AGRICUTURE RELATED PROPOSALS Advisory Board for Agriculture

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AGRICUTURE RELATED PROPOSALS Advisory Board for
Agriculture

• November 21, 2007
• ENGRO CHEMICAL PAKISTAN LTD

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Snapshot of Opportunities

• Record high world prices for agricultural
  commodities because of increasing demand for
  fresh and processed products and competing usage
  for fuel energy
• Maize price in USA reached a record 4/bushel
  recently
• Basmati rice prices touched a record 1300/met
  in Oct 2007
• FCOJ prices crossed a record high of 2,878/met
  in 2007 and are at 2,400/met currently
• Frozen Potato products prices touched 1,000/met
  in Oct 2007
• Mango Pulp prices touched 1,500/met in Oct 2007
• There is a particular increase in demand for
  value added food products in Asia Pacific region
  because of increasing per capita incomes and
  increase in per capita consumption
• Limited processing facilities in Asia for many
  agricultural products - Good opportunity to
  capitalize on this need

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Snapshot of Opportunities

• Pakistan amongst the top 20 producers for Rice,
  Mango, Mandarin, Dates, Sugarcane, Apricots and
  many vegetables however exports are below
  potential - offering an opportunity
• Need to capitalize on competitive advantages,
  invest in development of right varieties,
  increase yield/acre to ensure cost
  competitiveness and improve quality
• Local consumption of value added food commodities
  is also on the rise with increase in per capita
  consumption to 925 /met - 13 growth p.a.
  during last 5 years
• Increase in private consumption expenditure at an
  average rate of 10.9 per annum during last 3
  years
• Increase in middle class and increasing
  urbanization will result in quality conscious
  consumers eager to experiment with new and
  innovative products
• Investments in this sector will benefit farming
  community

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Issues

• Capitalizing on existing competitive advantages
• Pakistan has competitive advantage on Basmati
  rice varieties, Chaunsa/Sindhri mangoes and
  Kinnow. However, most of these products are being
  sold at a lower price vs. products from other
  leading countries due to the following reasons
• Lack of proper marketing, quality certification
  issues including Phytosanitary, EurepGap, HACCP
  and inconsistent quality of exports
• Need for Trade diplomacy by GOP with a coherent
  strategy to increase agricultural products
  exports pending Super Basmati issue is a prime
  example of the same
• Preferential trade agreements (MFN Status) with
  potential importing countries
• Low yield/acre and Crop Quality
• Pakistans average yield/acre for most crops is
  lower than most leading countries of the world
  Need to improve yield and quality of crops to
  compete in the global arena
• Improper farm practices, lack of high potential
  seed varieties and imbalanced use of fertilizers
  contributing towards the same
• Lack of focus on high yield variety development
  makes us uncompetitive on the global arena
• Efforts in Agricultural RD equipped India with
  high yielding hybrid varieties of rice including
  Pusa Basmati 1 and PB 1460 that are gaining
  export market share. India currently has a 52
  share of Basmati exports.
• Aside from quality improvement, use of Potash
  increases crop yields as follows
• Wheat 4 - 6, Rice 7 - 8, Cotton 4 - 5,
  Sugarcane 15-20,
• Potato 7 - 10, Citrus 20 - 25, Apple 15 - 20,
  Vegetables 10 - 15
• Pakistan has one of the worst NPK ratios in the
  world impacting both yield quality

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Issues

• Global need assessment and demand driven focus
• While many agricultural countries including China
  and India have focused on developing crop
  varieties having a global demand for processing
  industry, such strategy still needs development
  in Pakistan
• As part of a coherent national program, China has
  grown crop varieties with a focus to emerge as a
  leading exporter. Currently, China is the top
  exporter of Apple Juice Concentrate and Tomato
  Paste and is working on developing Orange and
  Potato processing varieties
• India has undertaken a major program to grow
  Sweet Orange varieties in Indian Punjab to cater
  to PCIs Asia Pacific demand for FCOJ. India has
  also locally developed Frozen Potato processing
  varieties to cater to local and regional markets
• Brazil undertook major programs for focused crop
  development and is the leading exporter of
  Coffee, Tobacco, Maize, Sugarcane and FCOJ. Value
  added Agriculture is the driving force behind the
  economy
• Many opportunities for value added agricultural
  exports from crops which can be grown in Pakistan
  remain untapped including Maize products, higher
  yielding Rice varieties, FCOJ and Potato
  processing varieties

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Alarming Potash Depletion in farm soils of Punjab

• Potash levels in Punjab soils already suppressing
  yields of Potato, Maize, Fruit orchards,
  vegetables and Sugarcane.
• Crops like Wheat, Cotton and Rice already
  responsive to Potash addition. Will start
  responding visibly in 3-5 years time
• Above based on existing crop varieties and
  agronomic practices. Depletion will be faster as
  new higher yielding varities become more common.
  Water stress will also enhance demand for Potash.

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Recommendations

• Promote Balanced Fertilizer Use to improve Yield
  and Quality
• Introduction of Quality Based Marketing System of
  Agricultural produce e.g. Sucrose contents based
  payments of sugarcane crop by Sugar Mills.
• Balanced use of Nitrogen, Phosphate and Potash
  crop nutrients - Agriculture Extension Research
  departments must be asked to communicate strongly
• Need to recommend both MOP SOP by Agriculture
  department as Potash source
• Reach consensus and streamline potash
  recommendations on crops at national level
• Promotion of micronutrients including Zinc and
  Boron - strict measures to ensure quality of
  these products in the market
• Seed varieties quality control
• Development of high yielding new seed varieties
  to improve yield potential of current crops
• Strict monitoring on usage of certified /
  permitted varieties of seed by the farmers
• Seed multiplication of new varieties with Public
  Private partnership

