Running head: fruit sector 1

ASSIGNMENT - 3

FRUIT SECTOR IN PAKISTAN

Group 5

Muhammad Palize Qazi – 24027,

Muhammad Hassaan Imran-24062,

Muhammad Azlan Tehseen – 24036,

Rajah Mishaz Khan – 24114,

Zahra Mustafa - 24054

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Introduction

Pakistan's fruit industry has long been a cornerstone of the country's economy, providing

significant export revenue and employment opportunities for thousands of people. From its lush

orchards come a diverse array of fruits, including the world-renowned mangoes, citrus, apples,

and dates. Despite the industry's rich potential for growth, however, Pakistan's fruit sector has

been facing several challenges in recent years, such as lack of modernization and poor

infrastructure, that have hampered its global competitiveness (Rafiq & Asghar, 2021; Ali, 2020).

This report offers a deep dive into the export performance of Pakistan's fruit sector, highlighting

key trends and challenges faced by specific fruits, and proposing actionable recommendations to

bolster the industry's future growth and competitiveness.

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Figure 1 Monthly Exports (Pakistan)

Figure 2 Yearly Exports (Pakistan)

In the fruit sector, Pakistan has a comparative advantage in exports of citrus fruits such as

Kinnow, as well as mangoes and dates (Ahmad et. al, 2021b). However, the comparative

advantage of countries such as Vietnam, Philippine, China, India, and Turkey is still higher

(Manzoor et al., 2020).

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Graphical Analysis and Inferences

This part covers the analysis of the highs and lows in the year-wise graph, with an

attempt to explain the causes.

The Highs

2011

Pakistan's fruit industry has been making efforts to improve the quality of its produce and

increase its production. This has led to higher demand for Pakistani fruits in international

markets, which has driven up exports. According to a report by the State Bank of Pakistan, the

production of fruits in the country increased by 2.2% in 2010-11, which could be a contributing

factor to the increase in exports (Pakistan's fruit exports hit new high, 2011).

Pakistan has a number of traditional export markets for its fruits, including the UAE,

Saudi Arabia, and the UK. In 2011, there was a surge in demand for Pakistani fruits from these

markets, which contributed to the increase in exports (Pakistan’s fruit exports surge, 2011). This

could be due to a number of factors, such as improved marketing and distribution efforts by

Pakistani exporters, as well as changes in consumer preferences in these markets.

In addition to traditional markets, Pakistan has been expanding its exports of fruits to new

markets in recent years. For example, Pakistani mangoes were exported to the United States for

the first time in 2011 (Pakistani mangoes set to make U.S. debut, 2011), following a successful

lobbying effort by the Pakistani government. This expansion into new markets has also

contributed to the increase in exports.

2015

According to a report by the Pakistan Bureau of Statistics, the value of fruit exports from

Pakistan reached a record high of $730 million in 2015, compared to $570 million in 2014.
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One of the key reasons for this growth was the increased production of mangoes, which

are one of Pakistan's top fruit exports. The country produced a bumper crop of mangoes in 2015,

which allowed for higher exports (FAOSTAT, 2023). Additionally, the government implemented

various measures to support fruit exports, including providing subsidies to growers and exporters

and improving infrastructure for transportation and handling of fruit.

2017- 2018

The United Arab Emirates (UAE) has emerged as the top export destination for Pakistani

mangoes as they imported about 35,5797 tons in 2017. United Kingdom (UK) was the second

top importer of Pakistani mangoes, as it imported 11,388 tons (Z. Hassan, 2018)

The Lows

2016-2017

Pakistan’s exports to Iran decreased from US$ 319 million in April-December 2017 to

US$ 209 million in April to December 2018 on year-on-year basis. (Reasons for dip in Pakistan

Exports to Iran, 2023)

Reasons:

• Protectionist Policy of Iran: Iran’s Supreme Leader had declared outgoing year as

“Iranian Year” as the year of Iranian goods only and prohibited Iranian government from

importing foreign goods.

• It is stated that Iran had imposed restrictions on exports of fruits from Pakistan in

a bid to support their local farmers. That is why Iran has banned Pakistani Kinnow since 2010.

(Reasons for dip in Pakistan Exports to Iran, 2019)

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Economic Indicators

A countries exports are closely tied to several economic indicators. This section attempts

to compare the trend of exports to several such indicators, to draw a complete picture of the

sector’s contribution and growth potential, as well as key economic issues halting that growth.

Imports

Figure 3 Exports and Imports (Pakistan). Source: FAOSTAT

Aside from a few decreases, fruit sector exports have shown an average yearly growth of

$22 million. However, fruit imports also increased from FY03 to FY17, with net exports having

a negative value in FY16 and FY17.

