Iran may have reversed its decision to increase tariffs on kinnow imports from Pakistan for now. But the story highlights important lessons that must be learned by Pakistani fruit producers and the government: research, modernisation, and diversification of both product and markets. The business of fruit and vegetable cultivation suffers from poor on-farming and post harvesting practices.
According to a study by Pakistan Agricultural Research Council, 30 percent of fruit and vegetables production is lost before it even reaches the market. In some cases, the loss is even more; according to joint study by UNDP and Department of Agriculture, Pakistan loses up to 50 percent of date output per annum threatening its position as the fifth largest producer of dates.
Although, such dismal performance demands heavy investment in the industry, yet the situation is exactly the opposite. Investment in agricultural research has been deferred more than once leading to ineffective harvesting techniques affecting both the quantity and quality of production.
And this years has been no different: the Ministry of food and Agriculture received mere Rs 1 billion in the first quarter 2010 as against Rs 8 billion planned under the Public Sector Development Programme. But its not just dearth of funds, its also about sheer mismanagement of affairs. At one end, farmers lack price incentive and at the other, middlemen and contractors have been influencing the market in their own favour.
Middlemen pick the crop late in the season which creates shortage -- leading to higher prices. As a consequence, middlemen reap huge gains whereas farmers get the same contracted price when retail prices were much lower. So in the upcoming agriculture policy, the government should find a long term solution to these problems including means to provide access to proper harvesting management techniques to small growers and employ a mechanism through which they can easily bring farm output to the market.
As for the funds, the country can either attract local entrepreneurs or even loans from foreign institutions as the return on agriculture is quite attractive. According to one USAID study, if $50 million is spent on applied agriculture research in Pakistan, then almost 300,000 small farmers who are currently cultivating citrus, mango, onion, potato would be able to raise their annual income by an average $89 per annum.
This means that total income would increase by nearly $27 million per annum and the cost of project would be recovered in less than two years. These measures would only help diversify Pakistans products that in turn can help diversify the market for fruits and vegetables, which is currently quite limited.
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