Pakistan Horticulture Sector
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Transcript of Pakistan Horticulture Sector
VALUE ADDITION IN HORTICULTURE SECTOR
Harvest TradingsApril 2013
Web: www.harvesttradings.com
economic use of water)
hi h h
B t t t f bli l d tt ib ti ti l f i
Horticulture Potential
• Horticulture is a major economic opportunity with a large global export market (USD150bn) and fast growth (12% per year). It also has the potential for tremendous socialimpact (employment creation and income generation) as well as sustainability (e.g bettereconomic use of water)
• Pakistan has not captured this opportunity yet, growing slower than the world market (6% vs.12% per year). It still remains a net importer of horticulture products (-USD 250m)
• The issues of the sector in Pakistan are well recognized (i.e. low land dedicated tohorticulture, low productivity, high losses, low value add) however these are only symptoms ofthe issue
• The real problem is that with the current industry structure, Pakistan cannot fulfil therequirements of the large global buyers who dominate this increasingly sophisticated market.Specific challenges include the:– Lack of sophisticated/ professional players– Lack of integration in the value chain
• The current set of solutions being undertaken in Pakistan focus on piecemeal interventionswhich have limited impact and limited scalability
• The government should facilitate a private-led integrated approach, with 3 specific initiatives:– Attraction of one key foreign importer– Development of an integrated pilot contract farming scheme– Beauty contest for public land attribution, promoting nucleus farming
• If Pakistan does this successfully, it can aspire to have a ~$1 to 1.5 bn export market from thehorticulture sector within the next 5 years
hi h h
B t t t f bli l d tt ib ti ti l f i
Pakistan Missing the Opportunities
• Horticulture is a major economic opportunity with a large global export market (USD 150bn) andfast growth (12% per year). It also has the potential for tremendous social impact (employmentcreation and income generation) as well as sustainability (e.g better economic use of water)
• Pakistan has not captured this opportunity yet, growing slower than the world market (6%vs. 12% per year). It still remains a net importer of horticulture products (-USD 250m)
• The issues of the sector in Pakistan are well recognized (i.e. low land dedicated tohorticulture, low productivity, high losses, low value add)
• The real problem is that with the current industry structure, Pakistan cannot fulfil therequirements of the large global buyers who dominate this increasingly sophisticated market.Specific challenges include the:– Lack of sophisticated/ professional players– Lack of integration in the value chain
• The current set of solutions being undertaken in Pakistan focus on piecemeal interventionswhich have limited impact and limited scalability
• The government should facilitate a private-led integrated approach, with 3 specific initiatives:– Attraction of one key foreign importer– Development of an integrated pilot contract farming scheme– Beauty contest for public land attribution, promoting nucleus farming
• If Pakistan does this successfully, it can aspire to have a ~$1 to 1.5 bn export market from thehorticulture sector within the next 5 years
18 4
Productivity of the horticulture sector in Pakistan can be furtherimproved to achieve the highest benchmark levels
Productivity gap vs. benchmarks1
Yield, t/ha Top 3 peer
Fruits Pakistan18.4
7.5
17.7
10.415.3
12.7
Apple Mango Tangerine
On average,Pakistan canimproveproductivity levelsby 40% on fruits
Vegetables 40.4 and vegetables
25.7
14.023.3 19.5
10.2
Onion Potato Tomato
1 Average of the top quartile of peers ranked by productivity for each item; peer group includes Bangladesh, China, Egypt, India, Indonesia, Kenya, Morocco,Nigeria, Philippines, Vietnam
SOURCE: FAOStat
Significant losses within the horticulture sector
Pakistan losses vs. best practices, %
Pakistan 30–40
2–4 timesmore
Best practices 5–15
• Level of losses vary accordingto the nature of the product
– Highly perishable products(e.g. mango kinnow,
vegetables)
– Durable products (e.g. potato,onions)
• Significant room for improve-ment with better post-harvestmanagement (e.g., rapid coolingafter harvest, packaging)
• Better varieties and ProductionTechnology
Source: Interviews
Pakistan
Pakistan has not yet fully developed its agro-processing industry
Low transformation rate
Processed food value add as share of total agriand processed food (%)
Philippines 31
Vietnam
China
Morocco
Indonesia
29Pakistan only
19 processes little ofits produce
18 compared tobenchmark
14 countries
Bangladesh 9
Pakistan 7
Egypt 7
India 4
Peer average: 14
SOURCE: Global Insight
Pakistan fresh products fetch much lower prices than otherexporting countries
Export unit value, $/kgFruits Vegetables
Spain 1.8 Morocco 0.4
Kenya 1.5
Philippines 1.3
Indonesia 0.8
Vietnam 0.4
Indonesia 0.3
Egypt 0.3
Peru 0.8 Bangladesh 0.3
Tanger-ines(incl.Kinnow)
India 0.7
Egypt 0.6
Pakistan 0.3
Kenya 1.0
India 0.9
Morocco 0.7
Indonesia 0.6
Egypt 0.4
China 0.4
Philippines 0.3
Pakistan 0.3
Toma-toes
China 0.2
Pakistan 0.2
India 0.1
Kenya 0.9
Morocco 0.7
Indonesia 0.4
China 0.3
Nigeria 0.3
India 0.3
Egypt 0.3
Pakistan 0.2
Pakistan freshproduce fetcheslower prices ininternationalmarkets thanother countries
SOURCE: FAO statistics
low productivity high losses low value add) however these are only symptoms of the issue
Specific Problems
• Horticulture is a major economic opportunity with a large global export market (USD 150bn) andfast growth (12% per year). It also has the potential for tremendous social impact (employmentcreation and income generation) as well as sustainability (e.g better economic use of water)
• Pakistan has not captured this opportunity yet, growing slower than the world market (6% vs.12% per year). It still remains a net importer of horticulture products (-USD 250m)
• The issues of the sector in Pakistan are well recognized (i.e. low land dedicated to horticulture,low productivity, high losses, low value add) however these are only symptoms of the issue
• The problem are• Lack of sophisticated/ professional players• Lack of integration in the value chain• Poor product post harvest management• Technology
• The current set of solutions being undertaken in Pakistan focus on piecemeal interventionswhich have limited impact and limited scalability
• The government should facilitate a private-led integrated approach, with 3 specific initiatives:– Attraction of one key foreign importer– Development of an integrated pilot contract farming scheme– Beauty contest for public land attribution, promoting nucleus farming
• If Pakistan does this successfully, it can aspire to have a ~$1 to 1.5 bn export market from thehorticulture sector within the next 5 years
9
Pakistan has large traditional marketing structure which does notlink with product differentiation, quality and safety
standards (e g powerhouses over the last
requires increased d l ti hi ith l
Horticulture is no more just farming, its an industry!
