China plans to remove import and export tariffs on a range of goods at the start of January next year. For most part, Pakistan will not be the beneficiary as the adjustments impacts industries such as aircraft engines, information technology products and pharmaceutical goods.
But there is good news to be had, if Pakistan can capitalize on the opportunity. US was one of the main suppliers of soybean to China. Given the trade war, China is looking for alternative meals that can be used in animal feed.
Import tariffs on rapeseed meal, cotton meal, sunflower meal, and palm meal will be removed starting January 1, 2019. While some imports of US soybean have resumed, China’s official statement expresses the belief that removal of tariffs on alterative meals will help improve the reliability of its animal feed meal supply chains.
Pakistan has historically had abysmally low levels of oil seed cultivation, despite fitting in the cropping system. Research indicates that cultivation can be in the form of rice-sunflower-rice and cotton-sunflower-cotton, but corn, rice, wheat, and sugarcane are generally more remunerative.
Growing various oil seeds and converting them into meal would enable Pakistan to tap in China’s $12.7 billion soybean feed market. The US China trade war has opened up a whole host of opportunities for exports to China to diminish the trade deficit. While high end exports such as aircraft engines are not feasible, markets such as animal feed can be explored.
However, while tariffs can be changed with the stroke of a pen, changing crops historically cultivated would require years to increase acreage and yield. Detractors could argue that by the time Pakistan has grown sufficient crop and enhanced processing facilities, the trade war could have cooled down. Other countries with readily available supply chains could be taking care of China’s import needs.
Pakistan is highly dependent on palm oil imports for ghee and has increased soybean imports for meal. Increase in cultivation in oil seeds would contribute positively towards the edible oil sector and has been repeated the request of related associations such as PEORA (Pakistan Edible Oil Refiners Association) and APSEA (All Pakistan Solvent Extractors Association).
Other than the need to import substitute palm oil and soybean, oilseeds such as canola have a superior nutrient profile and are an excellent feed for animals and birds, especially poultry. By increasing the acreage under oil seeds, Pakistan could import substitute and enhance exports in the long run while improving the nutrition for people and animal alike. It’s a win on all fronts.
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