Horticulture and market reforms in Pakistan
The CDES is pleased to be the Project Implementing Agency at Monash University for the Australian Centre for International Agricultural Research (ACIAR) project Policy and Institutional Reforms to Improve Horticultural Markets in Pakistan (ADP/2014/043).
Pakistan’s horticulture industry, one of the largest in the world, has huge growth potential in both domestic and export markets (noting that the China-Pakistan Economic Corridor will provide preferential access to the world’s fastest growing horticulture market). It is dominated by smallholders with strong participation of women and has a key role in the government’s development strategy.
But its present performance is well below potential, characterised by low productivity, poor quality, high wastage, and low exports. The marketing system is widely considered to be one of the main factors constraining the industry’s modernisation and development.
This project, developed in response to Pakistan government and industry requests, will investigate existing marketing arrangements, assess domestic and foreign market potential, identify main problems and, drawing on both Pakistani and international reform experiences, formulate an appropriate marketing policy reforms programme.
This project is a collaboration between:
- Monash University
- University of Queensland
- Alfaisal University Saudi Arabia
- Macquarie University
- Pakistan Agricultural Research Council
- Pakistan Agriculture Coalition (PAC)
- Karachi School of Business and Leadership (KSBL)
- Sindh Agriculture University
- Quaid-e-Azam University
- University of Agriculture Faisalabad
- Arid Agriculture University Rawalpindi
- Centre for Chinese Agricultural Policy at the Chinese Academy of Sciences
Pakistan’s horticulture industry, one of the largest in the world, has huge growth potential in both domestic and export markets (noting that the China-Pakistan Economic Corridor will provide preferential access to the world’s fastest growing horticulture market). It is dominated by smallholders with strong participation of women and has a key role in the government’s development strategy. But its present performance is well below potential, characterised by low productivity, poor quality, high wastage, and low exports. The marketing system is widely considered to be one of the main factors constraining the industry’s modernisation and development. This project, developed in response to Pakistan government and industry requests, will investigate existing marketing arrangements, assess domestic and foreign market potential, identify main problems and, drawing on both Pakistani and international reform experiences, formulate an appropriate marketing policy reforms programme.
- What are the existing agricultural marketing arrangements and regulations that contribute to prevailing marketing chain inefficiencies and hinder investment and upgrading of production, processing and marketing technologies?
- What are the medium-term domestic and global market opportunities, and what are the costs of not removing marketing system related constraints to utilizing that potential?
- What feasible marketing reforms (and complementary policies) would enhance marketing performance?
- What will be the impact on various groups such as producers, consumers, women and the poor, and what measures can ensure that reforms enhance the welfare of affected groups, particularly women and the poor?
Aims and objectives
The overall aim of the project is to design practicable marketing policy reforms to improve producers’ and consumers’ welfare with particular attention to gender and poverty dimensions.
There are four research objectives:
- Investigate main features of existing marketing systems including role of policy, regulatory and institutional factors.
- Assess domestic and global (including China) market potential.
- Identify and assess extent of, and main factors contributing to, market inefficiency and low exports, and evaluate costs of inefficiency.
Identify reform options, analyse their efficiency and distributional impacts, and formulate and disseminate a set of concrete, practical recommendations for policy action.
The research approach will incorporate both qualitative and quantitative market research methods and be cross-disciplinary, involving methods and techniques from economics, business, private sector and other social sciences. It will integrate literature reviews, structured surveys and interviews of producers, traders, processors and exporters, market structure case studies, qualitative and econometric modelling, and impact evaluations on various groups.
- Report on existing marketing arrangements and the extent and sources of inefficiency.
- An assessment of local and global marketing opportunities, including opportunities in China.
- Reform recommendations for improving markets to foster industry growth, welfare, gender equity and poverty reduction.
- Enhanced policy analysis capacity in Pakistan
- A detailed final report, a series of policy briefs, one book and 5 scientific/academic papers
Key project impacts will be:
- Improved market efficiency leading to smaller marketing margins, higher producer prices, lower consumer prices, better quality, lower wastage and higher exports.
- Stronger incentives for private and public investments to upgrade productivity, processing and storage, and improve quality.
- A more resilient horticultural marketing system that can underpin and complement other strategies to improve overall horticultural sector performance to provide higher producer incomes, reduced supply and price volatility, and better nutrition outcomes.
The adoption pathway will be through two main channels, the government (policy and regulatory reforms) and private industry (new industry‐driven market systems).
To maximise probability of government and industry adoption of recommendations, they must be realistic and responsive to market realities and opportunities, politically acceptable and administratively feasible.
