are being produced for local or export market. Unless that gap is bridged the economic returns of value-addition will remain limited.
Pakistan produces surplus rice and maize and is, more or less, self-sufficient in wheat and sugarcane. (The impact of occasional falls in the output of the last two crops can be minimised by removing some basic structural flaws).
But the country is yet to take full economic advantage of this blessing. We keep exporting rice and maize with very little or no value-addition at all. In domestic market, too, value-addition in key food crops rarely goes beyond a few steps—rice-based cuisine, breads made of wheat and maize flour and sugar and confectionaries etc.
It’s not that rice or wheat or maize is not being used in manufacturing of value added products. “It’s the quality and diversity of the products made out of them and tapping of their full export potential that is under question,” says a former secretary of Sindh Agriculture Department.
The list of the value-added food items produced locally is long. Thanks to urbanisation, rise in income levels and change in lifestyles, hundreds of products are now available even in ready-to-cook and energy diets categories in addition to regular types. But two things are worth examining. First, only a small percentage of the local value-added food products are manufactured by leading, ISO-certified food companies, and the rest are produced by little-known companies and lack quality. This also reflects in exports.
Exports of value-added food items remain the exclusive domain of a limited number of companies and export volumes and export earnings remain limited. If we exclude processed meat, fish and manufactured spices, the export earnings of all other value-added food items including dairy and milk products, cereal-based food items and confectionary fetch less than $100m a year, officials of Trade Development Authority of Pakistan say.
Generally speaking, the food and beverage companies have been doing well. Increase in local demand and sales and marketing opportunities via internet have helped them boost local sales. But executives of these companies say that local sale volumes can be increased further and export potential can be further realised more effectively if the government comes up with a plan for mapping the domestic food sector and then categorise the market players on different basis.
“Obtaining Pakistan Halal Authority certification, achieving ISO standards and meeting nutrition value standards, for example, can help the local companies get enough return on their investment that measure up to such criteria. And this, in return, will encourage them to invest more in technology and qualified staff,” says a senior executive of Multi Food Industries.