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Logistic Hurdles In Kinnow Export (New)

By Ahmad Fraz Khan

PAKISTANI kinnows may have a bad export season this year. Out of usual target of around 400,000 tonnes, the final tally may not cross 100,000 tonnes if pessimists are to be believed.

Russian and Ukrainian markets, which absorb around 50 per cent of total export, have slumped because of a range of factors.Iran, a market of 20 per cent if formal and informal export is calculated, is under international sanctions. These factors might take the final figure down like never before.

In case of Russian market, the importers suffered huge losses last year when the NATO containers’ crisis hit the country. Once theses NATO containers were disallowed inland movement, they hit kinnow exports on two accounts: choking of the port and activating the customs officials. The blockage and overloaded ports made outward movement difficult for all containers, exceptionally delaying exports and hitting quality of kinnow.

To make the matter even worse, the customs officials started stringent and thorough checking of all outgoing containers, disturbing the containers’ temperature and spoiling quality. Both these factors caused huge losses to the Russian importers, and, according to one report, they had to dump around 250 containers in the sea. They were not allowed the off-loading as quality of the fruit had deteriorated beyond permissible limits even by Russian standards.

As if this was not enough, some unscrupulous exporters tried to exploit the situation by sending out under-sized fruits though Russians are known for consuming small-size kinnow. It only further shook the Russian confidence in exporters.

This lack of confidence has now come back to haunt the entire export process. If Pakistan loses the Russian market, the exports would suffer hugely.

Pakistan kinnow exports hardly form one per cent of $2billion world market. Even if that is allowed to slide because of routine management problems, the country may lose a big chunk of $200 million exports. The final loss, however, might be much bigger as the Russian market consumes other products as well.

How such processes can hit other fruits is evident from sliding apple prices in the domestic market. Some exporters are now bartering kinnow with apples with neighbouring states due to lack of formal banking channels. It has flooded domestic market with apple, bringing its prices down and hurting local farmers. The crisis, which hit one fruit, has now spilled over to others and hurts many involved in the process.

Unfortunately for consumers, the slide in export has not brought the kinnow prices down in the domestic market, as retailers inflated their profit margin correspondingly. Receding writ of the government has only allowed the domestic players to rig market in their favour and make a windfall when everyone else — farmers, exporters, traders and consumers — suffered export shocks.

The export shock came in a year when domestic production was healthy despite it being off year; alternate bearing factor hits the crop every second year to bring production down. It was supposed to be second year but still country produced 1.84 million tonnes against 1.88 million tonnes last year. So, the supply was ample. The production figure remained healthy as the citrus production is now spreading out of its traditional area of central Punjab.

For the last few years, it is gone into southern districts of Layyah and Bhakkar and may soon go beyond. The citrus farmers are also shifting to high-density planting thanks mainly to awareness and training spread by the Citrus Research Institute.

In some areas, plantation has doubled per acre in a matter of few years — from around 70 plants per acre to 130-135 plants. The inter-cropping pattern is also changing as people have started realising the ill-effects of barseem, rice and wheat sown in the kinnow areas; these crops have conflicting water requirements and hit quality and production of fruit. All these factors point to one direction i.e., kinnow production is set to increase.

On the other hand, if Pakistan keeps losing foreign markets, instead of finding new ones, the future of kinnow is bound to be bleak. Pakistan exports merely seven to eight per cent of domestic production. If it slides to three to four per cent with increasing production and decreasing exports, this specialty of Pakistan will quickly lose its financial sheen and farmers’ interest. This should not be allowed to happen.

Though provinces now own the agriculture sector, but exports remain a federal forte. Thus, both need to sit and plan such fruits that bring good name (enjoying exclusivity), and money to the country.

The provinces, mainly Punjab, can take charge of production and the federation of international marketing. Both are tedious processes in a highly quality-conscious and competitive international market. If such a division can be worked out, it would benefit all. Provinces can invest in production chain without bothering about marketing, and federation can concentrate on international marketing without fearing quality issues.

At present, both are trying to do everything, and ending up with nothing. The federation has created Pakistan Horticulture Development and Export Company (PHDEC) and Punjab has an exact replica in Pakistan Agriculture Marketing Company (Pamco). The overall export percentage — constant for many years — and current slide in export figures is a question mark on performance of both, at least for Kinnow.

A division of labour between the province and federation is necessary because of paucity of resources at both ends. Both, quality production chain and international marketing are highly capital intensive exercises.

Neither of them has resources and time to perform both feats. It is time to divide the mandate, and concentrate money and human resources on ones’ own area to the benefit of the country.

Lahore, Monday, February 4, 2013

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