This is achieved by:
- (a) guidance of research process by a high level Project Advisory Committee with industry, government and NGO representation;
- (b) regular presentations, dialogue and interaction with main stakeholders including at annual National Agricultural Marketing Forums;
- (c) where feasible, field testing and demonstration of alternative marketing arrangements done in association with project partner Pakistan Agriculture Coalition (PAC);
- (d) wide public dissemination of findings and recommendations through policy briefs, scientific publications and seminars/workshops.
Monash University is the Commissioning organisation. Pakistan Agricultural Research Council (Pakistan’s apex agricultural research body) is the lead agency in Pakistan. Other key collaborators are Pakistan Agricultural Coalition (PAC) – an active NGO with strong market links and expertise in innovating horticulture marketing systems, University of Queensland, La Trobe University, leading Pakistani universities and the Centre for Chinese Agricultural Policy (China). Several younger Pakistani researchers, including two female academics and a (female) PhD student at Macquarie University, will participate intensively and gain research, technical and policy analysis skills from the international collaboration.
- Working Paper 01/18 - Commissions and Omissions: Agricultural Produce Markets in Pakistan (Muhammad Ahsan Rana, Lahore University of Management Sciences)
- Working Paper 02/18 - Effect of China-Pakistan Economic Corridor on Bilateral Trade with Focus on Horticulture Commodities. (Tariq Ali, Jikun Huang and Wei Xie, China Centre for Agricultural Policy, School of Advanced Agricultural Sciences, Peking University)
- Working Paper 03/18 - Food consumption Pattern Change and Horticulture Consumption in China. (Jikun Huang and Qi Cui, China Centre for Agricultural Policy, School of Advanced Agricultural Sciences, Peking University)
- Working Paper 04/18 - Consumption Patterns and Demand Elasticities of Selected Horticulture Products in Pakistan. (Abdul Jalil, Pakistan Institute of Development Economics Islamabad and Hayat Khan, College of Business Alfaisal University Riyadh)
- Working Paper 05/18 - Gender Issues and Horticulture Markets in Pakistan. (Aneela Afzal, Arid Agriculture University Rawalpindi Pakistan, Sisira Jayasuriya, Monash University and Sarah Meehan, Centre for Development Economics and Sustainability Monash University)
- Working Paper 06/18 - Improving Market Performance of Pakistan Horticulture Industries: Some Initial Insights. (Thilak Mallawaarachchi and Shabbir Ahmad, University of Queensland).
- Working Paper 07/18 - Vertical Integration and Cross-Country Price Transmission in Pakistan’s Agriculture Market.. (Hayat Khan, College of Business, Alfaisal University, Riyadh, Saudi Arabia and Sisira Jayasuriya, Centre of Development Economics and Sustainability, Monash University).
- Working Paper 08/18 - Understanding Export Challenges and Potential for Mangoes and Chillies. (Zarmeen Hassan, Pakistan Agriculture Coalition).
- Draft Report 01/18 - Preliminary Report on the Growers' and Marketing Channel Surveys (Chilli) in Sindh. (Tehmina Mangan, Sindh Agriculture University Tandojam and Ummul Ruthbah, Centre for Development Economics and Sustainability Monash University)
- Draft Report 02/18 - Draft Report on Mango Farm Survey in Sindh, Pakistan (Tehmina Mangan, Sindh Agriculture University Tandojam and Ummul Ruthbah, Centre for Development Economics and Sustainability Monash University)
- Draft Report 03/18 - Preliminary Report of Marketing Channel Survey (Mangoes) in Rahim Yar Khan and Multan. Information Collected from Growers and Contractors. (Nauman Ejaz, International Islamic University Islamabad).
- Draft Report 04/18 - Preliminary Report on the Survey of Tomato Growers in Sindh, Punjab and Balochistan. (Muhammad Qasim, Waqas Farooq and Waqar Akhtar, Agricultural Economics Research Institute, National Agricultural Research Centre).
- Draft Report 05/18 - Draft Report of Mango Farm Survey in Punjab, Pakistan: Findings and Policy Guidelines. (Abdul Ghafoor, Adnan Adeel and Asif Maqbool, Institute of Business Management Sciences, University of Agriculture, Faisalabad, Pakistan).
Project: Policy and Institutional Reforms to Improve Horticultural Markets in Pakistan
Project number: DP/2014/043
Prepared by: Sisira Jayasuriya, Hayat Khan, Jeff LaFrance and Thilak Mallawaarachchi Co-authors/contributors/collaborators: Jikun Huang, Muhammad Qasim, Ahsan Rana, Nauman Ejaz, Arif Nadeem, Abdul Ghafoor, Tariq Ali, Anwar Shah, Zarmeen Hasan Aneela Afzal, Waqas Farooq, Ummul Ruthbah, Tehmina Mangan, and Shabbir Ahmad
Published by: ACIAR, GPO Box 1571, Canberra ACT 2601, Australia
Background and Project Objectives
The project originated in response to a request to ACIAR from the Pakistan Agricultural Coalition (PAC) with Pakistan government support. The project objectives were to investigate existing marketing systems, identify weaknesses and sources of inefficiency, to then use the findings to design and disseminate concrete, practical policy reform recommendations for improving market efficiency, farm incomes, consumer welfare and gender equity.
