Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
OFFICIAL PROGRAM
PARTNER
DISCLAIMER
The information in this report was gathered and researched from sources believed to be reliable
and are written in good faith. S-GE and its network partners cannot be held liable for data,
which might not be complete, accurate or up-to-date; nor for data which are from internet
pages/sources on which S-GE or its network partners do not have any influence.
The information in this report does not have a legal or juridical character, unless specifically
noted.
Executive Summary
The sectors covered in the report on food processing industry of Pakistan include red chillies, dairy and mangoes.
Pakistan, with a population of 190 million people, presents a huge opportunity in terms of consumer demand.
Agriculture is the main sector and by overcoming the challenges in each sector Pakistan will be able to achieve
higher yields and improve the overall exports. It is a win-win situation for the Pakistani exports and the Swiss
SMEs and could be attained by collaborative efforts.
The first sector is that of chilli. Chilli crop is mainly based in the province of Sindh. The core challenge in chilli
sector is to achieve higher yields by producing a healthier crop. It was observed that by providing training,
materials, and/or raw materials to the farmers the quality of the crop was improved significantly when Engro
Foods, one of the largest local food processing companies, collaborated with Muslim Commercial Bank to provide
loans and assistance to the farmers. National Foods, another large local food processing company, receives better
crop by providing farmers with geo-textile sheets and DuPont covering sheets to ensure better and faster drying
cycle. Other multinational companies such as Bayer, Novartis and ICI Chemicals provide training to the farmers
regarding fungicides and pesticides. The opportunities for the Swiss companies lay in working with
farmers to improve crop health and free it from infestation. In this way, food processing mill investors
would be assured of a healthy stock for their product and will find acceptability in the European and North
American markets. The Swiss corporations may also assist food processing mills by providing links between the
mills and the global commodity buying houses. If the Pakistani mills are able to meet a set level of aflatoxins (this
could be set at 3-5 parts per billion) then they would be assured of an export market at a competitive price. Good
quality product would fetch a higher price. Much of the market for chillies is domestic because at present export
into EU has been banned due to high levels of aflatoxins. A nationwide campaign to create awareness of the
harmful effects of aflatoxins in our diets would result in increasing consumer knowledge about what is present in
the market and how it affects them. Benefits to a Swiss firm would be that they could promote their
machinery as the one providing clean, toxin-free products.
The second most important sector is the dairy sector which has a huge opportunity because the demand locally is
far greater than the supply. Pakistan being the fourth largest producer of milk in the world has the
potential to export milk as well. Overall there has been increase in demand for dairy products such as cheese,
butter and ghee. As an example, the sales of cheese in terms of value increased in 2013 to 4.2 million tons from
3.9 million tonnes in 2012. The processed milk sector is only 30% of the market and 70% is occupied by loose
milk. In terms of processed milk and value added dairy products, the market is dominated by giants like Nestl,
Engro Foods etc. to an extent of approximately 80%. In value added products sector such as yogurt, butter, and
cheese etc., the small and medium sector has a share of only 12%. . However, in order to tap opportunity at
various stages certain challenges have to be tackled with. The initial stage which is the yield per animal could be
dealt with by improving the quality of the animals through cross breeding, artificial insemination, provision of
right quality of fodder and vaccines. At this stage an opportunity exists for the international exporters
in terms of export of silos, mixing wagons, maize cutters etc. to Pakistan. They are being used by big
dairy farms and are currently being imported mostly from Turkey and Italy respectively. These opportunities
were tapped because of the efforts made by Pakistan Dairy Development Corporation (PDDC) and Small &
Medium Enterprise Development Authority (SMEDA) in educating farmers regarding proper farming practices. If
these types of trainings continue not only will the demand supply gap be minimized but these programs will also
help the investors to provide feeding and breeding solutions to the farmers. The second stage which is the milking
stage presents opportunities in terms of milking parlours. The right way forward is to pitch this product category
to the dairy associations of various areas of Pakistan who act as opinion leaders and educators and will
recommend the importance of it to the farm owners. The third stage is the storage stage which requires the
farmers to install chillers. Due to lack of proper storage facilities at the farm level there is milk wastage. Here
again educational programs by the dairy associations would help because the concept of branding and packaging
is almost negligible. Joint ventures with the dairy associations, local giants such as the Mansha Group, Dawood
Group, Lakson Group etc. would be a way forward in this regard.
The other important sector covered by this report is the mango sector. Mango is considered to be the king of
fruits and Pakistani mango varieties such as Sindhri, Chaunsa and Langra are considered to be of superior
quality. Currently approximately 3% of mangoes are processed into value added products such as pulp for use in
drinks and ice cream, canned mangoes and dried mangoes. Pakistani exports can attain an enormous jump if
locally produced mango meets certain international export conditions. Fruits are not acceptable for exports
unless they are treated with a combination of hot water and vapour heat. Potential investment opportunities in
mango sector exist in mango pulp, chutneys, jams, dried mangoes and pickles. Unlike citrus, grading and packing
facilities do not exist for mango in the mango growing areas. There are very few mechanized grading and packing
facilities and most of those are located in Karachi. There is a potential for investment in mango grading and
packing facilities in mango growing areas of Sindh. To meet those requirements, it is important to have hot water
treatment facilities for mango; for taking care of the issue of fruit flies. There are some existing facilities in
Karachi; however, ample opportunities exist for the Swiss SMEs in this sector.
