The impact of export the orange on the balance of trade of Pakistan

Submitted to,

Prof. Muhammad Akram

Submitted by,

Muhammad Faisal BC16-649

Ghulam Mustafa BC16-658

Abdul Taimoor BC16-671

Ali munib nizami BC16-684

Muhammad Amir BC16-716

HAILEY COLLEGE OF COMMERCE

THE UNIVERSITY OF PUNJAB

LAHORE
Table of Contents
Abstract...................................................................................................................................................3
Introduction:............................................................................................................................................4
2.1 MAJOR CITRUS GROWING AREAS IN PAKISTAN...............................................................................5
2.2 Harvesting:.......................................................................................................................................5
2.3 Post-Harvest Issues..........................................................................................................................6
2.4 Constraints of production................................................................................................................6
2.5 Product Specification:......................................................................................................................8
2.6 Different Channels:........................................................................................................................10
Oranges Exports by Country..................................................................................................................11
3.1 Countries.......................................................................................................................................11
3.2 Advantage......................................................................................................................................12
3.3 Opportunities.................................................................................................................................13
3.4 Oranges Exporting Companies.......................................................................................................14
3.5CITRUS..................................................................................................................................................15
3.6 Exports...........................................................................................................................................19
3.7 Pakistan - Citrus fruit production quantity.....................................................................................21
Balance of trade....................................................................................................................................22
4.1 How Importing and Exporting Impacts the Economy....................................................................23
How to enhance citrus export...............................................................................................................25

2
Abstract

Pakistan is producing more than 30 types of different fruits of which citrus fruit is leading
among all fruit and constitutes about 30% of total fruit production in the country. Above 90% of
citrus fruits are produced in Punjab province and distributed through different value chains in
domestic as well as in international markets. A large part of citrus fruit produced in Pakistan is
mostly consumed locally without much value addition; however, 10–12% of total production is
exported after value addition. The value chains are very diverse, and a number of different
players actively participate in these chains, which ultimately decide the destination of citrus
fruit in these supply chain(s). Knowing all these facts, the main aim of this research is to identify
different value chains of citrus fruit (Kinnow) in Pakistan and also to identify and discuss the
role and function of different value chain players in the citrus industry in Pakistan. A survey
involving of different players of Pakistan’s citrus industry was conducted in 2010 to 2020 to
better understand the citrus value chain(s It was found that citrus value chains can be classified
into two major types: unprocessed citrus value chain and processed citrus value chains. It was
also found that in the past, a large number of citrus growers were involved in pre harvest
contracting for their orchards and only a small number of citrus growers sold their orchards
directly into local and foreign markets. The proportion has been gradually changed now and
growers are becoming progressive and more market oriented.

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Introduction:

In Pakistan, agriculture is the largest sector which provides livelihood to 44.7 percent of the
total labor force. It is because of its central importance in the economy that the Government
has identified agriculture as one of the four major drivers of growth. In this sector production of
fruit and vegetable plays pivotal role. In fact, the Nature has blessed this country with ideal
climate for growing a wide range of delicious fruits and large varieties of vegetables. Over the
years, Pakistani experts have developed unique stains of exotic fruit varieties unmatched for
their rich flavor and taste. From the selection of the finest fruits grown, a reasonable quantity is
processed and properly packed for sales and consumption in local market and exporting
abroad.

Pakistan is one of the few countries of the world where fruits grown in cool temperate climate
(apples, plums, pears, cherries), warm temperate (apricots, grapes, pomegranates and melon),
and subtropical climate (citrus, mango, banana, dates and guava) are available. Pakistan
annually produces about 12.0 million tons of fruits and vegetables. Citrus fruit is leading in term
of production followed by mango, dates and guava. Fruit and vegetable export trade in Pakistan
amounts to US$ 8 billion (2019/2020), of which fruits account for US$ 6.67 billion , vegetables
US$ .33 billion and fruit & vegetable preparations (mostly juices) US$ 1 billion. Their share in
Pakistan’s total exports is slightly over one percent.