Customers are more demanding• Certification
New countries are competingaggressively• Development of very
Safety according tostandards (e.g.,CAC; SPS; PrivateStandards)
• Importance of
Being successfulas a nation in thehorticulture sector
aggressive horticulturepowerhouses over the lastdecade in countries such asChina, Kenya, Turkey
• Countries have developedQuality appearance,
packaging and taste
• Consistently high
requires increasedinvestment andsophistication
good relationships with largebuyers, who have investedheavily in those countries
Volumes volumes with timelydelivery
low productivity high losses low value add) however these are only symptoms of the issue
Th t h ld f ilit t f ith 3 ifi i iti ti
What needs to be done
• Horticulture is a major economic opportunity with a large global export market (USD 150bn) andfast growth (12% per year). It also has the potential for tremendous social impact (employmentcreation and income generation) as well as sustainability (e.g better economic use of water)
• Pakistan has not captured this opportunity yet, growing slower than the world market (6% vs.12% per year). It still remains a net importer of horticulture products (-USD 250m)
• The issues of the sector in Pakistan are well recognized (i.e. low land dedicated to horticulture,low productivity, high losses, low value add) however these are only symptoms of the issue
• The real problem is that with the current industry structure, Pakistan cannot fulfil therequirements of the large global buyers who dominate this increasingly sophisticated market.Specific challenges include the:– Lack of sophisticated/ professional players– Lack of integration in the value chain
• The government should facilitate reforms, with 3 specific initiatives:– Institutional development– Marketing & Agribusiness– Research and Technology Development
• If Pakistan does this successfully, it can aspire to have a ~$1 to 1.5 bn export market from thehorticulture sector within the next 5 years
13
The Options for Value Addition!
D
I
NT
PARTNERSHIPS d
P T h l ChE
The Chain Integration !!! (Three to Five Years)
EPLOYMENTINDUSTRY
INVESTMENTS
UNIVERSITYRESEARCH
PUBLICPRIVATE
PARTNERSHIPS
- Institution Reforms- Market Reform- Technology Change- Entrepreneurship- Model CRC’s
BASIC+APPLIED
season
d
Public sector may make investments through ExportDevelopment Fund (EDF)
NON EXHAUSTIVE
Technology needed Expected impact
Labs
Cool chain
• Modern Labs (for testing quality)• In main producing areas for export
• Cooling stations at production site• Cold storage at packing sites• Cool chain for transportation (e.g. reefer,
controlled atmosphere)
• Quality Assurance
• Higher quality• Lesser losses
Exporttreatment
• Irradiation facility for e.g. USA• Vapor heat treatment facility for e.g.
Japan• Hot water dip for e.g. South Korea
• Access to higher-end more profitablemarkets
ProcessingPackaging
• Modern Processing, washing, waxing,grading, de-greening equipment
• Packaging and branding
• Higher price fetched
Govt charge the rental from the exporters of the above facilities
d
B t t t f bli l d tt ib ti ti l f i
Conclusion/Recommendations
• Horticulture is a major economic opportunity with a large global export market (USD 150bn) andfast growth (12% per year). It also has the potential for tremendous social impact (employmentcreation and income generation) as well as sustainability (e.g better economic use of water)
• Pakistan has not captured this opportunity yet, growing slower than the world market (6% vs.12% per year). It still remains a net importer of horticulture products (-USD 250m)
• The issues of the sector in Pakistan are well recognized (i.e. low land dedicated to horticulture,low productivity, high losses, low value add) however these are only symptoms of the issue
• The real problem is that with the current industry structure, Pakistan cannot fulfil therequirements of the large global buyers who dominate this increasingly sophisticated market.Specific challenges include the:– Lack of sophisticated/ professional players– Lack of integration in the value chain
• The current set of solutions being undertaken in Pakistan focus on piecemeal interventions whichhave limited impact and limited scalability
• The government should facilitate a private-led integrated approach, with 3 specific initiatives:– Attraction of one key foreign importer for fruits– Development of an integrated pilot contract farming scheme for vegetables– Beauty contest for public land attribution, promoting nucleus farming
• If Pakistan can manage the value additions successfully, sky is the limit; Country may bringin ~$2 to 2.5 bn foreign exchange from the horticulture sector within the next 3 years