Contents
Executive Summary ....................................................................................................................................................... 3
List of Tables .................................................................................................................................................................. 8
List of Figures ................................................................................................................................................................. 9
1. An Introduction to Pakistan ..................................................................................................................................... 10
1.1. Basic Information about Pakistan .................................................................................................................... 10
1.1.1. Population: ................................................................................................................................................ 10
1.1.2. GDP of Pakistan ........................................................................................................................................ 10
1.1.3. GNP of Pakistan ......................................................................................................................................... 11
1.1.4. Economic Indicators .................................................................................................................................. 12
1.1.5. Economy and Agriculture .......................................................................................................................... 12
1.2. Retailing Landscape In Pakistan ......................................................................................................................14
1.2.1. Retail in Pakistan An Overview .............................................................................................................. 15
1.2.2. Types of Pakistani Retailers ...................................................................................................................... 15
1.2.3. Retail Ownership Formats in Pakistan ..................................................................................................... 17
1.3. Foreign and Local Companies Present in Food Processing .............................................................................18
1.3.1. Nestl Pakistan Limited .............................................................................................................................19
1.3.2. Unilever Pakistan Foods Limited ............................................................................................................ 20
1.3.3. National Foods Limited ............................................................................................................................ 20
1.3.4. Shan Foods (Pvt) Ltd ................................................................................................................................ 20
1.4. Recommendation of Chillies, Dairy, and Mangoes ......................................................................................... 20
2. Chilli Processing and Packaging ............................................................................................................................... 21
2.1. Overview of the Chilli Sector in Pakistan ......................................................................................................... 21
2.1.1. International Demand .............................................................................................................................. 22
2.1.2. Classification of Chilli Products Produced in the Country ..................................................................... 23
2.1.3. Geographical Mapping ............................................................................................................................. 25
2.1.4. Growing Conditions and Seasons ............................................................................................................ 26
2.1.5. Estimating the Market Size ...................................................................................................................... 27
2.1.6. Chilli Trade Cycle ..................................................................................................................................... 28
2.1.7. Understanding the Supply Mechanics ..................................................................................................... 29
2.2. State of Infrastructure Prevalent in the Industry ........................................................................................... 33
2.3. Technological Up-Gradation Recommended in the Report ........................................................................... 34
2.3.1. Uses of Chillies.......................................................................................................................................... 34
2.3.2. Details of Red Chilli Producing Area and Total Production................................................................... 35
2.3.3. Possible Reasons for Declining Yield ...................................................................................................... 36
2.4. Suggested Courses of Action and Recommendations .................................................................................... 36
2.4.1. Issue one: Supply-Side Assistance Assistance to Farmers .................................................................. 36
2.4.2. Issue Two: International Demand Global Commodity Buying Houses ............................................. 37
vi
vii
List of Tables
Table 1: Key Economic Indicators ................................................................................................................................ 12
Table 2: Top Agricultural Products of Pakistan in 2012 .............................................................................................. 13
Table 3: Top Agricultural Exports of Pakistan in 2011 ................................................................................................14
Table 4: Company Shares of Packaged Food: % Value 2009-2013 .............................................................................18
Table 5: Brand Shares of Meal Solutions: % Value 2010-2013 ...................................................................................19
Table 6: Top 8 supplying markets for the product: 0904 Pepper, peppers and capsicum, imported by Pakistan in
2012 .............................................................................................................................................................................. 22
Table 7: Global Increase in Export of Pepper: Top 10 Exporting Countries ............................................................. 22
Table 8: Top 10 importing markets for the product: red chilli (whole) exported by Pakistan, in US$ .................... 23
Table 9: Top 10 importing markets for a product: red chilli (powder) exported by Pakistan, in US$ ..................... 23
Table 10: Varieties of Pepper ....................................................................................................................................... 24
Table 11: Various forms of pepper used ...................................................................................................................... 24
Table 12: Food Items that Include Chilli as Ingredient: 2008 - 2013 volume sales .................................................. 25
Table 13: Area-wise Cultivation of Pepper .................................................................................................................. 25
Table 14: Yearly Cultivated Area and Yield ................................................................................................................. 26
Table 15: International Market: Five-Year World Exports of Pepper and its Product Forms, and a Comparison of
Pakistan Exports; US $ ................................................................................................................................................ 27
Table 16: Domestic Market: Estimation of Domestic Demand up to 2020 ............................................................... 28
Table 17: Milk Manufacturers in Pakistan .................................................................................................................. 47
Table 18: List of Supplying Markets for a Product Imported by Pakistan: Product: 843420 Dairy Machinery ...... 49
Table 19: List of Supplying Markets for a Product Imported by Pakistan: Product: 84342000 Milking Machines
and Dairy Machinery Dairy Machinery ................................................................................................................... 49
Table 20: List of Supplying Markets for a Product Imported by Pakistan: Product: 84349000 Milking Machines
and Dairy Machinery Parts....................................................................................................................................... 50
Table 21: Livestock Semen in Pakistan - Market and Demand Sizing ........................................................................ 51
Table 22: Cow Vaccination Routine ............................................................................................................................ 52
Table 23: Company Shares of Major Yoghurt Producers ........................................................................................... 53