With 402000 tons, Pakistan is the largest producer of Citrus in the world. Citrus is cultivated on
an area of 313,212 hectares and it is increasing @ 5% annually. Pakistan is also the largest
producer of 'Citrus Reticula' variety (Kinnow), this unique variety of citrus is indigenous to this
part of the world. According to an estimate approx. 95 percent of the total Kinow produced all
over the world is grown in Pakistan. Punjab is the Centre of production and supply citrus fruits
of high quality and grade. Area under different varieties indicates that about 86 per cent of the
citrus is covered by Kinnow variety followed by the Musambi (10 %), Feutral (4%) Blood Red
(1%). Kinnow is only grown in Pakistan and 5 Bhalwal is the main Kinnow producing center. The

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harvesting season lasts for 4 months, starting from mid-December to mid of April. However,
according to a rough estimate of industry, approximately 20-40 percent of the produce is
wasted during pre & post-harvest stages. Mismanagement of diseases, unfavorable weather,
delay in harvesting, absence of proper roads and cold storage facilities, glut formation in the
market and other similar factors are responsible for these losses.

2.1 MAJOR CITRUS GROWING AREAS IN PAKISTAN

PUNJAB

Districts of Sargodha, Jhang, Sahiwal, Lahore, Multan, Gujranwala, Sialkot, Mianwali

SINDH

Districts of Sukkur, Nawabshah, Khairpur

KHYBER PAKHTUNKHWA

Peshawar, Mardan, Swat, Hazzara, Nowshera, Swabi

BALOCHISTAN

Sibbi, Makran, Kech

2.2 Harvesting:

Pakistan is blessed with a climate ideally suited to the farming of all kinds of fruits - rich in taste
and juicy. Farmers have been developing new varieties of fruit by grafting one exotic variety
with other. Sunny winters in Pakistan yield a large variety of citrus fruits. Season of Kinnow in
Pakistan starts from December and last till April. It has a soft skin which is easy to peel and has
a lovely fragrance. Kinnow is very delicious in taste and if treated with proper fungicide and wax

5
and careful handling and storage of Kinnow at about 4 Degree Centigrade can retain its
freshness until 2 months.

Following are the main commercial varieties cultivated in the country:

Sweet Orange: Succri, Mausami, Washington Navel, Jaffa, Red Blood, Ruby Red and Valencia
Late.

Mandarines: Feutrells Early and Kinnow

Grape Fruit: Mash Seedless, Duncan, Foster and Shamber

Lemon: Eureka, Lisbon Lemon and rough Lemon

Lime: Kaghzi Lime and Sweet Lime

2.3 Post-Harvest Issues

According to the report of Pakistan National Commission on Agriculture, defects and
inadequate facilities in postharvest handling transport storage and marketing cause up to 20-40
percent loss of fruit and vegetables. This is true for Kinnow as well and the value of this loss
amounts to millions of rupees annually. Following are the prominent causes of Pre & Post-
Harvest loss of Kinow in Pakistan.

 Poor Farm Management

 Improper harvesting
 Absence of anti-fungal treatment
 Delays in the lifting of harvested crop
 Poor non-refrigerated transportation
 Below standard Fruit markets (Sabzi-mandies)
 Absence of proper cold storage facility
 Inadequate Packing

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2.4 Constraints of production
Following factors are identified as major constraints of production.

 Absence of training institutions.

 Absence of disease treatment.
 Poor farm management practices (improper planting, pruning, fertilization, irrigation,
spraying etc.)
 Absence of proper roads and refrigerated transportation
 Lack of cold storage and transportation facilities,
 Poor hygienic conditions of fruit markets.
 Lack of investment & research.
 Weak linkages among growers, processors & exporters.

