CPEC opens avenues for agri-exports
PHOTO: REUTERS
KARACHI: The China-Pakistan Economic Corridor (CPEC) is approaching to significantly urge mercantile conditions in Pakistan.
The vital projects listed on a CPEC portal, grown by a Pakistan-China Institute, embody travel infrastructure, appetite production, industrial team-work and a Gwadar pier city.
However, surprisingly, a intensity impact of CPEC on a farming zone is frequency discussed in vital mercantile forums.
Agriculture is fortitude of a economy: Jhagra
Recent media reports on CPEC’s long-term plan, a investigate by a National Development and Reform Commission and China Development Bank, emphasize that a farming zone is a vital customer of CPEC. Though regarded as a ‘redundant document’ by supervision officials, a long-term devise introduces open sermon on a impact of CPEC on a farming sector. CPEC will yield a immeasurable travel network that will bond Khunjerab in a north to Gwadar in a south-west. This will automatically boost a economy of several remote farming towns located on a network as a travel time to civic centres and markets will cringe considerably.
Furthermore, this network will yield farming producers an event to trade not usually to China, though also to other countries as CPEC improves Pakistan’s trade formation into a tellurian economy.
As farming practice and agro-based industrial outlay rest heavily on a farming sector, it is essential to establish a impact of CPEC on a zone and a existent trade patterns of farming products.
Agriculture contributes approximately one-fifth to Pakistan’s sum domestic product (GDP) during consistent bottom prices of 2005-06. About $3.7 billion was generated from food products in FY16. The vital author was rice, that contributed around $1.8 billion.
Total trade profits from a food product forsaken some-more than 15% between FY15 and FY16. Exports of basmati rice, that contributed 32% to altogether rice trade profits in FY16, declined some-more than 31% in a year. However, exports of other forms of rice increasing 7%. The weave zone available a decrease of 5.8% in trade profits between FY15 and FY16. Receipts from tender cotton, that stood during $153 million in FY15, fell some-more than 49% between FY15 and FY16.
Production linkages
Though sum trade profits dipped approximately 8.8% between FY15 and FY16, a farming zone reported a larger fall. The sum outlay of a farming sector, in consistent prices, forsaken between FY15 and FY16. Other sectors of a economy reported certain expansion rates.
Although trade profits for farming products are supportive to cost fluctuations in a universe market, it is needed that a supervision develops domestic and general prolongation linkages in sequence to revoke a sensitivity in sum exports and a income warranted by farmers.
Agricultural products accounted for reduction than 8% of a tellurian trade in 2015, though constituted approximately 22% of sum exports from Pakistan. Around 43% of a farming products exported globally in 2015 were tender element and 42% were consumer goods.
On a other hand, around 53% of a farming products exported from Pakistan were consumer products and 29% were tender material.
The farming products constructed in Pakistan typically have reduce linkages with a prolongation sector. The reduce commission of farming tender element exported from Pakistan indicates that a domestic farming producers are not expected to attend in tellurian prolongation linkages.
Unlike made consumer products that might engage estimable value serve by opposite stages, farming consumer products are expected to be of low value and be supportive to fluctuations in tellurian commodity prices. Given that geographical and climatic constraints might extent diversification of farming products, it is critical to establish specific products that will boost a formation of a farming zone into a tellurian economy.
Trade with China
Approximately 6.5% of farming products exported from Pakistan were unfailing to China. Agricultural products accounted for 15% of sum exports to China from Pakistan in 2015.
Approximately 56% of farming products exported to China were consumer goods, 29.6% were middle products and 14.7% were tender material. On a other hand, farming products accounted for 6.5% of sum imports into China in 2015. However, 71.2% of farming products alien by China were tender element and 18.1% were consumer goods.
The tip 3 exports of farming products to China from Pakistan consecrate reduction than 2% of China’s sum universe import direct of farming products.
Non-tariff barriers
One of a biggest hurdles exporters of farming products might face are a non-tariff measures, essentially in a form of spotless and phytosanitary (SPS) and technical barriers to trade (TBT), imposed by end markets.
Problems riddle cultivation sector, contend experts
Importing countries levy such measures to not usually boost consumer recognition of a peculiarity of products alien by correct labelling, imprinting and packaging, though also demarcate a imports of products damaging for tellurian consumption.
Agricultural products typically face aloft occurrence of SPS and TBT measures than made products. For instance, exports of rice to China face several measures such as microbiological criteria of final product, acceptance and contrast mandate and geographical risk eligibility that can almost change a cost of exporting a farming goods.
Without a devise to support a farming sector, their exports might serve stagnate.
The author is Assistant Professor of Economics and Research Fellow during CBER, IBA
Published in The Express Tribune, Jun 5th, 2017.
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Article source: https://tribune.com.pk/story/1427500/cpec-opens-avenues-agri-exports/