Main research findings
From the start of the research process, the team engaged closely and worked interactively with policy makers, senior government officials and industry stakeholders to understand in depth the existing system, problems, and constraints on policy makers. We adopted a ‘mixed methods’ approach, combining quantitative and qualitative methods of data collection and analysis, producing a comprehensive body of analytical research on marketing systems and channels from farm gate to final markets, market performance and prospects (including export prospects to China following CPEC).
1- Market demand for all three crops we studied - mango, tomato, and chilli – is expected to increase over time. In the case of tomatoes, the current goal is to meet domestic demand as Pakistan is forced to rely on imports to maintain a socially acceptable consumer price. Mango and chilli also have good export potential.
2- To meet market needs, it is necessary to shift from the current ‘low quality-high-cost’ equilibrium, reduce wastage, improve storage and processing. Exporting also requires higher quality, credible certification and better marketing. The central policy challenge is to provide the conditions for integrating rural producers into modern value chains, while ensuring that vulnerable small farmers will share the benefits from industry modernization.
3- The current marketing system is inefficient. It needs comprehensive reforms involving a combination of legislative/regulatory changes and complementary institutional reforms with supportive policies.
The central bottleneck to value chain modernization that can be addressed by policy reforms is the concentration of market power in the hands of licensed Commission Agents (Arhtis). While they provide a range of essential marketing services, their control of market access allows them to exercise market power and hinder entry of new firms.
4- Our main policy recommendation is: Implement legislative reforms to remove barriers to entry of new firms and weaken the monopoly power of Arhtis so that new dynamic firms can enter horticultural industries, modernize them through technological and institutional innovations and integrate small producers into modern value chains.
5- These legislative reforms must be followed by government policies, investments and initiatives, including establishing appropriate private-public partnerships, to complement the legislative reforms to assist and foster improved production, distribution and marketing, including exports.
Achievements and Impact
In line with the above research findings, the project team formulated, refined and disseminated a set of concrete, practical, realistic proposals for market reforms and interventions, that recognised the financial, administrative, political and socio-cultural constraints facing Pakistan’s policy makers.
Our findings and proposals were disseminated through draft reports and papers, numerous formal and informal presentations, meetings and discussions, building on the strong relationships of trust and policy credibility established with key stakeholders in industry and government (at both province and national level). As a result, even before the formal end of the project, the project achieved the following major policy impacts, with promise of much more:
1- Our main recommendation was accepted and implemented through major legislative changes in Punjab and incorporated into the national export development strategy.
2- The recognition of the value of ACIAR policy research at the highest level of government generated requests and created opportunities for ongoing policy contributions, enhancing prospects for greater impact from future policy projects.
3- Lessons drawn from the Chinese experiences were incorporated into the rural transformation strategy in Pakistan’s 12th Five Year Plan (2018-2023).
4- Project recommendations have started to influence new government initiatives, such as the Punjab government’s ‘Model Farm Project” led by Kashif Jamshed, a member of the project Advisory Committee, and private sector initiatives such as those undertaken by PAC and PMEX.
What needs to be done
1- Revision, refinement, and editing of the project outputs (at present mostly in draft form) into research papers, reports and briefs that are publishable or otherwise ready for public circulation and preparation of a monograph based on the research findings
2- Continuation for another 18 months to two years of dissemination and advocacy roles, building on links and relationships built up with key stakeholders with more policy briefs, presentations, and meetings to achieve full potential for policy impact
An ACIAR-funded project to assist the modernisation of Pakistan’s horticultural sector has resulted in legislative change in the country’s breadbasket state of Punjab and drawn support from the office of Pakistani Prime Minister Imran Khan, raising hopes that this could be replicated throughout the rest of the country.
An international project led by Monash Business School investigating Pakistan’s horticulture markets has already brought about policy changes at the highest level.
From 19 to 24 March 2018, Monash University hosted the project's mid-term workshop in Victoria, Australia.
The workshop comprised of several days of intensive meetings culminating in a very productive two-day conference in the coastal town of Lorne on the Great Ocean Road.
During this time, the project team was pleased to share its research and make plans for the successful completion of the project in 2019.
On 18 and 19 September 2016, the project inception workshop was held in Islamabad, Pakistan.
It provided a valuable opportunity for participants to meet and map out plans for the project, with all looking forward to a very productive collaboration.