Area under cultivation of Kinnow and production per annum both have increased side by side
however, there is no noticeable increase in yield per acre Percentage share of exportable
quality in total picked fruit also remained low. At the same time post-harvest losses are very
high. Major factors responsible for this state are inappropriate planning strategies during
planting, poor sanitation, poor farm management and lack of proper infrastructure for post-
harvest handling.

In addition to the lack of technical know-how at growers' level specialized extension supports
on Kinnow cultivation are virtually not available. Research output is still in its infancy and the
little work done by agricultural development institutions like, Agriculture University (Faislabad),
Agriculture Research Institution (Tando-Jam) so far, is extremely inadequate. Surveys have
shown that our scientists have made no noticeable improvements in the genetic engineering
and in so many years have not been able to produce better varieties or have not managed any
organized plan to train growers in the field of better farm management. Above all there is a lack
of any coordination and sharing among different departments and organizations working with
the same objectives of horticulture development. In addition there is a strong need to provide
basic infrastructure like refrigerated transport, cold storage, processing, commercial scientific
packing, and international marketing.

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2.5 Product Specification:

Citrus is most commonly thought of as a good source of vitamin C. However, like most other
whole foods, citrus fruits also contain an impressive list of other essential nutrients, including
glycaemia and non-glycemic carbohydrate (sugars and fiber), potassium, floated, calcium,
thiamin, niacin, vitamin B6, phosphorus, magnesium, copper, riboflavin, pantothenic acid and a
variety of phytochemicals. In addition, citrus contains no fat or sodium and, being a plant food,
no cholesterol. The average energy value of fresh citrus is also low (see Table), which can be
very important for consumers concerned about putting on excess body weight. For example a
medium orange contains 60 to 80 kcal; a grapefruit 90 kcal and a tablespoon (15 ml) of lemon
juice only 4 kcal.

Nutritional facts about citrus fruit

Orange Grapefruit Mandarin

Weight (g) 131 236 84

Energy (kcal) 62 78 37

Fibre content (g) 3.1 2.5 1.7

Ascorbic acid (mg) 70 79 26

Folate (mcg) 40 24 17

Potassium (mg) 237 350 132

Proximate Analysis of Kinnow

Varieties TSS T. Acidity PH Sugar Ascorbic Acid Season

Kinnow 11-14 1.01-0.87 4.50-4.80 11-14 59-60 Nov-Feb

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NUTRITIVE VALUE OF KINNOW

Chemical composition of Kinnow when ripe and ready for consumption.

• Juice % 47.50

• Vit.C. (mg/100ml) 32.00

• Calcium (mg/100ml) 40.00

• Phosphorous (mg/100ml) 18.00

• Iron (mg/100ml) 00.45

• Reducing sugar percent 03.75

• Non reducing sugar percent 03.65

• TSS % 12.00

• Sugar % 09.00

• Acidity % 01.00

• TSS/Acid ratio 10.00

Kinnow Distribution & Marketing Channel: Current Status

Harvested Kinnow is currently being marketed and consumed through the following three

2.6 Different Channels:

(a) Wholesale (Sabzi-mandi) markets.

Wholesales markets of fruits and vegetables are commonly known as 'Sabzi-mandies’ and these
markets exist in almost every major city. Seasonal crops are brought mostly by middleman
(Theka-i-Dar) and in some cases by grower himself in trucks or trolleys to the place of auction,

9
'Aarat', specified in these markets. Here the commodity is auctioned and the price is mostly
based on the principle of supply and demand. 'Arty' (Person who do auction) and 'pandi'
(Loader) takes their percentage share from the total auctioned price.

(b) Juice manufacturing factories.

Juice processing plants consume approximately 10% per season of the total available crop of
Kinnow. These processing factories produce a Kinnow extract that is known as FCKJ (frozen
concentrated Kinnow juice). Kinnow because of its unique taste and aroma when mixed with
orange juice gives it flavor and better taste. Sometimes it is consumed by mixing it with alcohol,
especially in European countries. It shows that this sub-sector has

great potential for future exports if it is properly channeled.