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GDP contribution

Figure 4 Contribution of fruit exports to GDP. Source: SBP, FAOSTAT, Statista

The fruit sector exports’ contribution to GDP has also seen a gradual increase. The

quality of Pakistani fruits has improved, which has helped the export industry grow. The

Ministry of Commerce reports that Pakistani fruits have improved in quality due to better

cultivation, seed quality, and handling and processing. Pakistani fruits are now more popular

abroad. Pakistan's mango exports rose 42% from 98,903 tonnes in 2016 to 140,915 tonnes in

2020. (Pakistan Bureau of Statistics).

Pakistan's government has also supported the fruit industry. Farmers have received

financial aid and infrastructure investments from the government to produce and export fruit. For

instance, the government has built several modern fruit processing and cold storage facilities

nationwide. By facilitating trade agreements, the government has also encouraged fruit exports.

Free Trade Agreements with China, Sri Lanka, and Malaysia have increased Pakistan's fruit

exports. China bought 34% of Pakistan's fruit exports in 2019. (State Bank of Pakistan, 2020).
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Production and Yield

Figure 5 Total Fruit production in tonnes. Source: FAOSTAT

Despite an increase in exports, we see that total production of fruit has remained roughly

stagnant.

Figure 6 Area Harvested (Ha). Source: FAOSTAT

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Figure 7 Yield (hg/Ha). Source: FAOSTAT

Similarly, the area harvested, and the yields of major exported fruits have also remained

stagnant. Then why is it that exports are increasing? The best explanation is the increase in

exports of citrus fruit to UAE, Afghanistan, Iran, Indonesia, Malaysia, Eastern European and

Russia (Ahmad, 2018). Improving efficiency across the supply chain can improve yields and as a

result, further improve the exports.

Exchange Rates

Figure 8 PKR/USD exchange rates. Source: investing.com

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The value of PKR has depreciated against USD and most other currencies since 2003.

This can also help explain the growth in exports, as according to Ali (2020), currency

devaluation allows for higher ‘intensive’ and ‘extensive’ margins. However, this alone is not

enough to improve the exports of Pakistan (Ahmad Et. Al, 2021).

Competitive and comparative advantage

Figure 9 Total export value of top fruit exporters (USD thousand). Source: UN COMTRADE

According to data from UN COMTRADE and FAOSTAT, Pakistan ranks 37th based on

total export value of fruits, with a growth rate incomparably lower than the top 15 countries.

Further comparison with countries that had similar total export value to Pakistan in 2003

reveals that Pakistan’s average growth has at best been half of its competitors.
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Figure 10 Total export value (USD thousand). Source: UN COMTRADE

Pakistan’s major fruit exports are Mangoes, Oranges, and Dates. An analysis of its direct

competitors reveals that Pakistan ranks 8th in mango exports, 13th for oranges, and 9th for dates

(FAOSTAT, 2023).

Figure 11 Mango production (Tonnes)

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Figure 12 Orange production (Tonnes)

Figure 13 Date production (Tonnes)

Figure 14 Mango exports total value

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Figure 15 Orange exports total value

Figure 16 Dates exports total value

Studies on the comparative and competitive advantage of Pakistan’s fruit sector however,

indicate the following:

● Pakistan has a comparative advantage in mango production but does not have export

competitive advantages (Kousar et al., 2019). In fact, it has a competitive disadvantage.

● Similarly for oranges, Pakistan has the highest comparative advantage and yet has an

export disadvantage (Naseer et al., 2019).

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● The picture is again the same for dates, with Pakistan having a comparative advantage

(Khalid, 2009) but a competitive disadvantage (Kousar et al., 2019)

So what is it that Pakistan is doing wrong but its competitors are doing right? The following part

focuses on the comparison of export policies between major economies and Pakistan.

Export policy comparison

Pakistan, being a major producer of fruits, has developed policies to promote the export

of fruits from the country. The government has allowed duty-free export of all fruits, including

fresh, dried, or frozen fruits, to promote exports (TDAP, 2023). Additionally, the government

has established the Export Development Fund (EDF), which provides financial assistance to

exporters for market research, product development, and participation in trade fairs and

exhibitions, and can be used to promote exports of fruits from Pakistan (Hassan, 2013). The

government has also set up Export Facilitation Centers (EFCs) across the country to provide

exporters with facilities such as grading, packing, and pre-shipment inspection of fruits, as well

as training and support to fruit growers and exporters to improve the quality of fruits (Ahmad et

al., 2021).

Furthermore, the government has been working to identify new markets for the export of

fruits from Pakistan and has signed various Memorandums of Understanding (MOUs) with

different countries to promote the export of fruits from Pakistan (Ahmad et al., 2021). The

Pakistan Horticulture Development and Export Board (PHDEB) is responsible for developing

and implementing various standards and certifications for the export of fruits from Pakistan
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(Tariq et al., 2022), ensuring that the fruits exported from Pakistan meet the international quality

and safety standards.