Table 24: Production of Butter and Fat during 2008 - 2013 ..................................................................................... 53
Table 25: Sales of Cheese by Category: 2008 - 2013 .................................................................................................. 54
Table 26: Dairy Processing Company Shares: 2008 - 2013 ....................................................................................... 55
Table 27: Dairy Brand Shares: 2008 - 2013 ................................................................................................................ 56
Table 28: Top Mango Producers ................................................................................................................................. 60
Table 29: Top Mango Exporters in 2011 ..................................................................................................................... 62
Table 30: Mango Varieties Cultivated in Pakistan...................................................................................................... 62
Table 31: Area and Production of Mangoes ................................................................................................................ 63
Table 32: Quarantine Requirement per Importing Country ...................................................................................... 66
Table 33: List of Mango Pulping Manufacturers ........................................................................................................ 68
List of Figures
Figure 1: Population Pyramid of Pakistan ................................................................................................................... 10
Figure 2: GDP of Pakistan from 2004 to 2013 ........................................................................................................... 11
Figure 3: GNP of Pakistan from Jan 2004 to Jan 2014 ............................................................................................... 11
Figure 4: Retail Ownership Formats of Pakistan ................................................................................................... 17
Figure 5: Volume of, and Growth in, Retail Sales ..................................................................................................18
Figure 6: World Chilli Production ................................................................................................................................ 21
Figure 7: Chilli Growing by Region ............................................................................................................................. 26
Figure 8: The Process of Cultivation ........................................................................................................................... 29
Figure 9: Value Chain Progression of Chilli ................................................................................................................ 30
Figure 10: Total Chilli (Dry) Production per Year ...................................................................................................... 36
Figure 11: Livestock Population ................................................................................................................................... 38
Figure 12: Milk Collection Pockets .............................................................................................................................. 39
Figure 13: Provincial Share in National Milk Production ....................................................................................41
Figure 14: The Indian Dairy Industry...........................................................................................................................41
Figure 15: The Producer-Processor Gap and Source Volumetric Sharing ................................................................. 42
Figure 16: Milk Collection and Distribution System .................................................................................................. 43
Figure 17: Milk Processing ........................................................................................................................................... 45
Figure 18: Milk Forms Available in Pakistan ...............................................................................................................57
Figure 19: World Mango Production ........................................................................................................................... 59
Figure 20: Mango Production per Hectre ................................................................................................................... 60
Figure 21: World Mango Exports, US $, 2002 - 2011 ..................................................................................................61
Figure 22: Pakistan's Mango Exports, US $, 2002 - 2011 ...........................................................................................61
Figure 23: Mango Production in tonnes: 2002 - 2012 ............................................................................................... 63
Figure 24: A Typical Mango Distribution Channel ..................................................................................................... 64
Figure 25: Domestic and Export Flowchart for Mangoes .......................................................................................... 65
Figure 26: Value Chain Analysis of Mangoes .............................................................................................................. 66
Figure 27: Mango Pulping Process Flowchart ............................................................................................................ 67
1. An Introduction to Pakistan
The Indus Valley civilization, one of the oldest in the world and dating back at least 5,000 years, was spread over much of what
is presently Pakistan. Being the 36th largest country1, Pakistans geographical location and natural resources have always kept
the world interested in this country of 196 million2. It is bordered by India in the east, China in the northeast, and Afghanistan
in the north and northwest, the Islamic Republic of Iran in the southwest and the Arabian Sea to the south. Pakistan is divided
into four provinces, namely the Punjab, Sindh, Khyber Pakhtunkhwa and Balochistan.
Source: CIA
Ibid
Ibid
4 Source: World Bank Group
3
10
11
National Accounts
Gross Domestic Product (Current
Prices)
Agriculture
(Rs. Million)
25,401,895
6,051,015
National Accounts
Gross Domestic Product (Constant
\-1
Prices)
Agriculture
Crops
2,640,485
Crops
Livestock
3,184,843
Livestock
(Rs.
Million)
10,713,053
2,152,313
861,151
1,203,451
Fishing
79,185
Fishing
43,758
Forestry
146,502
Forestry
43,953
Industry
Manufacturing
Mining and Quarrying
Construction
Electricity generation & distribution
and Gas Distribution
Services
5,126,288
3,387,188
766,407
494,316
478,377
12,907,802
Industry
Manufacturing
Mining and Quarrying
Construction
Electricity generation & distribution and
Gas Distribution
Services
2,129,075
1,382,106
307,646
244,506
194,817
5,945,276
4,875,708
1,899,067
2,415,576
1,328,754
606,280
319,968
1,228,126
691,149
1,651,080
719,109
2,131,032
987,229
Employment
Labour Force Participation Rate
Labour Force Unemployment Rate
Per Capita Income
32.1
6
143,808
12
Source: FAO
Food exports account for 13.2% of total exports, or US$2 050 million, contributing 26.1% to overall export growth. Rice,
accounting for 60% of food exports, has registered an impressive growth of 28.5%. Pakistan clearly benefited from the
unprecedented rise in the international price of rice. Since Pakistan is a net exporter of rice, it is likely to benefit from the
elevated international price of rice in coming years. This will encourage farmers in Pakistan to grow more rice and benefit from
the higher prices on the international market. The top export goods (agricultural, 2011) are:
13
Source: FAO
14
Local trade such as Aghas, Naheed, Imtiaz, Best way, HKB, EBCO etc. Further it is to point out here that Imtiaz store
has started delivery to households.
b.
Traditional trade such as Kiryana stores, neighbourhood stores, Jodia Bazaar etc. The traditional segment is largest in
terms of trade.
c.
Further classification of local trade, traditional trade, and international modern trade is given below:
Departmental Stores: offer a wide range of products to the end-users under one roof. Consumers can get almost all the
products they aspire to shop at one place only. Departmental stores provide a wide range of options to the consumers and
thus fulfill all their shopping needs. Their merchandise may include: Electronic Appliances, Apparel, Jewellery, Toiletries,
Cosmetics, Footwear, Sportswear, Toys, Books, CDs, DVDs. Example: Chase & ChenOne.
Discount Stores: offer a huge range of products to the end-users but at a discounted rate. They generally offer a limited
range and the quality in certain cases might be a little inferior as compared to that of department stores. Example: Chase
Up.
Supermarkets: A retail store, which generally sells food products and household items, properly placed and arranged in
specific departments. It is an advanced form of the small grocery stores and caters to the household needs of the
consumer. It serves as a one-stop shopping destination for customers to buy merchandise like bakery products, cereals,
'Hidden Heroes - The Next Generation of Retail Markets' (2011) published jointly by Deloitte and PlanetRetail
15
meat, fish, medicines, bread, vegetables, fruits, soft drinks, frozen food and canned food/juices. Example: Imtiaz, Naheed,
Farids, Aghas, & EBCO.
