Almost $40 million fruits are being smuggled to Iran annually, resulting in substantial loss of revenue to Pakistan on the exports of fruits and vegetables to that country. The issue was raised by Harvest Trading CEO in a meeting with the CEO of Pakistan Horticulture Development and Export Company (PHDEC), Bashir Hussain, in Lahore last week.
This illegal trade is being carried out in violation of the protocol signed by Pakistan and Iran and has resulted in drastically reduced legal trade of fruits with Iran. Iran's share in total export of Pakistani Kinnow was around 33 percent of the export target during last many years, and is likely to remain at the same level even during the coming season as well.
According to Harvest Trading CEO Jawad, Kinnow exports to Iran are likely to face serious problems in the coming seasons if exporters do not comply with Iranian quarantine department's requirement of shipping kinnows in refrigerated containers. Iran had placed an unannounced ban on import of citrus fruit (kinnow) in November 2009 from Pakistan on the plea of lack of pursuance of Memorandum of Understanding (MoU) by the Pakistani exporters, which binds them to dispatch export consignment through refrigerated containers only.
The Iranian authorities have clearly demanded kinnow shipments in refrigerated containers, whereas Pakistani exporters, ignoring the said condition, ship the fruit in open trucks. Jawad expressed fear that the Iranian authorities may refuse clearance of Pakistani kinnow permanently for non-compliance with the refrigerated container condition.
He suggested to the PHDEC chief to ensure implementation of compliance issues of the importing countries if they want foreign remittance from kinnow exports. PHDEC must call exporters' meeting and take undertakings from them to save the relations between the two countries and also monitor the illegal exports by road. Check-posts must also be set up in compliance on the respective borders with the help of Ministry of Interior. On his recommendation, PHDEC will also notify the standing committees of kinnow, mango, dates, apple and potato after Eid, who would sort out issues of the said products. These committees may help boost export of fresh produce items from Pakistan through government assistance under PHDEC umbrella.
Every year, Pakistan's exporters wait for duty waiver on Kinnow for exporting quality product through sea but due to unchecked trade via land routes with Tehran, the export of Kinnow has declined from 2000 containers to only 200 containers during the last few years as illegal trade has increased manifold. Transportation of fresh commodities is often made to Iran in open trucks and does not meet the phytosanitary requirements. This has led to the neighbouring country rejecting export goods several times. A request was sent to the Pakistani government to follow global standards.
Jawad also estimated that Iran may put heavy dent on Pakistan's kinnow exports in terms of reducing the duty rate. In case the Iranian government reduced customs duty on Kinnow from 90 percent to 4 percent on time in January 2012 as they did last year, it will be a great boom for Kinnow consumption. It, however, totally depended on their citrus production this year, as Iran is also a citrus producing country.
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