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
Executive summary
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
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