Kinnow exports: dynamics and concerns

The export target for kinnow set at 300,000 tons this year is becoming harder to meet as the season unfolds. One hurdle in its way is the sanctions imposed on Iran by the United Nations and the United States this year, which has resulted in a potential revenue loss of around $30 million to Pakistani exporters of the fruit along with a huge surplus of fruit in Pakistan because of lack of export to its south western neighbour. Iran is regarded as a major market for Pakistans kinnow, with its imports of more than 60,000 tons of the fruit every year, totaling 30 to 40 percent of Pakistans total kinnow exports. Yet, under the sanctions, State Bank of Pakistan (SBP) issued a notification to the banks in 2008, to stop issuing export forms to the fruit exporters for Iran, which is being implemented this year. Besides Iran, Pakistans citrus export to Russia has also been affected this year due to the delay in picking season. Besides this, Pakistan is facing competition in the Indonesian market from Chinas cheaper variety. With a bumper kinnow production this year, along with constrained export options, great quantities of the citrus are expected to be traded illegally. This was pointed out by Waheed Ahmed co-chairman, Pakistan Fruit and Vegetable Exporters, Importers and Merchant Association (PFVA), who said that this move has "given rise to the illegal trade of fruit with Iran. After a complete halt of exports through legal ways, the smuggling/illegal export to Iran via land routes would be increased that would cause huge losses in revenue to the national exchequer." "With 50,000 tons of surplus kinnow as a result of the sanctions there is an urgent need to explore new markets and avoid such unwanted losses to the national exchequer", CEO Harvest Tradings, Ahmad Jawad, told BR Research. "It is time to start working on Pakistans image building; counselors should work as marketing managers and explore new markets, fully knowing about demand and quality of products as well as selling tactics used by Pakistans competitors," he said. According to him, the US and international community should compensate the countrys exporters, who have been indirectly affected by the sanctions, by giving market access to other countries of the West. Not only is there a need to look for new markets, but also efforts need to be made to ensure the existing importing countries remain in the list of buyers and, to maximise the buyers pool. Private sector has contributed around 75 percent towards the establishment of the citrus sector. An essential aspect warranting the attention of policy makers is the banking sector linkage, especially with Russia and Iran. "We should save this market and the government must establish the banking channels with Iran for trade in all sectors," said Jawad. "The officials should be in touch with the business communities there, exchange business data and information, provide businessmen at both ends with proper consultation meant to increase bilateral trade and investment , help resolve trade disputes between entrepreneurs of Pakistan and any other country", he stressed. With a fragile domestic economic situation, the concerned officials must ensure all opportunities to improve the situation are availed. The government must come forward and help the citrus exporters by developing the banking channels, exploring new markets and developing relations with the existing market buyers.