(c) Export of fresh Kinnow through processing units.

Waxing and Processing of Kinnow is done to maintain its freshness and to enhance its shelf Life.
At present fresh Kinnow is being processed at both local and imported processing units these
are concentrated mostly in Sargodha (Bhalwal). Kinnow exporters generally maintain these
processing units themselves and process fruit for their targeted export. Few processors offer
services for others

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Oranges Exports by Country

Global sales from oranges exports by country totaled US$5.3 billion in 2020.
Overall the value of exported oranges appreciated by an average 18.2% for all exporting
countries since 2014 when shipments of oranges were worth $4.5 billion. Year over year, the
value of global oranges exports rise by 5.6% from 2019 to 2020.
Among continents, European countries sold the highest dollar value worth of exported oranges
during 2020 with shipments worth $2.2 billion or 40.5% of total exported oranges. In second
place were African exporters at 29% while 12.2% of worldwide shipments originated from
North America. Asia supplied 10.6% worth of oranges, trailed by Oceania (4.3%) led by Australia
then Latin America (3.3%) excluding Mexico but including the Caribbean.

For research purposes, the 6-digit Harmonized Tariff System code prefix for oranges is 080510.

3.1 Countries
Below are the 15 countries that sold the highest dollar value worth of oranges on international
markets during 2020.

1. Spain: US$1.3 billion (24.3% of total exported oranges)

2. South Africa: $770.2 million (14.4%)

3. Egypt: $666.3 million (12.5%)

4. United States: $625 million (11.7%)

5. Netherlands: $296.9 million (5.6%)

6. Australia: $230.4 million (4.3%)

7. Hong Kong: $169.9 million (3.2%)

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 8. Greece: $161.7 million (3%)

9. Turkey: $161.4 million (3%)

10. Italy: $128.6 million (2.4%)

11. Portugal: $115.3 million (2.2%)

12. China: $107.5 million (2%)

13. Morocco: $84.4 million (1.6%)

14. Chile: $84.1 million (1.6%)

15. United Arab Emirates: $48.6 million (0.9%)

The listed 15 countries shipped 92.6% of all oranges exports in 2020 by value.

3.2 Advantage

The following countries posted the highest positive net exports for oranges during 2018.
Investopedia defines net exports as the value of a country’s total exports minus the value of its
total imports. Thus, the statistics below present the surplus between the value of each
country’s oranges exports and its import purchases for that same commodity.

1. Spain: US$1.2 billion (net export surplus down -4.3% since 2014)

2. South Africa: $768.9 million (up 27.6%)

3. Egypt: $666.3 million (up 50.7%)

4. United States: $380.9 million (down -5.9%)

5. Australia: $208.1 million (up 84.1%)

6. Greece: $158.1 million (down -5.5%)

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 7. Turkey: $153.9 million (down -15.8%)

8. Morocco: $84.4 million (up 22.6%)

9. Chile: $80.5 million (up 71.6%)

10. Iran: $30.5 million (up 2,366%)

11. Uruguay: $22.9 million (down -30.4%)

12. Argentina: $21.5 million (down -14.2%)

13. Mexico: $15.8 million (up 43%)

14. Nicaragua: $13.7 million (up 115.1%)

15. Tunisia: $10.2 million (down -5.1%)

Spain earned the highest surplus in the international trade of oranges. In turn, this positive cash
flow confirms Spain’s strong competitive advantage for this specific product category.

3.3 Opportunities

The following countries posted the highest negative net exports for oranges during 2018.
Investopedia defines net exports as the value of a country’s total exports minus the value of its
total imports. Thus, the statistics below present the deficit between the value of each country’s
oranges import purchases and its exports for that same commodity.

