Executive Certificate in AgriBusiness Management (Term - C)

Submitted To:

Dr. Tanveer Shehzad

LAHORE UNIVERSITY OF MANAGEMENT SCIENCES

Rausing Executive Development Centre

While meeting with the business community at the Islamabad Chamber of

Commerce and Industry (ICCI) February 2017 session, the Ambassador of the
Republic of Yemen said : “The current volume of bilateral trade between Pakistan
and Yemen is very low and there is a need to promote trade ties” . He further
remarked that “Yemen’s market was quite open and Pakistani businessmen
should focus on quality and price to compete there”

Macro-Economic Situation & Key Demographic Trends:

The Republic of Yemen is at the south western corner of the Arabian Peninsula. It is
contiguous to Oman and Saudi Arabia and connects to Djibouti, Eritrea and Somalia by
sea. Yemen ranks at 128th position in terms of exporting economies of the world and it
is positioned at 101th rank in the Economic Complexity Index .The ongoing conflict in
Yemen has resulted in a catastrophic humanitarian crisis. As of March 2017 an
estimated 17 million (60 percent of its population) Yemenis are suffering from food
insecurity. Its current GDP is 27.32 billion USD, which is quite low as compared to the
increasing trend following 2010. Per Capita GDP is 990.33 USD. Topography of
Yemen varies widely from sea level to inter-mountain plains, steep slopes and rugged
high mountains. In geographical terms its land mass mainly comprises of low and high
altitude mountains, highland, desert and coastal plains. The war torn country has few
natural resources, oil being the major one. Petroleum and petroleum product constitutes
a major portion of exports. In fact it would not be a exaggeration to state that the whole
economy of Yemen is oil based and recession in oil business has resulted in high
inflation, that is up to 30%, and unemployment rates. The major export destinations of
Yemen include China, South Korea, Saudi Arabia and India.
  Per capita GDP : 990.33 USD
 GDP: 27.32 billion USD
 GDP by sector: services (61.4%), industry (30.9%), agriculture (7.7%)
 Role of Petroleum production in GDP : 25% of GDP
 Labor force : 7.4 million (2015)
 Foreign reserves : 2.7 billion USD
 Exports : 2.07 billion USD
 Imports : 8.5 billion USD
 Yemeni Population: 27.8 million
 Total Urban Population: 35 %
 Total Rural Population: 60 %
 Unemployment Rate: 15 %
 Population under poverty line : 54 %

Agriculture Sector in Yemen :

Agriculture is one of Yemen’s key economic sectors, accounting for around 17% of
GDP. Yemen's agriculture is typical of the arid and semi arid agricultural practices. The
major products of the agriculture sector include gain, fruits, vegetables, pulses, qat,
coffee, cotton; dairy products, livestock (sheep, goats, cattle, camels, poultry); fish.
Even though some of its mountainous terrain is unsuitable for farming and water
scarcity makes farming difficult in plains, nevertheless, approximately 58 percent of the
population is employed in farming.

Most farms are small; with the average size being only few hectares. Yemen does not
have a diversified industrial economy. In fact as far as industrial productions are
concerned, major chunk is contributed by oil industry. Although there are other small
industries as well including small scale production of cotton textiles and leather goods ;
food processing ; handicrafts ; small aluminium products factory ; cement ; commercial
ship repair.

Yemen’s major agro-food trading partners are other nation States, with Australia and
Turkey each accounting for slightly less than a fifth of the total. Yemen’s leading agri-
food exports are wine, pasta, olive oil, cheeses, and fruits and vegetables. However,
exchange rates play a critical role in maintaining balance of payments. Yemen has not
invested even a single penny in a “Made in Yemen” strategy to build consumer loyalty
to weather exchange rate fluctuations. Instead investing in the research sector of
agriculture, the consecutive governments of the country has had laid their emphasis on
strengthening the petroleum industry.

Yemen’s Major Exports & Imports:

Exports:

Exports from Yemen amounted to US$2.05 billion in 2015, down -7.6% since 2012 and
down by 10.9 % from 2014 to 2015. The major export partners of Yemen are China
($798M), South Korea($331M),Saudi Arabia ($173M),Indi($165M) and Japan ($149M)

The following export product groups represent the highest dollar value in Yemni global
shipments during 2015. Also shown is the percentage share each export category
represents in terms of overall exports Yemen.

 Petroleum Gas ( $718M )

 Crude petroleum ($715M )
 Non-fillet fresh fish ($73.2M)
 Cars ($57.9 M

Imports:

Yemeni imports amounted to US$ 8.5 billion in 2015, resulting in a account deficit or
negative trade balance of US$6.44 billion. The top import partners are the United Arab
Emirates ($722M), Saudi Arabia ($605M), Australia ($560M) and Turkey ($542M).
The top imports were as follow :

 Wheat ($1.36B)
 Refined Petroleum ($1.05B)
 Rice ($337M)
 Cars ($293)
Rationale behind the Rice export to Yemen

The import requirement of Yemeni population of cereals to guarantee a sufficient

calorie intake in the 2015-16fiscal year (January/December) was estimated at about
4.1 million tones, including 3 million tons of wheat, 700,000 tons of maize and
420,000 tons of rice.

Pakistan is the 4th largest producer of rice with an average yield of more than 6
million tons per year. Surplus rice could be exported to Yemen because it is not self
sufficient in rice production due to its geographical and environmental constraints.
The paddy crop normally grows in all types of soils but a land with good water
holding capacity is preferable. Moreover, ad-lib supply of water is required for good
production. Both of these aforementioned conditions are very difficult to be
maintained in the civil war ridden country.

Although major food-trading partners of Yemen are China, South Korea and
Australia but the transportation cost with these countries is an issue of interest.
Pakistan is located in proximity than any other Yemeni major trading partner.
Therefore the profit margin will be more and both of the countries would be the
beneficiaries of this Endeavour.

During the fiscal year 2009-10, Pakistan’s exports to Yemen increased by $US
64M , reaching a sum of $US 164M. Pakistan needs positive trade balance to
overcome its economic dilemma which is caused due to increased number of
imports than exports.

Country Expected Imports (1000 MT), 2017

China 4,800.00

Nigeria 2,200.00

Islamic Republic Of
1,100.00
Iran

Iraq 1,050.00

Senegal 1,050.00
 South Africa 950.00

Indonesia 500.00

Angola 500.00

Yemen 410.00

Conclusion:

Yemen is a war torn and least developed country of the Arabian Peninsula. The current
socio-economic situation in Yemen provides a good opportunity to Pakistani
businessmen for exporting agriculture products to the country on profitable basis.
Although there will be competition among a number of nation states to highjack the
Yemeni market, but the competiveness of Pakistani exports will increase over time if the
Pakistani Government kept on investing in Agriculture research and development.