Food exports gains not enough to plug deficit

Food exports are growing faster this fiscal year, but the quality of exports is not such that it can make enough and immediate impact on stubbornly high food trade deficit.

The food trade deficit was $1.31 billion in the first half of this fiscal year compared to $1.21bn a year ago, as food imports jumped to $3.24bn from $2.86bn but exports rose somewhat slower to $1.93bn from $1.65b. In the July-December period, additional earnings of $181 million came from sugar and $130m from rice exports. The exports of the two commodities are expected to grow in the second half too.

Performance of other food items has remained mixed: growth impact in some items, e.g. fish and fish preparations, has offset decline in case of others like meat and meat products. In the near future, the current pattern will not help in accelerating exports to make an impact on food trade deficit, which can only be squeezed through quicker and larger gains. At the same time, controlling food imports seems difficult amid higher demand and the economy expected to grow by six per cent.

Bumper sugar cane production and enough installed capacity of cane crushing ensure the creation of surplus. Export marketing, too, has improved over the years. "For us, the problem is pricing," says an official of the Pakistan Sugar Mills Association. The government will hopefully not delay the finalisation of sugar export plans in coming years as the country has suffered badly on this account. "Exporters now ought to focus on value-added products and diversified export markets," says an official of the Ministry of Commerce. "For example, they can increase exports of brown sugar, which typically fetches higher per-unit value than white sugar. Similarly, they can explore new markets in Central Asia and East Asia."

The Rice Exporters Association of Pakistan (REAP) has recently announced to reward sizable buyers of Pakistani rice. That's a right step in the right direction. Indonesia has long been doing this. REAP expects rice exports to touch $4b a year from about $2b now if the government and rice millers focus on export promotion.

However, millers will have to go beyond demanding incentives, and should come up with the specifics: what markets they are looking at and how exactly the government can help them in overcoming obstacles in those markets?.