1. France: -US$417.1 million (net export deficit up 21.9% since 2014)

2. Germany: -$394.3 million (up 21.9%)

3. China: -$329.3 million (up 35077.9%)

4. Russia: -$310.2 million (down -25.7%)

5. South Korea: -$250.8 million (up 52.2%)

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 6. Canada: -$214.6 million (up 9.6%)

7. United Kingdom: -$211.6 million (up 1.6%)

8. Saudi Arabia: -$207.2 million (up 10%)

9. Hong Kong: -$198.5 million (up 13.8%)

10. Japan: -$124.2 million (up 10.7%)

11. Poland: -$116.4 million (up 16.9%)

12. Iraq: -$111 million (up 420.5%)

13. Belgium: -$105 million (down -0.2%)

14. Netherlands: -$96.6 million (down -48.5%)

15. Vietnam: -$94.9 million (up 799.7%)

France incurred the highest deficit in the international trade of oranges. In turn, this negative
cash flow highlights France’s strong competitive disadvantage for this specific product category
but also signals opportunities for oranges-supplying countries that help satisfy the powerful
consumer demand.

3.4 Oranges Exporting Companies

According to global trading platform Alibaba, the following companies are also examples of
oranges-trading companies located in the country shown within parentheses:

 Elk nana Company MAFAZA (Egypt)

 Global Prime Group (PTY) Ltd (South Africa)

 Intron Ltd (Greece)

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  Marryat Trading (Morocco)

 NAFTA Enterprises PTY Ltd (Australia)

 Nova Trading SAC (Peru)

 Pons Redondo Group SLU (Spain)

 Shanxi Qinghe Trading Co, Ltd (China)

 Sunkist Growers co-operative (United States)

3.5 CITRUS

Punja Sind KP Balochista Pakista

Year b h K n n

(Area '000' hectares)

2000-01 187.6 3.9 4.8 2.4 198.7

2001-02 183.2 4.1 4.5 2.4 194.2
2002-03 170.8 4.1 4.3 2.4 181.6
2003-04 166.6 4.2 4.4 1.3 176.5
2004-05 173.9 4.2 4.4 1.3 183.8

5
Years'Avg: 176.4 4.1 4.5 2.0 187.0
2005-06 182.1 4.4 4.5 1.3 192.3
2006-07 183.3 4.5 4.1 1.3 193.2
2007-08 189.2 4.5 4.4 1.3 199.4
2008-09 189.8 4.5 4.2 1.4 199.9
2009-10 188.2 4.5 4.3 1.4 198.4
5-
Years'Avg: 186.5 4.5 4.3 1.3 196.6
2010-11 184.2 4.9 4.0 1.4 194.5
2011-12 183.6 4.9 4.1 1.4 194.0
2012-13 183.3 5.1 4.2 1.4 194.0
2013-14 183.2 5.1 4.0 1.4 193.7
2014-15 183.4 4.9 4.0 1.4 193.7
5- 183.5 5.0 4.1 1.4 194.0

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 Years'Avg:
2015-16 181.8 4.9 3.9 1.6 192.2
2016-17 177.2 4.2 3.9 1.6 186.9
2017-18 174.2 4.0 3.9 1.6 183.7

(Production '000' tons)

2000-01 1813.0 30.9 40.2 13.6 1897.7

2001-02 1751.0 28.1 37.5 13.7 1830.3
2002-03 1623.5 27.7 38.0 13.1 1702.3
2003-04 1688.7 28.5 37.2 5.9 1760.3
2004-05 1872.3 28.6 36.8 6.0 1943.7
5-
Years'Avg: 1749.7 28.8 37.9 10.5 1826.9
2005-06 2385.1 29.5 37.7 6.1 2458.4
2006-07 1400.7 31.5 34.4 5.8 1472.4
2007-08 2219.3 30.9 35.9 8.4 2294.5
2008-09 2059.5 30.5 33.8 8.4 2132.2
2009-10 2077.5 30.5 35.1 6.9 2150.0
5-
Years'Avg: 2028.4 30.6 35.4 7.1 2101.5
2010-11 1912.0 30.9 32.3 7.0 1982.2
2011-12 2076.8 30.9 32.6 7.0 2147.3
2012-13 1930.1 31.4 33.3 7.0 2001.8
2097. 31.
2013-14 7 30.9 6 7.5 2167.7
2014-15 2328.1 30.1 31.0 7.0 2396.2