However, while the Pakistani government has established policies to support its fruit

exporters, implementing and enforcing regulations to ensure the quality and safety of its fruit

exports remain a challenge. Furthermore, Pakistan's fruit exports are subject to various non-tariff

barriers, such as sanitary and phytosanitary regulations and technical regulations imposed by

importing countries. Pakistan also faces issues related to the storage and transportation of fruits

(Ahmad, 2018). According to a report by the Pakistan Agriculture Research Council, around 35-

40% of fruits produced in the country are wasted due to the lack of proper cold storage facilities

and inefficient transportation systems. The lack of cold storage facilities leads to spoilage and

reduced shelf life of the fruits, which in turn affects their quality and market value (Syed et al.,

2014).

In comparison, the world's top fruit exporting countries including China, Spain, Chile, the

United States, and Italy - have well-established fruit export policies and initiatives that prioritize

the quality and safety of their fruit exports, provide support to their exporters, and ensure market

access through trade negotiations (Ahmad et al., 2021). These policies and initiatives have

helped these countries to establish strong export markets and increase the quality and

competitiveness of their fruit exports.

For instance, China has established the "Belt and Road Initiative" to promote trade and

investment in infrastructure, as well as "Made in China 2025" to upgrade its manufacturing

industry and improve the quality of its exports (Erokhin & Gao, 2018). Chile has established the

"Pro Chile" program to promote exports of its fruits and other products, which includes trade
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fairs, business matchmaking, and other promotional activities (Melo et al., 2014). It will enable

the country to perform more effective marketing of goods.

The United States has founded the "Market Access Program" to assist U.S. agricultural

exporters in promoting their products in overseas markets, as well as the "Foreign Market

Development Program" to develop and expand export markets for U.S. agricultural products

(Grant et al., 2015). Italy has also established the stringent policy on "Integrated Quality System"

to ensure the quality and safety of its fruit exports, as well as the "Made in Italy" brand to

promote Italian products and increase their competitiveness in international markets (Celebrand,

2019).

Looking into neighbor developing countries, India's policies for fruit exports incorporate

establishing export promotion councils, providing incentives, and signing free trade agreements

with countries like ASEAN, Japan, and South Korea to increase market access. The government

is also working on reducing transaction costs and relaxing phytosanitary regulations. (Trade

facilitation in India: An analysis of trade processes and procedures, 2023). The government of

Bangladesh is promoting fruit exports by providing subsidies for production, establishing export

processing zones, and negotiating market access agreements with India and China. (Pamuk et al.,

2021).

Recommendations for Improving Pakistan's Fruit Sector Competitiveness

Several factors impede Pakistan’s growth potential in the international fruit market. For

example, a lack of diversification of its export basket, as 80 percent of Pakistan’s fruit exports

mainly comprise of citrus fruits, mangoes, and dates (TDAP, 2022), that are unable to satisfy the

preference of consumers in the importing markets. Moreover, Pakistan’s access to premium

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international markets, such as China, is restricted due to not meeting the strict food and safety

requirements, inefficient distribution channels, and poor-quality cold chain systems (Invisible

Barriers to Trade - Pakistan: Business Perspectives, 2020).

Also, Pakistan suffers from lower crop yields which limits its export potential. For

instance, in 2019, citrus fruit production in Pakistan was more than two times lower as compared

to other countries such as Egypt, Turkey, and Iran (FAOSTAT, 2023). These low yields mean

that Pakistan is unable to generate a sufficient surplus that is needed for exports.

To compete effectively in the global market with these top exporters, Pakistan needs to

continue to develop its fruit export policies, establish a more robust regulatory framework, and

invest in the development of its infrastructure, particularly quality assurance, marketing and

storage and transport facilities. Improving the quality and safety of its fruit exports will help to

build trust with importers and consumers, and increase Pakistan's share of the global fruit

market, similar to how the world's top fruit exporting countries have prioritized quality and

safety in their fruit export policies.

Pakistan overcoming these challenges will mean that the fruit sector presents itself as an

opportunity for Pakistan in the shape of an avenue with huge export revenue potential. However,

strategies such as improved export quality, greater market access to Middle Eastern countries, as

well as diversification in its fruit production are not enough, as considerable investment is

required in enhancing the skills and technical knowledge of farmers, so that in addition to being

a major world producer of fruit, Pakistan maximizes its yield and also harnesses its export

potential.
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Conclusion

In summary, this report has provided a comprehensive analysis of Pakistan's fruit sector,

with a focus on its export performance, challenges, and opportunities. While the industry has

faced several challenges, it remains a crucial driver of economic growth and employment in the

country. Looking ahead, the sector has significant potential for growth and diversification, but

realizing this potential requires strategic interventions and sustained efforts by policymakers,

industry stakeholders, and the broader community.

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