Warehouse Stores: A retail format which sells limited stock in bulk at a discounted rate. These stores do not bother
much about the interiors of the store and the products are not properly displayed. Example: Factory Outlets of Levi, Fifth
Avenue.
Mom and Pop Store (Kiryana Stores): These are the small stores run by individuals in the nearby
locality/neighbourhood to cater to daily needs of the consumers staying in the vicinity. They offer selected items and are
not at all organized. The size of the store would not be very big and depends on the land available to the owner. They do
not offer high-end products and they would carry merchandise like: eggs, bread, stationery, toys, cigarettes, cereals,
pulses, milk and medicines. About two third of FMCG outlets consist of neighbourhood 'kiryana' stores, commonly called
general stores, which sell multiple brand grocery items of daily use. Such outlets are generally owned by a single individual
and managed by him alone or with some help from his family members. The bulk of FMCG business comes from these
'kiryana' stores due to large numbers, location (proximity to shoppers), convenience and long business hours.
Specialty Stores: These specialize in a particular product and would not sell anything else apart from the specific range.
Specialty stores sell only selective items of one particular brand to the consumers and primarily focus on high customer
satisfaction. Example: Khaadi, Junaid Jamshed.
Convenience stores: Examples include Shell Select and stores at Pakistan State Oil (PSO) stations that offer customers
easy access and convenience an easy stop-and-shop solution while you wait to get fuel for your car.
E Retailers: Customers can now enjoy shopping while sitting at home. They can place their order through internet, pay
with the help of debit or credit cards/or avail the Cash-On-Delivery service and the products are delivered at their homes
only. This kind of shopping is convenient for those who have a hectic schedule and are reluctant to go to retail outlets.
Examples: Daraz, Kaymu, Homeshopping, Ishopping, Shophive, Symbios, Azmalo, TCS Connect, VMart, e4u, ShopnShop,
OLX and ShopDaily
Other retail channels: include 'pan (Beatle Leaves) shops, petro marts, department stores, medical-cum-general
stores, book shops, road side eateries and other specialty shops. Grocery stores include Meat One and K & N (specializing
in meat and chicken respectively) and other neighbourhood stores that offer convenience and availability of grocery and
dairy items.
Multi format retailing: With consumer business taking a more important role in driving economic growth, in the
next five years the retail industry will come into an era which opportunities and challenges coexist. Several changes
will take place, while industry players are trying to establish their core competence in the market with diverse
consumer tastes and intense competition. This will give rise to an era of multi-format retailing an inevitable future
trend of the industry. Consumer needs are becoming more individualized and diverse along with the rising middle
class in Pakistan, driven by the notable increase in household income. Consumers are less price sensitive compared to
previous times, while they have become more aware of the brands and cost-effectiveness of the products. Reasons for
implementing multi-format retailing strategy would include: meeting the diversified needs of consumers, reducing
competition pressure and diversifying operating risks and achieving differentiated competition.
Private label development: Retailers have an advantage over national brands. They own the canvas where
consumers shop. If they listen, they can lead the shoppers to a better experience and lay the foundation to build a true
store brand! Price is key: it is the fundamental reason why consumers buy and choose a private brand. Otherwise,
they would probably go with their usual, favourite brand. Originally, private brands packaging designs were poor,
which rather than reflecting lower prices actually made consumers suspicious about product quality.
The economic downturn prompted many consumers to try private label goods for the first time, and once they did so, they
discovered that not only was the pricing right, but the quality of the goods met or exceeded expectations. Regardless of the pace
of economic recovery, retailers continue to have a tremendous opportunity to convert shoppers to private label for the long
16
term. Customers no longer view private label/store label as a trade-down and, more often, see private label as just another
branded option8. Example: Poonam Rice of Imtiaz and Metros Own Brands.
Traditional grocery retailers continue to dominate retailing: This is due to the extremely high number of retail
outlets in the country, with hundreds of thousands of small independent grocery retailers in operation. These traditional
grocery retailers performed well during the review period in spite of their old-fashioned facilities and basic approach to
business, which is in fact strength for traditional grocery retailers due the deep roots of these retailers in the social fabric and
financial mind-set of Pakistani people. Modern grocery retailers, meanwhile, also experienced healthy growth during the
forecast period as the channel moved into less densely populated areas. Modern grocery retailers offer a wide range of brands
at competitive prices in order to attract both affluent and middle-class Pakistani consumers.
Independent retailers aggressively compete with modern grocery retailers: Pakistans modern grocery retailers
such as Hyperstar, Makro, Metro and Imtiaz represent a potential threat to independent players as due to their wide ranges of
grocery and non-grocery products at attractive prices. In order to compete with these increasingly popular outlets, local rivals
have begun to engage in aggressive advertising campaigns using both electronic and print media. Retailers such as Gul Ahmed,
Junaid Jamshed and Sana Safinaz, among others, also use billboards in major cities such as Karachi, Lahore and Islamabad,
also extending their marketing campaigns to smaller cities such as Gujranwala, Faisalabad, Multan and Rahim yar Khan.
Hypermarkets value sales growth rate outgrow traditional grocery retailers: In terms of actual sales, traditional
grocery retailers continued to dominate grocery retailing in 2013. However, value growth in modern grocery retailers outpaced
growth in traditional grocery retailers over the entire review period due to rising income levels, a sense of modernization, the
need for greater convenience in terms of one-stop shopping and heavy marketing campaigns by Pakistans leading
hypermarkets.