5-
Years'Avg: 2068.9 30.8 32.2 7.1 2139.0
2015-16 2276.1 29.5 31.7 6.8 2344.1
2116. 30.
2016-17 5 26.3 3 7.0 2180.1
2289. 30.
2017-18 1 25.0 3 7.0 2351.4

Table 1: Area and Production of Kino

Year Area (000 Hectares) Production (000 tons)

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2014-15 198.4 2,132.2

2015-16 196.6 2,150.0

2016-17 194.5 2,101.5

2017-18 195.6 1,982.2

2018-19 195.4 1,986.7

Source: Agriculture Statistics of Pakistan.

Table 2: World’s Top Citrus

Producing Countries Country Production (tons)

Brazil 20,682,309

China 19,617,100

United States 10,017,000

Mexico 6,851,000

India 6,286,000

Spain 5,703,600

Iran 3,739,000

Italy 3,579,782

Nigeria 3,325,000

Turkey 3,102,414

Pakistan 1,995,000

Source: World Atlas.com

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Table 3: Export of Fresh Kino from Pakistan

Year Quantity (Tones) Value (US$ 000) Value (PRs. Million)

2015-16 393,310 170,581 17,386

2016-17 372,160 171,627 17,782

2017-18 174,624 68,305 7,519

2018-19 283,807 110,614 13,709

Table 4: Country-wise Exports of Fresh Kino (Major Countries)

Quantity: tons

Value: PRs. Million

Country 2018-19 2017-18

Quantity Value Quantity Value

Afghanistan 283,807 13,709 174,624 7,518

Bahrain 16,877 1,081 25,591 1,204

Indonesia 12,795 692 7,112 291

Kuwait 797 41 2,428 87

Philippines 19,132 1154 19,248 8,113

Russian 48,776 3198 31,879 1,936

Saudi Arabia 5,569 337 4,849 194

Uruguay 1,606 86 7,529 107

U.A.E 17,857 929 20,092 777

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U.K 10,867 317 2,780 60

Belgium 2,869 153 3,052 113

Oman 3,470 183 5,600 219

Uzbekistan 13,980 495 199 5

All others 154,595 8,666 130,359 13,105

Total 283,807 13,709 174,624 7,519

Source: Pakistan Bureau of Statistic source: Agriculture Statistics of Pakistan

3.6 Exports

With the changing consumer preferences towards consumption of fresh and convenience food,
the global demand for fresh fruit is increasing. There is a huge demand from both the fresh and
processed oranges by the consumer. Food exports are also linked with food tastes, which are
deeply cultural in nature. The export of food ‘taste’ has to precede the export of the food
‘product’ itself. Pakistani food products sold abroad are mainly consumed by South Asian
communities, and the volume of these exports to a country is directly proportional to the size
of the ethnic community there. In the mainstream market segment, the Pakistani Kino has to
compete with seedless mandarin and clementine from Spain, Morocco, Argentina and South
Africa. Though smaller in average size and harder to peel, mandarins from competitors are
claiming a larger market share because of being seedless. In the European market, Pakistani
citrus has an insignificant 0.09% share. Pakistani Kino’s availability in the European market is
irregular. Kino is mainly used as a raw material for juice by a few big companies in Europe, but it
is not consistently imported as a table fruit. The export figures for these fruits are increasing
every year with leaps and bounds Export of fresh Kino from Pakistan increased from 175 million
tons worth PRs. 7.52 billion s during the year 2017-18 to 284 million tons worth Rs.13.71 billion
in 2018-19, thus showing an increase of 82% in terms of value. Exports of Kino from Pakistan

