Task Force on Horticulture Finance and Competitiveness meeting chaired by Dr. Salman Shah, Minister of Finance on 7 December 2007

Task Force on Horticulture Finance and Competitiveness identifies key areas to improve production and exports in Pakistan

Competitiveness Support Fund (CSF) linking finance to innovation and competitiveness of the Horticulture sector

Islamabad, December 7 -- The fourth meeting of the Task Force for Horticulture, Finance and Competitiveness was held today at the Ministry of Finance. The meeting was chaired by Dr. Salman Shah, Minister for Finance, Economic Affairs, Revenue and Statistics. The meeting was also attended by a large number of stakeholders from the horticulture sector in Pakistan, including federal secretaries from the Ministries of Food, Agriculture and Livestock, Commerce, Industries and other line ministries and provincial departments along with the leading exporters and representatives of commercial banks. The Task Force agreed that issues of quality improvement and infrastructure development were the key to increased earnings from the horticulture sector.

Dr. Salman Shah in his opening remarks said that there was a need to link finance and investment with development plans for the sector, and welcomed the presentation of several project concepts at the meeting. He further said “the future of the industry would depend on partnerships between public and private enterprises and that this approach will be assisted by the Competitiveness Support Fund via its program of matching grants”. Dr. Shah said that he was delighted to see that CSF was working in the most disadvantaged areas of Pakistan including the Northern Areas and FATA. These projects, said Dr. Shah, would enhance livelihoods and relieve poverty while at the same time improving the role of women in economic development.

Competitiveness Support Fund (CSF) is a joint initiative of the Ministry of Finance and the U.S. Agency for International Development (USAID). CSF supports Pakistan’s goal of a more competitive economy by providing input into policy decisions, working to improve regulatory and administrative frameworks, and enhancing public-private partnerships within the country.

The four sub-committees presented their recommendations to the Task Force. The Sub-Committee on Finance gave a detailed outline on the Horti-business Finance guidelines developed for the sector. The State Bank of Pakistan gave its recommendations to improve the Horti-business financing in the country. The Sub-Committee on Processing, Production and Marketing made presentations on private sector led extension services. The Sub-Committee for Infrastructure made presentations on the National Trade Corridor and Cold Storage projects at major airports. The presentation by the Sub-Committee on Quality, Standards and Regulations by National Animal and Plant Health Inspection Service (NAPHIS) emphasized the need for an improved and effective legal framework, and the potential of NAPHIS as an effective concerned agency.

Following meetings of the Task Force for Horticulture, Finance & Competitiveness (TFHF&C or “the Task Force”) held earlier in the year, the four sub-committees had met to consider detailed aspects of finance, production, processing, marketing, quality and infrastructure. The committees, which represented the major stakeholders in the industry, found that there was a strong need for regulation and enforcement of quality standards. The Task Force agreed that this approach would be supported by the development of supply chain infrastructure. As a key component to improve the quality and standards in the horticulture sector, the recommendation to strengthen the National Animal and Plant Health Inspection Services (NAPHIS) agency within a legal framework was appreciated. The restructuring will allow NAPHIS to make an impact on the food industry. The Task Force also recognized the need for cool storages in the production areas and more sophisticated and larger cold storage facilities at major airports.

During the recent meeting held last week, at the Ministry of Finance, individual presentations were made by the principle agencies involved in the work that has been coordinated by the Competitiveness Support Fund (CSF). These included presentation of Guidelines for Horticulture Financing prepared by the State Bank of Pakistan and aspects of the horticulture supply chain infrastructure development under the National Trade Corridor project. The Competitiveness Support Fund is also assisting the Ministry of Commerce and Pakistan Horticulture Development and Export Board together with the Punjab Agricultural Marketing Company to develop the strategy for a series of cool chains on the National Trade Corridor.

Six pilot project designs with innovative aspects to improve the value chain in horticulture were also presented to the Task Force. These include: Mango Pack Houses in Multan with a total cost of US$ 0.26 million, Potato Processing for French Fries & Potato Flour in Okara with a total cost of US$ 0.40 million, Plant Extracts for Medicinal and Perfume Purposes at Pattoki with US$ 0.26 million, an agro-based herbal products unit at Gilgit with a total project cost of US$ 0.25 million, value addition projects of Production of Mint Oil/Crystal worth US$ 0.16 million in Mir Pur Khas & Multan and a US$ 0.2 million project in Swat on Certified Vegetables Seed Production. These projects provide industry and investors, examples of how horticulture potential is present and can be tapped for greater gains, which has primarily been ignored and suffered from underinvestment by the private sector. The Competitiveness Support Fund will provide an amount of US$ 628,676 to support these projects; the projects will be supported by various agencies involved in the Horticulture business in Pakistan by contributing US$ 883,403.

Briefing the Task Force, Arthur Bayhan, Chief Executive Officer of the Competitiveness Support Fund (CSF), informed the Task Force that the Competitiveness Support Fund, was tasked by the Ministry of Finance to undertake a comprehensive study entitled “The Competitive Advantage of the Food Processing Industry: Focus on Quality, Safety and Standards”. As a result, CSF was asked to undertake more specific work on horticulture, a sub-sector of agriculture accorded national priority by the Government of Pakistan. An Action Plan for the horticulture industry was subsequently developed by CSF in close consultation with the Ministry of Food Agriculture & Livestock along with other stakeholders in May and June 2007.

The world horticulture market is valued at $80 billion to which Pakistan contributes an annual $130 million. Only about 16% of fruits are being processed, although, this activity offers great opportunities to augment volume of value added products using modern technology. The fruits and vegetables exported in fresh form attract discount prices because exporters are unable to provide adequate grading and packing. Pakistan’s horticulture export industry’s share in the world market has risen steadily from about 5% in 1991 to 12% (value 2004). The potential markets for the Pakistani exporters have been identified in Europe and the Middle East.

Support for CSF is part of the $1.5 billion in aid that the U.S. is providing to Pakistan, through USAID, over five years to improve economic growth, education, health, and governance, and for earthquake reconstruction.