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Recommendations

• New Variety Development
• Develop sweet orange (Citrus Sinensis) varieties
  for tapping the large export market for Sweet
  Orange juice processing through
• Investment in variety development, import new
  rootstocks scion of sweet orange
• Establish greenhouses and research stations for
  nursery development
• Agriculture. extension service to promote new
  varieties
• Develop Potohar area for Sweet Oranges.
  Investment in small dams, drip sprinkler
  irrigation systems and farmer incentives for
  growing new varieties.
• GOP to lease land to growers/Agribusiness
  companies on long term lease for growing suitable
  varieties through Tri Party contract.
• Develop globally preferred Frozen Potato
  Processing varieties
• Test yield potential and quality of varieties in
  various Potato growing regions
• Work on developing own Potato seed as being done
  in India
• Target based incentives to research institutes
  for developing higher yielding hybrid Basmati and
  IRRI varieties to increase exports
• Development of high yielding corn varieties by
  research institutes and technology transfer to
  farmers could be an opportunity because of
  surge in maize demand on account of food and Bio
  Fuel

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Recommendations

• Match Transport Assistance for exports with APEDA
  (Agricultural Processed Food Products Export
  Development Authority) in India
• Current scheme by TDAP has a maximum subsidy
  limit of RS 5 MN annually, excludes Mango,
  provides 25 freight subsidy and is only for
  selective countries
• Should be applicable on all Horticulture,
  Processed food products and Medicinal Plants
  moving By Air/Sea without restriction of
  countries OR an upper cap on reimbursement
• Minimum per unit FOB realization could be set for
  some commodities
• Online system for lodging claims and
  reimbursements
• Applicable rates to be as follows
• Reefer containers By Sea Least of 10 FOB value
  OR 33 of total freight OR 50 of ocean
  freight
• By Air Least of 10 of FOB value OR 25 of
  freight
• Tax holiday for investments in Agribusiness
• No tax on machinery, seed and other items needed
  for Agribusiness for 5 years
• Exemption from Income tax for 5 years

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Recommendations

• Pre-Shipment Inspection
• Establish consistent mixing limit for the rice
  varieties and ensure strict adherence of mixing
  percentages in rice exports.
• Implementation of quality standards related to
  Phyto-sanitary Aflatoxins
• Better define roles of agencies/ institutions
  involved in SPS management
• Strengthen technical capacity for risk
  assessment
• Institute controls to ensure that only the right
  product gets certification
• Re- institutionalize early warning and
  surveillance systems to pre-empt and contain
  spread of pests, diseases and contaminants
• Establish DNA testing facilities / infrastructure
  for rice exports OR subsidize the infrastructure
  and equipment needed for a DNA testing facility
• Trade Agreements
• FTA with EU and N. America to be accomplished,
  which are the premium markets for Basmati and
  Juice exports
• FTA with Asia Pacific and African countries for
  Frozen Potato and Juice Concentrate/Pulp exports
• Resolution of the Super Basmati license issue
• Consistent monitoring and issuance of country
  reports by Attaches on the lines of USDA reports

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Recommendations

• Investment in RD
• Customer focus and co-ordination with the
  relevant industry for setting direction of
  developing new varieties and improving existing
  varieties
• Higher budgetary allocations and Incentive based
  compensation for scientists developing new
  varieties to create competition
• Establishment of quality assurance laboratories
  in line with global standards in all provinces
• EurepGAP and HACCP certification for exports

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Annexure 1 Juice Definitions

• 100 Pure or 100 Juice Juice that is directly
  squeezed from a fruit or vegetable. Can be made
  from juice concentrate reconstituted with water,
  and certain other ingredients (for example,
  vitamins) as prescribed by law.
• Juice Drink - A drink that contains less than
  100 juice. A juice drink also may contain
  sweeteners and water. Other terms with the same
  meaning are juice cocktail, punch, drink,
  sparkler, blend, and beverage. Under US law,
  manufacturers are required to list the total
  percent juice content on the information panel of
  juices and diluted juice beverages.
• Squeezed Juice - This term means the juice was
  extracted from fruit or vegetables and packaged
  in a variety of appropriate containers. It is not
  pasteurized and is kept under refrigeration.
• Pasteurized Juice Juice that has been heated
  (pasteurized) to increase its shelf life.
• Chilled, Ready-to-Serve - Juice made from frozen
  concentrate or pasteurized juice. It is packaged
  in paper cartons, plastic or glass containers.
• Not from Concentrate - This juice is from the
  fruit or vegetable after it is squeezed. It has
  never been concentrated.
• From Concentrate - This refers to juice
  manufactured as a frozen concentrate and/or
  reconstituted from concentrate.
• Frozen Concentrate - This juice has been
  concentrated and frozen. It is ready to be
  consumed after reconstituting with water per the
  instructions on the container.
• Frozen - Juice that is packaged and frozen
  without pasteurizing or further processing is
  called frozen."
• Juice in Aseptic Containers - This is a
  shelf-stable product. It is pasteurized juice or
  juice from concentrate, packaged in sterilized
  containers or preserved by a specific
  sterilization technique.
• Canned Juice Fruit or vegetable juice that has
  been heated and sealed in cans to provide shelf
  life for an extended period of time. Canned juice
  should be refrigerated after opening in a
  container other than the can it came in, and
  consumed within one week.
• Apple cider is the name used for a non-alcoholic
  beverage produced from apples by a process of
  pressing. It is more sour and cloudy than
  conventional apple juice, retaining the tart
  flavor of the apple pulp which is lost in
  conventional fruit juice production.

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Annexure 2 - NPK Contribution in developing
Potash Usage
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Annexure 3 - K Contribution by Fertilizer Type
(Nutrient MT)
35.6 kt
14.4kt
13kt
8.5kt