17
Company Names
Nestl SA
Engro Foods (Pvt) Ltd
Westbury Group
FS Rice Ltd
Mondelez International Inc
English Biscuit Manufacturers (Pvt) Ltd
Wazir Ali Industries Ltd
Haleeb Foods (Pvt) Ltd
Habib Oil Mills (Pvt) Ltd
Ismail Industries Ltd
Unilever Group
Kohinoor Foods Ltd
Reem Rice Mills (Pvt) Ltd
Zahoor Industries (Pvt) Ltd
KS Sulemanji Esmailji & Sons (Pvt) Ltd
Agro Processors & Atmospheric Gases (Pvt) Ltd
Hilal Confectionery (Pvt) Ltd
Millac Foods (Pvt) Ltd
Sultan JSC
Shakarganj Food Products Ltd
Golden Harvest Health Foods Co
Noon Pakistan Ltd
Asian Food Industries (Pvt) Ltd
Wali Oil Mills (Pvt) Ltd
Agro Industries (Pvt) Ltd
PepsiCo Inc
Mars Inc
Kidco Manufacturers
Guard Agricultural Research & Services (Pvt) Ltd
Tripple-Em (Pvt) Ltd
Artisanal
Others
Total
Source: Euromonitor (2014)
FOOD PROCESSING SECTOR IN PAKISTAN
18
2009
10.49
5.66
5.26
4.89
3.72
3.00
3.07
3.54
1.99
2.61
1.51
1.60
1.49
1.66
1.66
1.20
2.02
1.26
0.39
0.66
0.32
0.58
0.76
0.74
0.28
0.63
0.50
0.32
0.65
7.18
30.37
100.00
2013
11.28
9.14
5.30
4.87
4.76
4.31
4.29
4.03
3.23
2.06
1.98
1.61
1.61
1.52
1.38
1.22
1.20
1.17
0.95
0.87
0.85
0.77
0.62
0.61
0.59
0.55
0.54
0.52
0.51
0.51
7.65
19.51
100.00
With a growing population and rapidly developing middle class, Pakistan is an ideal target market for both multinational and
local food companies. The major international players are Nestl and Unilever and they have been operating here for decades,
enjoying sizable market share in the sector. Across the last three decades, local national food companies have emerged. The
largest ones are National Foods and Shan Foods in spices and condiments. Engro Foods in dairy.
Brand
National Foods
Shan
Mitchell's
Knorr
K&N's
Maggi
Euro Food
English Mayonnaise
Heinz
Young's
Pak Food
Mon Salwa
Menu
Del Monte
Dawn
PK Meat's
Seasons
Del Monte
JFC
English Mustard
Luna
Khanam
Maling
American Garden
Ahmed
Campbell's
Fish Patty
Syma's
King's
Tulip
Others
Total
Company
National Foods Ltd
Shahi Foods Pvt Ltd
Mitchell's Fruit Farms Ltd
Unilever Pakistan Ltd
K&N's Foods (Pvt) Ltd
Nestl Pakistan Ltd
Euro Food Industries (Pvt) Ltd
Premium Foods Industries
Heinz Co, HJ
Young's Food Products Ltd
Pak Food Processors
Quick Food Industries (Pvt) Ltd
Seasons Foods Pvt Ltd
Campbell Soup Co
Golden Harvest Foods Pvt Ltd
PK Meat & Food Co Pvt Ltd
Quantum Foods Inc
Del Monte Pacific Ltd
Jfc Enterprise Co Ltd
Premium Foods Industries
National Food Industries Co Ltd
Khanam Foods
Shanghai Maling Food Co Ltd
American Garden Products Inc
Ahmed Food Products (Pvt) Ltd
Campbell Soup Co
Gaba Seafood
Syma Food Products
Premium Foods Industries
Tulip Food Co
Others
Total
19
20
Source: FAO
However, Pakistan does not make it to the top 10 chilli exporting countries of the world and imports some of the
chilli (see Table 4) that is processed and packaged in Pakistan for both local consumption as well as exports.
Additionally, although Pakistan is one of the top five producers, its level of production is much below that of the
leading producer, India. This is disappointing, considering the fact that India and Pakistan share similar terrains
and climatic conditions that make it possible for the two countries to cultivate certain similar products such as
cotton and chillies. The difference in production levels is attributed not only to the difference in area of
cultivation due to Indias larger geographic spread, but also to the fact that India has realized the potential in
cultivation of this cash crop and is taking measures to ensure a more efficient yield. A clear opportunity exists for
Pakistan to expand its production of chillies and ensure systems of cultivating, nurturing, harvesting, processing,
and packing of the product that will result in higher per capita yield and eventual benefits to the farmers.
21
Table 6: Top 8 supplying markets for the product: 0904 Pepper, peppers and capsicum, imported by Pakistan in 2012
Trade Indicators
Imported
value 2012
(USD
thousand)
Exporters
World
Trade
balance
2012 (USD
thousand)
16,755 -19,199,586
Imported
Share in
growth in
Pakistan's
value
imports
between
(%)
2008-2012
(%, p.a.)
Imported
growth in
value
between
2011-2012
(%, p.a.)
