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ISLAMABAD: The fruit juices industry has out rightly rejected 20 percent federal excise duty (FED) in amended Finance Bill 2023, arguing that fruit drinks having fruit content cannot be equated with aerated beverages.

On Sunday, the fruit juice industry alliance has vehemently opposed “the draconian imposition of 20% federal excise duties on packaged juices” and “decried being clubbed with the carbonated beverages” in the new taxation measures undertaken by the federal government on the final day of the fiscal budget 2023-24.

Talking to Business Recorder on Sunday, the alliance spokesperson said, “The 20% hike in FED from the already existing 10%, and the additional 18% sales tax, will not only derail the sector completely but also have devastating impact on the rural economy, affecting fruit growers and allied industry associated with the juices sector, eventually resulting in decline in governments overall tax revenue, as well.”

Earlier due to the 10% FED levy, industry sales plummeted to Rs 43 billion in 2023 that were to increase to more than Rs 70 billion, considering the industry growth rate, he said.

“Putting the juice sector in the same league as carbonated drinks is absolutely undermining the vital role it’s been playing as a safe and healthy alternative to carbonated drinks,” the spokesperson added, questioning who was driving this agenda.

“It is also important to question who is behind this move, and why these measures are being bulldozed without taking into account the impact it will have on the agriculture sector. Is it any of the UN bodies such as UNICEF or WHO, or the IMF alone?”

Despite assurances of no further increase in FED from the government and representatives of the FBR and finance ministry, the government has proceeded with sheer indifference, he said.

Earlier, Jabbar Tatypur, a local mango farmer in Multan, managing mango production in Rajanpur, Jhang and Khanewal on over 1700 acres of farmland says, “Due to decline in pulp purchase by pulping companies and juice manufacturers, we are now constrained to sell surplus in open market, where there is constant fluctuation of rates.”

Like Jabbar, there are countless farmers growing other fruits such as apples in Gilgit, who are facing similar issues. Muhammad Esa, who has a small farmland in Rakaposhi and mostly produces apples and cherries, echoed similar views.

“We had made arrangements considering the rising growth of the sector as demand was increasing, but since the year commenced, there has been a massive decline,” he said, adding that this is resulting in wastage as not hundred percent of the produce is sold as table fruit, and a hefty chunk goes into pulping for juice manufacturing.

Due to their perishable nature and inadequate handling, storage, packaging, and transportation practices, fruits often experience a high rate of wastage. “As a result, farmers are compelled to sell their produce at very low prices, particularly during peak seasons,” said an Aarti, a commission agent, who serves as the middleman in the buying and selling of fruits.

The industry has also been helping thousands of farmers adopt best practices, which has resulted in the farmers’ uplift and development. The industry procured an estimated 100,000 tons of mango from local farmers, apart from other fruits, for conversion into pulp. These measures will result in drastic reduction in fruit pulp purchase by almost 50% and even more following these measures.

The fruit-based beverage industry has a turnover of about Rs 60 billion, with an investment of Rs 40 billion, and employs 5,000+ employees.

Fruit juices and drinks are popular amongst the youth and are optimized to suit their healthy lifestyle. According to regulations, such as Punjab Food Authority, fruit drinks have minimum 8% fruit content, nectars have 25-50% fruit content and pure juices have 100% fruit content. In fact, fruit juices are promoted as healthier options by food authorities across the country for consumption in schools and colleges.

Copyright Business Recorder, 2023

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