SEZs for food processing?

The idea that Special Economic Zones in Pakistan should also focus on food processing is not new. Federal and provincial investment promotion agencies have been trying to attract investors in food processing in SEZs for some time, and reportedly Faisalabad has already locked a few. This week, however, business community has now demanded an SEZ dedicated to food processing.

One is not very sure what great strides a dedicated food processing SEZ can achieve in a country which, as per PBF’s own admission, is wanting of productivity. Might one remind that whilst there are some rare islands of excellence in Pakistan’s food value chain starting from primary production of crops, cattle, fish, etc., they are too few and too scattered across the country to justify such investments. In the absence of competitiveness across the value chain of food production, a dedicated food processing SEZ may be a great photo-up but quite likely a cart before the horse.

In its report on EU’s GRASP project, the International Trade Centre offers a rather useful way to analyze competitiveness, based on four distinct lenses of analyses. The first pertains to the capacity of farms and agribusinesses to compete in the market and meet its requirements. The second relates to whether or not farms and agribusinesses have the capacity to connect across the value chain through buyers, suppliers, and institutions to obtain information and knowledge. The third lens focuses its capacity to pro-active change or respond to dynamic market forces, say by investments in skills, financial capital, innovation and so forth. And the last zooms on their ability to sustain competitiveness, including through gender inclusiveness, and environment sustainability.

This is not enough space to analyse the fine nuances of Pakistan’s farm-to-table food value chain in detail using each of these lenses but it is safe to say that the country fares poorly in each these aspects. At one end, farms don’t have timely access to quality inputs to be competitive, and at the other they don’t even have basic education level to absorb training on good farming practices if it were provided to them. Similarly, at the one end farmers and agri-businesses don’t have strong associations in place, and at the other absence of written contracts, access to bank loans and so forth makes them vulnerable to shocks. And all this, whilst practicing unsustainable means of farming leading to water scarcity to say the least.

Instead of focusing on the tail end of the production chain – SEZs for food processing – best if federal and provincial governments collaborate to lift agriculture, especially considering that improving the competitiveness of farmers and agri-businesses can significantly help Pakistan meet its sustainable development goals on poverty, hunger, gender, decent work as well as climate. Talk about one size fits all!