100
Ranking of
partner
countries
in world
exports
Share of
partner
countries in
world
exports (%)
100
India
8,285
-4,337,926
16.5
22
25
1.1
Viet Nam
4,887
-4,067,622
15.3
13
11.3
Sri Lanka
1,618
-3,827,891
9.8
-4
-8
16
Brazil
966
-4,126,207
9.6
12
37
0.6
Indonesia
420
-1,898,505
4.9
10
-22
23
1.3
Malaysia
221
-1,684,092
4.3
4.4
United
Republic of
Tanzania
121
-1,224,591
3.6
-2
18
1.6
73
2,158,867
3.4
-6
-14
8.6
China
Source: Trade Map (2013)
Exporters
World
2009
2010
2011
2012
2,146,580
1,941,084
2,291,079
3,285,920
3,403,018
India
349,914
329,364
426,639
676,881
676,572
Viet Nam
312,117
349,368
422,626
733,918
624,353
Indonesia
186,672
142,126
252,085
223,405
435,257
China
273,804
222,050
215,093
317,729
287,210
Brazil
128,142
117,903
114,098
198,921
199,478
Spain
88,383
109,361
93,941
122,734
140,645
Netherlands
59,574
51,468
54,985
102,181
136,348
Germany
97,543
71,743
81,561
118,842
118,301
136,229
102,891
96,956
131,886
111,610
56,095
54,679
72,413
101,247
85,863
Peru
Malaysia
Source: Trade Map (2013)
The annual exports of countries shown above exhibit a flat to upward trend, making chilli a promising venture.
India is the largest exporter of chillies while the United States of America is the largest importer. The largest
producers of red chillies are India, China, and Mexico.
Although Pakistan is the 5th largest producer of chillies in the world, it ranks 31st in pepper exporting countries
and its exports amount to 0.17% of world exports (Trade Map, 2013). Below are the top 10 markets for Pakistans
red chillies, whole (Table 6) and ground (Table 7), for the years 2008-2012 (Trade Map, 2013).
22
Table 8: Top 10 importing markets for the product: red chilli (whole) exported by Pakistan, in US$
Importers
World
Exported
Exported
Exported
Exported
Exported
value in 2008 value in 2009 value in 2010 value in 2011 value in 2012
2,805
3,798
3,439
1,934
713
704
993
1,447
821
305
Saudi Arabia
799
835
719
659
213
Mexico
324
483
649
87
73
Pakistan
147
56
52
111
70
10
17
Canada
33
32
16
Kuwait
57
96
23
38
20
26
133
40
33
Qatar
41
42
29
55
Taipei, Chinese
Australia
This low trend in export and Pakistans standing as the 31st exporter is disappointing, given its production
capacity. The shortfall in exports is a result of inefficiencies in harvesting and processing. Additionally, a decline
in export figures, as depicted in Tables 6 above and 7 below, may be attributed to contamination by aflatoxin in
red chillies, which is a fungal disease resulting from the presence of moisture due to ineffective drying, processing
and storing facilities. These factors are discussed in more detail in later sections.
Table 9: Top 10 importing markets for a product: red chilli (powder) exported by Pakistan, in US$
Importers
Exported
Exported
Exported
Exported
Exported
value in 2008 value in 2009 value in 2010 value in 2011 value in 2012
World
2,085
1,647
1,695
2,155
1,006
Saudi Arabia
1,321
968
980
1,258
606
170
146
136
236
198
Canada
86
60
65
113
75
Kuwait
97
69
79
83
62
23
44
19
136
105
134
194
15
19
10
Singapore
Qatar
15
104
121
58
150
Bahrain
Source: Trade Map (2013)
23
Chilli type
Capsicum annum
Capsicum
frutescens
Capsicum chinense
Capsicum
pubescens
Capsicum baccatum
Description
Perennials; highest diversity of shapes and sizes; include varieties such as jalapeno, bell
pepper, cayenne, paprika, pimento; most commonly cultivated; widespread use
Small bushy plants with small but prolific pods; most common variety is tabasco pepper;
also included is piri piri; commonly used in South Asian, Ethiopian, and Egyptian
cuisines
yellow lantern chilli; hottest kind as well as mild aromatic; fruity flavour; includes
Habanero varieties as well as Congo pepper, Jamaican hot, red Dominica etc.
Least cultivated; with hairy leaves; with distinctive flavour due to capsaicinoid content;
able to grow in lower temperatures; varieties include Mexican manzanos, Bolivian
locotos, and Peruvian locotos
berry like; known as Ajis; smoky-flavoured; range from very mild to very hot; one of the
primary ingredients in Bolivian and Peruvian cuisines; varieties include Brazilian Starfish,
Peppadew, Bishops Crown, Wild Baccatum, and Lemon Drop
The two main varieties of pepper grown in Pakistan are capsicum annum and capsicum frutescens. Variations in
these varieties are found according to the climatic conditions of different provinces. For example, Nagina and
Kunri 1 varieties are grown in Sindh whereas Talahari, a sweet pepper, is grown in Badin (elaborated further in
next section).
There are various uses of red chillies in the domestic market. Demand for chillies is based not only on its direct
consumption but also as a derived demand from the increase in demand of food items that use chillies as
ingredients.
Product Forms
Fresh pepper
Dried/ground chillies
Spices
Sauces
Frozen processed food
Pickles
Ready meals
Canned/preserved food
Overall meal solutions
Although cooking from scratch remains to be the dominant form of food preparation, demand for processed and
semi-processed food, as well as meal solutions, has gone up considerably because of more households seeking the
convenience of prepared meal as an alternative to cooking from scratch. This is also spurred on by the advent of
more women entering the job market and finding themselves hard-pressed for time. Home-cooking is mostly the
responsibility of female members of the household, even in dual income families. These females may be assisted
by hired help to continue the tradition of home cooking to some extent.
Separate figures for chilli in spices are not available. Category shows a volume increase from 2008 figure of 5,740,040 kg (Euromonitor, 2014).
Separate figures for chilli sauce are not available. Category shows a volume increase from 2008 figure of 1,522,010 kg (Euromonitor, 2014).
11
Separate figures for chilli in frozen processed food are not available. Category shows a volume increase from 2008 figure of 2,126,160 kg
(Euromonitor, 2014).
12
Separate figures for chilli in ready meals are not available. Category shows a volume increase from 2008 figures of 15,280 Kg (Euromonitor,
2014).
