FOOD exports are growing faster this fiscal year, but the quality of exports is not such that it can make enough and immediate impact on stubbornly high food trade deficit.
The food trade deficit was $1.31 billion in the first half of this fiscal year compared to $1.21bn a year ago, as food imports jumped to $3.24bn from $2.86bn but exports rose somewhat slower to $1.93bn from $1.65bn.
In the July-December period, additional earnings of $181 million came from sugar and $130m from rice exports. The exports of the two commodities are expected to grow in the second half too.
In the near future, the current pattern will not help in accelerating exports to make an impact on food trade deficit, which can only be squeezed through quicker and larger increases
Performance of other food items has remained mixed: growth impact in some items, e.g. fish and fish preparations, has offset decline in case of others like meat and meat products.
In the near future, the current pattern will not help in accelerating exports to make an impact on food trade deficit, which can only be squeezed through quicker and larger gains.
At the same time, controlling food imports seems difficult amid higher demand and the economy expected to grow by six per cent.
Bumper sugar cane production and enough installed capacity of cane crushing ensure the creation of surplus. Export marketing, too, has improved over the years. “For us, the problem is pricing,” says an official of the Pakistan Sugar Mills Association.
The government will hopefully not delay the finalisation of sugar export plans in coming years as the country has suffered badly on this account.
“Exporters now ought to focus on value-added products and diversified export markets,” says an official of the Ministry of Commerce. “For example, they can increase exports of brown sugar, which typically fetches higher per-unit value than white sugar. Similarly, they can explore new markets in Central Asia and East Asia.”
The Rice Exporters Association of Pakistan (REAP) has recently announced to reward sizable buyers of Pakistani rice. That’s a right step in the right direction. Indonesia has long been doing this.
REAP expects rice exports to touch $4bn a year from about $2bn now if the government and rice millers focus on export promotion.
However, millers will have to go beyond demanding incentives, and should come up with the specifics: what markets they are looking at and how exactly the government can help them in overcoming obstacles in those markets? What are they doing for producing more value-added brand products?
Exports of fish and fish preparations have risen to $200m in July-December from $183m in the year-ago period. But since this 9pc rise in export earning came as a result of a larger 13pc increase in export volumes, the quality of export growth is clearly poor.
The government and the private sector need to jointly work out ways for boosting the per-unit value of exports. That can come from a combination of high-end processing and value-addition in export products as well as from targeting richer segments of export markets.
Exports of meat and meat products, on the other hand, continue to fall and have now slipped below $100m in the six-month period under review.
Why the private sector has failed to fully avail itself of the tax incentives allowed a few years ago for setting up export-oriented abattoirs? Why meat processing and packaging remains wanting on several counts? Why our meat export market remains heavily concentrated in the Gulf Cooperation Council countries (88pc in the 2016-17 fiscal year)? Has establishing the halal certification authority in the country made any real impact on meat exports — and if not, why?
Unless we have clear answers to these and similar questions, growth in exports of meat and meat products will continue to suffer or, at best, remain stagnant.
Food exports data published by the Pakistan Bureau of Statistics (PBS) every month does not give a clue about the pace of growth in value-added food products.
But another set of monthly data published by the State Bank of Pakistan (SBP) based on export receipts of banks shows that exports of prepared foodstuffs and beverages more than doubled to about $460m in the first five months of this fiscal year. However, this was owing to exports of sugar, confectionary and beverages. The point is exports of value-added food products need a dramatic rise to ensure a sustainable and fast growth in food exports.
Fruit and vegetables’ exports remain erratic, too. But recently, per-unit prices of such exports have started showing an increasing trend.
This is evident from the fact that despite a 25pc volumetric decline in fruit exports in July-December, the exports value slid only 9pc to $180m. Exports of vegetables fell about 8pc in volume, but earnings somehow increased modestly to $63m from $59m.
Obviously this is not enough. Unless fruit and vegetable exports along with exports of seafood and meat rise at a double-digit rate for some years, the dream of reducing the huge food trade deficit cannot be materialised.