19
are given in Table-3. Kino exporters of the country have been advised to accelerate their fruit
exports to Malaysia with sizable percentage of Chinese origin population fast preparing for their
New Year festival celebrated on February 5. Traditionally Chinese present Kino to each other
during the New Year season as

a holy fruit and it is right time to market Kino popular among the Chinese, constituting almost
40% of the total population of Malaysia, said senior horticulturist and fruit exporter. Major
international markets for Pakistani Kino’s during 2018-19 were Afghanistan, Russian Federation,
Saudi Arabia, UAE, Indonesia, Philippines’ and Kuwait. Country-wise exports of fresh Kino from
Pakistan are given Table-4.

3.7 Pakistan - Citrus fruit production quantity

Pakistan targets $195 million through kinnow export this year

 Last year, the country earned the highest export revenue of $222 million by exporting
370,000 tons of the fruit

 Lack of new varieties, declining quality, and absence of quarantine protocol posing
major export challenges

2,247,956 (tons) in 2018, now Pakistan exported the 170 million

In 2018, citrus fruit production for Pakistan was 2.25 million tons. Citrus fruit production of
Pakistan increased from 427,000 tons in 1969 to 2.25 million tons in 2018 growing at an
average annual rate of 4.19%.

Date Value Change, %

2020 1,745,295 -2.93%

2019 2,042,369 -0.11%

2018 2,247,956 -0.19 %

2017 2,252,287 -3.45 %

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2016 2,332,808 -2.62 %

2015 2,395,550 10.58 %

2014 2,166,385 8.03 %

2013 2,005,400 -6.61 %

2012 2,147,440 8.34 %

2011 1,982,200 -7.80 %

2010 2,150,000 0.84 %

Balance of trade

The balance of trade, commercial balance, or net exports, is the difference between the
monetary value of a nation's exports and imports over a certain time period. Sometimes a
distinction is made between a balance of trade for goods versus one for services

Pakistan recorded a trade deficit of 237365 PKR Million in March of 2020.

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Exports of Pakistan

(Billion US dollars)

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Jan to
march
25.354 24.718 24.802 25.078 24.089 21.972 22.003 24.768 24.217 16.434

Contribute the orange value in exports

Value (US$ 000)

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

135,620 153,053 153,283 171,957 170,581 171,627 68,305 110,614 148,389

4.1 How Importing and Exporting Impacts the Economy

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In today’s global economy, consumers are used to seeing products from every corner of the
world in their local grocery stores and retail shops. These overseas products—or imports—
provide more choices to consumers. And because they are usually manufactured more cheaply
than any domestically-produced equivalent, imports help consumers manage their strained
household budgets.

KEY TAKEAWAYS

 A country's importing and exporting activity can influence its GDP, its exchange rate, and
its level of inflation and interest rates.

 A rising level of imports and a growing trade deficit can have a negative effect on a
country's exchange rate.

 A weaker domestic currency stimulates exports and makes imports more expensive;
conversely, a strong domestic currency hampers exports and makes imports cheaper.

 Higher inflation can also impact exports by having a direct impact on input costs such as
materials and labor

Now we discuss the impact of orange on the balance of trade. In 2011, we did export the
finished and raw goods about 25.345 billion, and we traded the orange about 13.6 million .if we
did not export the orange than we couldn’t get the 13.6 million and we could not increase the
foreign reserve and had not maintain the balance.

In 2012, we gained the foreign reserve about 24.5 billion and through orange export we took
the dollar about 15.6 million. Again if we did not export the citrus, we couldn’t take the foreign
reserve and could not increase the own reserve.

This was the glimpse of impact on the export of orange of balance of trade of Pakistan

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How to enhance citrus export   

THE citrus, mainly kinnow, export season is at its fag end and has proved to be a mixed blessing
for the country. On the one hand, almost 10 per cent of the crop was lost to the alternate
bearing factor and weather vagaries.