13
Separate figures for chilli in canned/preserved foods are not available. Category shows a volume increase from 2008 figures of 2,450,320 Kg
(Euromonitor, 2014).
14
Separate figures for chilli in meal solutions are not available. Category shows a volume increase from 2008 figures of 19,574,460 kg
(Euromonitor, 2014).
10
24
Table 12: Food Items that Include Chilli as Ingredient: 2008 - 2013 volume sales
2008
2009
2010
2011
2012
2013
15.28
15.53
15.86
16.27
16.79
17.37
Canned/Preserved Food
2,450.32
2,589.69
2,721.81
2,891.68
3,083.04
3,259.87
3,066.25
3,103.45
3,190.27
3,290.10
3,410.80
3,560.51
Meal Solutions
Location
Sindh:
District Umerkot Kunri Town
Badin
Mirpur Khas
Ghotki; Khairpur
Karachi outskirts; Thatta; Hyderabad;
Larkana; Dadu; Shikarpur; Sanghar;
Sukkur; Nawabshah; Jaocobabad; Halla
Punjab:
Attock; Rawalpindi; Jehlum; Chakwal;
Talagang; Gujranwala; Lahore; Okara;
Sargodah; Mianwali; Sahiwal; Faisalabad;
Jhang; Cheniot; Vehari; Sailkot; Narowal;
Bhurewala;
Khanewal;
Multan;
Bahawapur; D.G. Khan; Muzafargarh;
Rahim Yar Khan; Lodhran
Baluchistan:
Quetta; Sibbi; Kalat; Mastung; Kachi;
Loralai
Khyber Pakhtunkhwa:
Malakand Agency; Swat; Charsadda;
Mardan; Peshawar; Shinkyari; Haripur;
Mansehra; Kohat; Karak; Bannu; Lakki
Marwat; Hangue; D.I. Khan
Total Production (2013 2014)
Total Production (2012 2013)
2
Total Area (km ; 2013 2014)
2
Total Area (km ; 2012 2013)
Important Varieties
Percentage
of Total
%
82.0
Production
(000 kg)
2013 2014 P*
118,980
10.6
15,380
6.1
8,850
1.3
1,890
100.0
145,100
147,200
625
636
The climate of Sindh is most suitable for chilli growing of the varieties Capsicum Annum and Capsicum
Frutescens which require warm temperatures of around 30 degrees Celsius. This is why chilli grows naturally in
Sindh. In places nearer the sea, such as Karachi, the atmosphere is too humid for proper cultivation of chillies
which require dry atmosphere for growth. However, most of Sindh fulfils this condition and is, therefore, suitable
for cultivation of chillies.
15
Includes other items as well that do not use red chillies, such as soups.
25
Year
Yield (Tons/Ha)
2004 2005
48.7
90.5
1.86
2005 2006
64.6
122.9
1.90
2006 2007
47.3
69.5
1.47
2007 2008
64.2
116.1
1.81
2008 2009
73.8
187.7
2.54
2009 2010
74.7
188.8
2.53
2010 2011
63.6
171.8
2.70
2011 2012
27.4
54.1
1.97
2012 2013
63.6
147.2
2.31
2013 - 2014(P*)
62.5
145.1
2.32
The small town of Kunri in Umerkot District of Sindh has become specialized as the chilli growing area. Its
specialties are Kunri 1 and Nagina, which are two hybrids of chillies grown in this area. Chillies grown in Sindh
are acclaimed by experts, and commonly known to be, of superior quality in the region in terms of flavour and
aroma. Kunri is an agriculture based town and its other important crops are cotton and mangoes. However, red
chilli production remains to be the backbone of Kunris structure.
2.1.4. Growing Conditions and Seasons
The province of Sindh produces the highest amount of red chillies in Pakistan and amounts to 80% of the total
production in the country. There are at least seven varieties of chillies grown in various regions of Pakistan.
Domestic demand for red chilli both whole and in powdered form - is high because the South Asian palate
favours spicy flavours.
26
Chilli production requires warm climatic conditions, with optimal temperature ranging between 240C to 320C
(SBI, 2010). Red chilli is grown mainly in the provinces of Sindh and Punjab, with Sindh accounting for around
80-85% of total production due to its favourable climate. Kunri, a small town in Sindh, was once considered to be
the Chilli Capital of Asia and produces around 55% of Sindhs produce (SBI, 2012). At least three main varieties
of chilli are grown in Kunri. Punjab faces an early monsoon season and does not provide the necessary dry
conditions as available in the interior parts of Sindh. Chilli production in Punjab, therefore, is low and it is
important to protect the crop from moisture to safeguard against destruction of crop and contamination by
aflatoxins. Planting of seeds in Punjab begins in early spring and harvesting is done around three to six weeks
after flowering. Green peppers are picked after one week interval, while orange peppers are picked later, and fully
ripe red peppers at the end of the season. Harvesting continues well into August. Monsoon season begins in
summer and plants need to be protected against moisture and rains.
2.1.5. Estimating the Market Size
Table 15: International Market: Five-Year World Exports of Pepper and its Product Forms, and a Comparison of Pakistan Exports; US $
Exported value
Product
2009
2010
2011
2012
2013
2,292,719
3,274,337
3,570,142
3,428,638
6,939
5,722
4,413
5,800
9,326
808,142
1,073,552
1,607,630
1,871,491
1,859,554
(Ranked 38 ):
34
18
28
249
511
205,276
240,313
354,794
403,034
432,882
45
57
83
153
205
932,505
978,851
1,311,915
549,307
8,357
6,861
5,648
4,302
339,143
479,211
5,076
6,355
407,169
645,054
321
2,254
Pakistan
1,945,918
th
(Ranked 26 ):
Pakistan
th
rd
(Ranked 53 ):
th
(Ranked 78 ):
th
Ranked 9 ):
nd
Ranked 22 ):
27
Chilli is an important ingredient of the South Asian cuisine and is used extensively in many forms. The most
commonly used form of chilli is in its ground state, while dry whole red chillies and fresh green peppers are also
used frequently for aroma and flavour.
