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Home > News Updates > News Headlines
News Headlines

GROWTH IN FOOD EXPORTS
11/1/2017

DAILY BUSINESS RECORDER (01/11/2017)

GROWTH IN FOOD EXPORTS

Though exports declined from August this year, the first quarter of the fiscal year brings a case of cautious optimism. 1QFY18 saw an 11 percent increase in exports over the same period last year with all major commodity groups’ exports rising. Other than increase in textiles (Read: “Textiles: up tick in value added exports” published on 27 October, 2017), the growth in exports was led by the food category.

The increase of nearly 18 percent in food exports was mostly due to rice. However, while rice exports increased by 32 percent, it was not Pakistan’s top export of Basmati rice that led the double digit growth; non-Basmati rice exports have nearly doubled compared to the same period last year. Over the past several years there has been a boom in non-Basmati rice exports, particularly to African countries. However, non-Basmati rice earns significantly less than Basmati rice due to its lower price point.

While Basmati rice’s quantity remained nearly the same, exports increased in dollar amount indicating a higher price point that led to the 2.5 percent growth. Since EU has placed stringent policies on the presence of hazardous pesticides in rice, India may lose its market share since Pakistan does not use the chemicals that have been prohibited. This may be reason driving Basmati rice’s higher price.

Fish and fish preparations’ exports grew by 18 percent which fishermen attributed to the netting better catches since the fishing season started from August 1. Increase in fisheries exports was due to shrimp, squid, cuttlefish, and ribbon fish. Improved harvesting with five new fish meals plants set up in Balochistan also contributed to the rise in its exports.

Almost 300,000 tons sugar export was allowed in July this year of which nearly 92,000 tons were exported last quarter. In September, 1.5 million tons of sugar export was approved over three phases. However, the increase in export quota of sugar seems premature. While Pakistan’s record crop of sugar drove the increase in exports which were previously banned, steep fall in global sugar prices have slowed down shipments. Pakistan is not the only country that enjoyed a bountiful harvest of sugar and key producers like India, China and Thailand are expected to drive prices further down.

On the other hand, exports of fruits and meat went down compared to the first quarter last fiscal year. Mangoes crop this season was not bountiful due to bad weather affecting nearly half the crops, which may have led to a decrease in Pakistan’s fruit exports by 24 percent.

Though the global meat market is growing, Pakistan’s meat exports are on a declining trend with exports decreasing by 15 percent last quarter. On one hand, there are issues with genetic pollution; nutrition and vaccination of animals and on the other, prices of male animals have risen due to the ban on slaughtering of female cows and goats. By one estimate, the ban has resulted in an increase of Rs.100/kg on prices of mutton due to which it is hard to compete in the international market.

The next quarter’s food exports depend partly on the kinnow season which drives fruit exports in winter months, and partly on the continuation of the positive trend in rice exports.

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