Export diversification

The strategy of enhancing exports through their diversification has always won favour of our policymakers because of the high risks involved in the concentration of exports in a few commodities, particularly cotton and its products. Though, it is too early to say that such a shift is in the offing, the latest trend of certain minor exports is encouraging.
According to a news item in this paper on 23rd October, Pakistan exported a record 127,000 tonnes of mangoes this year, fetching $6.1 million, surpassing the previous record of 120,000 tonnes. One of the reasons which contributed to this feat was an increase of 25 percent in average export price from Rs 30 to Rs 40 per kilogram during the year. Although, mango season ended on 15th September, final figures are still being tabulated and it is hoped that exports could reach as high as 132,000 tonnes this season.
According to the Chairman, Fruits and Vegetables Exporters' Association, new markets like China and Jordan, along with traditional markets of the Arabian Gulf countries played a major role in increasing mango exports. With the start of shipments by sea to European countries, Pakistan could expect more orders from these countries in the coming season.
The increase is not only limited to mango exports. Other related products are also being exported in large quantities. According to the latest figures released by the Federal Bureau of Statistics (FBS), about 121,254 metric tonnes of fruits worth $44.33 million were exported during July-September, 2009 as against 94,583 tonnes, fetching $39.85 million in the corresponding period last year, showing a growth of 11.24 percent in value terms.
Exports of vegetables jumped by 45 percent from $7.44 million to $10.84 million in the same period, with the quantity going up from 24,219 metric tonnes to 43,983 metric tonnes. Keeping in view the total volume of our exports, the above increases may appear insignificant, but are definitely a step in the desired direction and could make a welcome difference in the composition of exports if this trend could somehow be accentuated and maintained in the coming period. This is very essential because extremely heavy dependence of export earnings of the country on a single commodity, ie, cotton, makes it highly vulnerable to local weather conditions and other factors like pest attacks and demand conditions abroad.
Any adverse development pertaining to this particular crop could be highly risky, forcing the authorities to seek foreign funding in order to maintain smooth flow of imports into the country. Fortunately, Pakistan has huge potential to export increasing quantities of certain non-traditional products like fruits and vegetables but this could only be exploited by creating an enabling environment in the country. For instance, the government has not only to maintain a proper exchange rate for exporters to enable them to compete on equal footing in a highly competitive international market but has also to build the necessary infrastructure like pack houses, modern grading facilities and common facility centres.
A lack of interest by the government in the past in this respect could be gauged from the fact that Pakistan produces 1.6 million tonnes of mangoes annually but has no proper facility for washing, de-sapping, grading and removal of field heat from mangoes. Similar is the position with other fruits and vegetables. Some of the consignments are even rejected due to fruit/vegetable fly infestation. Since foreign markets are very sensitive to quality issues with regard to these kinds of products, Pakistani authorities and the exporters have to go an extra mile to ensure the best international standards with a view to capturing and retaining the foreign markets.
Also, it is very important for the authorities to build proper storage and other facilities at the airports/seaports to transport perishable commodities as fast as possible to ensure timely delivery to foreign importers. Other countries, which are already engaged in this business in a big way, continue to upgrade their facilities with time to enhance the satisfaction level of foreign buyers and improve the delivery time. Besides, trade policies of the importing countries also need to be continuously watched to maintain or improve the competitive edge of the local exporters.
For instance, Iranian authorities had recently increased valuation on Pakistani kinno imports from $400 to $1300 per tonne, rendering the export of citrus fruit from the country uncompetitive. Pakistani embassy in Iran took up the matter with the relevant Iranian authorities immediately and the decision was reversed, providing a sigh of relief to the Pakistani exporters. Hopefully, other embassies and missions in foreign countries would be equally alive to the situation. Economic diplomacy has to ensure, at least, that our exporters are not discriminated against.