Pakistan envoy stresses need of promoting bilateral trade with US

Pakistan Ambassador to United States Ali Jehangir Siddiqui has emphasized the need of promoting bilateral trade between Pakistan and the United States.

He expressed these views while presiding over a day-long conference of Pakistan’s Consuls General and Commercial Counsellors in the United States at Washington.

Matters related to consular facilitation, bilateral trade and investment, and outreach to Pakistani-American community for promoting Pakistan-U.S. relations were discussed.

The Ambassador was briefed on recent improvements brought in consular services. Applauding the steps taken by the Embassy and the Consulates General, the Ambassador Ali Jehangir Siddiqui asked the concerned officers to further improve areas of consular services based on the feedback received from the community.

He directed the trade representatives to focus on untapped sectors on both sides for enhancing commercial ties between the two countries.

Basmati Rice Exports

The 13 percent YoY increase in exports for 10MFY18 was led in part by food exports, of which rice accounted for 40 percent. Nearly 80 percent of Pakistan’s rice exports are of non-Basmati rice. On average Basmati rice is over a $1,000 per ton as compared to less $500 per ton for non-Basmati rice, as per PBS data. That is a differential of nearly 150 percent which is why the premium-priced Basmati gets the spotlight a lot more than its brethren.

Basmati rice, similar to non-Basmati rice, has different varieties. As per REAP export data, there were mainly 6 different varieties of non-Basmati rice exported in FY15 and 4 different varieties of Basmati rice. The least expensive variety of Basmati – Basmati brown rice – was nearly 40 percent more expensive that the most expensive non-Basmati variety i.e. blended rice.
Globally the Basmati market (including raw, parboiled, and steamed) stood at $10.5 billion in 2017 and is growing at a CAGR of over 10 percent to reach $17.8 billion by 2023. EU, one of Pakistan’s main markets for Basmati rice, is growing at a CAGR of 3.2 percent and is expected to reach $615 million by 2023.
The non-Basmati rice has many exporting countries with players from ASEAN taking the lead. Basmati rice on the other hand is famed from originating from the sub-continent making India Pakistan’s main competitor. Here, Pakistan has an advantage as EU has banned Indian rice for having high level content of a fungicide called Tricyclazole.
 While this restriction is in place for EU alone at the moment, Jordan earlier, this year, denied permission for off loading containers carrying Indian Basmati for similar reasons.
Thus it is possible that it is a challenge that India will continue to face, especially if other countries jump on this band wagon. Since it will take a minimum of three harvests to bring down Tricyclazole content to permissible level, Pakistan has time to elbow in and increase market share.
It has been said innumerable times that Pakistan’s exports are non-diversified and dependent on resource goods. This is a state of affairs that is not possible to address in the short and medium term. If Pakistan has to depend on agri goods in the foreseeable future, why not ensure that they are at least premium priced such as Basmati rice?

olive valley

It has been recently reported that the government is trying to convert Chakwal valley into an olive valley. For this purpose, two million olive plants will be distributed in Punjab over the next five years while an olive oil preparing factory is already functional in the region.
Pakistan’s water starved economy is dependent on water intensive crops such as sugarcane and rice . Olive trees are hardy plants with roots so extensive and strong that in time of drought they can survive by drawing water from deep within the earth. They are also able to produce olives for hundreds of years enabling the return on investment for setting up olive trees to be reasonably high and sustainable.
A report by SMEDA estimates that on average, an olive plant produces 20 to 35 kg of fruit per year which contain more than 12 percent oil content. Olives can be sold at the rate of Rs.73 per kg and oil can be sold at Rs. 500 per litre. Estimates suggest that the current there are 8 million wild olive trees present in different provinces, which if drafted and converted for olive production could present a potential of earning of $1 billion annually.
Since an olive plant requires at least 5 years before it can start bearing fruit, it is not feasible for farmers to opt for olive trees on their own. To promote its cultivation, the Punjab government has given a 70 percent subsidy on watering and cultivation and a 60 percent subsidy on installation of drip irrigation systems. The agricultural department has also promised to purchase olives so that farmers can sell their produce immediately.
However, this is not the first time an attempt has been made to create an olive valley. In 2016, Punjab government tried to create an olive valley in Potahar over 15,000 acres of land with a project cost of Rs 2.8 billion. Similarly, Pakistan Economic Survey FY18 lists olive forests in Punjab as part of its Green Pakistan Program, which is an initiative to revive forestry and wildlife resources to make the country more environmentally resilient. However, there has been little evidence of progress or results.
Though the government is providing some support for olive production, it also provides more lucrative assistance to main stream crops such as rice, sugar, wheat and cotton in the form of support prices and subsidies. There is little incentive for farmers to shift to the more prudent, profitable and long term sustainable production of olives. Yet, this shift needs to be made at least in part to decrease pressure on Pakistan’s water resources, decrease the edible oil import bill and tap into the lucrative Middle Eastern market that has high olive oil demand.