On the other, both the phenomena improved weight and quality of the fruit, as trees had to
support less number of fruits, and the country ended up earning almost 30 per cent additional
foreign exchange because of better international prices.

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According to market figures, which are not absolute, so far 300,000-325,000 tons of citrus fruit
was exported against an informal target of around 400,000 tons. The export figures, so far, are
almost identical to those of last year, but earnings are up to $120 million against $90 million
last year.

The uncertainty about the finality of both the figures – volume and value – comes from by road
exports (read smuggling) to Iran and Afghanistan. No one knows how much citrus has gone to
both these states, and at what price. But formal figures – less in quantity and more in earnings
– create optimism for the country and its exporters.

However, the export pattern necessitates some long-term changes in production and handling
of the fruit. For the last many years, citrus exports are on the rise. New markets have been
found and a niche has been created in them. Exporters hope that the trend would not only hold
but also expand in years to come, especially if some steps are taken, like developing new
varieties that cater to the existing and new markets, build required infrastructure and improve
management practices.

For new varieties, there is a need to work on two planks: for the East European markets and
high-end European markets. During the last few years, Russia and Ukraine have emerged as the
biggest markets for Pakistani kinnow. In a matter of five years, their share have increased from
almost nil to an over 100,000 tons (around 30 per cent of the total exports). Both these states
need smaller kinnow, which they consume with liquor for its strong taste and high sucrose
content. Their share is increasing every year.

However, the domestic production is focused on large and medium size fruit. All efforts have so
far been concentrated on increasing the size and improving the look of the fruit because
Pakistan’s traditional markets – the Middle East and the Far East – need them. With the Eastern
European countries emerging big markets, there is a need to adjust domestic production.

For the purpose, Pakistan needs to develop a new variety of seed that meets the requirements
of Russia, Ukraine and possibly other East European states. Size of fruit can be controlled with
management practices as well. But, it would be better if the country is somehow able to

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develop a new variety that does not grow beyond a certain size. The exporters hope to expand
their share in area because of similar consumption patterns in the region. From a long-term
perspective, the country needs to expand its citrus gene pool.

There is also a need to develop a variety that has reduced caloric value. Consumers, especially
in high-end European markets, have become calorie conscious. With the current high caloric
value, the fruit might not find many buyers in highly health-conscious European markets. The
exporters have, so far, been targeting Pakistani population in the European states. The policy
has its own benefits, but also limits the chances of multiplying exports. It is time to think
beyond ethnic population.

Beyond developing new varieties for niche markets, there is a need to build cool chains in the
citrus producing area. Their absence affects both production and quality, and worsens the so-
called alternate bearing factor – a phenomenon, which gives better production one year and
reduces it next season. In the absence of storage infrastructure, farmers use trees as stores and
delay their harvesting till very late. Thus, with late harvesting, flushes for next crop start
emerging on the tree and squeeze precious resources, effecting both existing and next crop.
Ideally, the trees should be freed by early or mid-February. But, it is delayed as late as mid or
late March.

The situation can only improve if cool chains are built in the citrus-producing areas and the crop
shifted in them on time. Fortunately, processing industry of the country is improving and
bringing dividends to local sellers. Even this year, the farmers and sellers made more money in
local market than in exports. Thus the only missing link, as far as infrastructure in concerned, is
cool chain system to help save the crop.

Exports to European market require a very elaborate system of quality assurance, and weaving
them into the entire production and supply chain. That needs to be taken care of, to increase
exports much beyond seven to eight per cent of domestic production that can easily go up to
20 per cent, without affecting domestic market.

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There are some examples in the world, like Chile, Holland and Thailand, which multiplied their
horticulture exports within a few years, taking to billions of dollars. Given Pakistan’s natural
endowments – four seasons and fertile land – it is surprising why it cannot learn from their
experience and increase exports to 20 to 30 per cent of domestic production.

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