Pakistan’s status as a low-value commodity exporter is at best a misnomer. Over the past decade, consolidated share of crop-based exports has remained fairly stable at 17 of total commodity exports. Yet, that stability has come about due to a concomitant contraction in value-added exports, and not due to a growth in agri-exports. In fact, since FY13 when crop-based exports peaked at $4.4 billion, the sector has witnessed a secular decline with a CAGR of negative 0.8 percent over past eight years - touching a new bottom of $3.9 billion in FY19 on annualized basis.
While it is correct that prices of major grains and cereals have ebbed over the past decade, the purported “backbone” of the economy failed to usher in a volume growth in quantities exported. Just to showcase volume of basmati rice export, pride of Pakistan’s cereals, has declined to almost half since FY11.
The fate of raw cotton has during this period has been just as abysmal. Once a net exporter, the country became a net importer during the 2000s with the textile boom of Musharraf-era – an acceptable trade-off considering the re-exports were hoped to offset the exchange loss.
Ever since, not only have textile exports remained stuck at average $12 billion throughout past decade, raw cotton exports have climbed down from $0.4 billion in FY11 to almost barely twelve thousand dollars. Given how cotton production has been performing, readers should not be surprised if the country records nil cotton exports in the coming fiscal year.
Which brings us to the why part. The fact is, just as industrial and services sectors of the economy, Pakistan’s crop-based out equally consumption centric. Of the four major crops – wheat, cotton, cane and paddy, only rice has a significant export share out of total domestic production. Whereas, the state of wheat and sugarcane is not even worth a comment, with erratic years of exports largely function of government subsidy in years of extreme supply glut.
Moreover, if the decline in demand for Pakistani grains a function of international commodity prices that further cements the argument that local crop’s lack of competitiveness is becoming increasingly unsustainable. Afterall, total global demand continues to expand, only to be fulfilled by economies such as China and India with higher yield and improved returns per dollar invested.
A sector that employs nearly forty percent of labour force and directly & indirectly sustains two-thirds of households in the country can survive on government protection only for so long. If Pakistan’s economy is to break through the cycle of subpar growth, Pakistan’s crop sector needs to usher in a revolution, and fast.
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