1. International Market
The world demand for pepper and its variants is on the rise. This is apparent from the increase in export of
pepper and capsicum varieties over a period of 5 years (Table 8). One reason attributed to an increase in demand
for pepper is globalisation and a palate for international cuisine. Growing middle classes, with rising
discretionary income are willing to experiment with exotic cuisines. This is deriving a demand internationally and
creating new markets.
The largest exporter of pepper of Capsicum genus similar to Pakistans product is India. Both countries have a
vast domestic market for their product due to strong demand and similar cuisines. A large portion of the produce
in Pakistan, around 85-90% according to industry experts, is consumed locally.
2. Domestic Market
Given that the population of Pakistan is 196 million, it is estimated that the urban population is around 37% of
the total population (Data, 2014). There is a constant influx of population from the rural areas to the urban areas.
Additionally, there is a slow but steady increase in the urban middle class. This uprising class is more
consumption-conscious, more demanding, and able to afford better standard of living. An estimate of per capita
consumption of chilli by the urban population has been quoted as 2.1 kg by industry experts based on
consumption patterns around the region. This is an accepted figure for South Asia which has a higher
requirement for spices. A simple calculation of increase in domestic demand based on an estimated 2% increase
per annum in population is given below. Calculation takes 2013 as base year and therefore uses 190m as the
population statistic. Domestic demand for chilli is considered constant by industry experts given that its general
uses are known. This demand would be higher if changing consumer preferences towards sauces and processed
condiments are taken into account.
2013 base year Population taken at 190 million as 2013 population estimate (currently around 196 million):
Total population: 190 million (2013)
Total production of chillies: 147,200,000 kg (2013)
85% consumed domestically: 125,120,000 tonnes (out of 2013 production)
Estimated yearly increase in population: 2% per annum
Estimated increase in domestic consumption*:
2013
2014
2015
2016
2017
2018
2019
2020
Population
190
193.8
197.68
201.63
205.66
209.77
213.97
218.25
millions
Domestic
chilli
125,120
127,622
130,177
132,778
135,432
138,140
140,906
143,725
Consumption
1000 kg
*Assuming a constant increase in population of 2%
May August
July October
September November
February April
28
Nursery preparation
Transplantation
Watering
Harvesting
Post-harvest handling
Packaging
Delivery to markets
Plastic mulches spread over soil reduce crop time, control root temperature, and increase yield by up to 2 to 3
times while at the same time decreasing soil water evaporation (Iqbal, 2009). There is potential for use of this
process in red chilli cultivation in Punjab to increase yield and to ensure healthier crop.
29
2.1.7.1.2. Harvesting
Chilli picking is labour-intensive and the harvest is picked by hand. Machines may be used for harvesting but they
tend to destroy the crop, while better quality is possible by hand-picking. On the other hand, hand-picking is
expensive since labour costs are involved and it is more time-consuming than machine harvesting. The labourintensive process of harvesting takes around 2 to 3 months.
In Pakistan, chilli picking is done by hand. Village women usually contribute to this process to earn daily wages
and support their families. Family members who seek employment outside their villages usually go back to help
their families during the harvesting season. Large mill owners of spice mixes buy dry crop from the farmers and
then hand pick dry chillies according to grading in order to ensure quality products.
It is very important to care for the crop once it is harvested. Pre-harvesting preparations would ensure proper
handling of the produce and protection against microbial organisms. Chillies need to be placed in dry
environment immediately upon harvesting. Contact with soil and moisture may contaminate the crop with
bacterial and fungal diseases such as various forms of aflatoxins. Aflatoxins are harmful for consumption and
their varieties are known to cause cancer.
Small farmers do not have the means to properly store their produce. Chillies require moisture for growth but
need dry climate after harvesting in order to prevent development of fungal bacteria and microbes. Storage is
discussed later.
2.1.7.1.3. Drying
Once harvested, chillies are dried by one of two methods used: traditional sun drying and machine drying. In
Pakistan, traditional methods of drying are used more frequently, where chillies are spread out on sheets in open
field to dry under the sun. This results in the crop being subjected to the elements such as dust, and
contamination by bacteria. Additionally, the process takes longer than a week during which time the moisture in
the chillies develops mould and micro-bacteria such as aflatoxins. In 2006, the European Union found quantities
of aflatoxins at levels higher than acceptable by Phytosanitary Standards and banned imports of Pakistani chillies.
Acceptable amounts of aflatoxins are 5 PPB16 according to European standards and may go up to 20 PPB in the
USA.
16
30
Harvested chillies have about 65 to 80% moisture content which needs to be reduced to 8 to 10% to avoid fungal
growth of aflatoxins. Drying substantially reduces the weight of the chillies. While the yield of fresh chilli may
vary from 30-40 q/acre depending on variety and growing conditions, the yield of dry chillies would range from
7.5 to 10 q/acre. After drying, 100 kg of fresh peppers would yield 25-35 kg of dried chillies.
Currently, investors of grinding and processing mills do not carry out the task of drying of chillies but leave it to
the farmers to provide them with dry chillies ready for grinding. Big brands such as National Foods ensure a
better quality product by providing farmers with support. Their practice is to supply farmers with Geo-Textile
sheets so that farmers would dry chillies on these, thereby preventing contact with the soil. The geo-textile sheets
also help in expediting the drying process because moisture from soil is prevented from entering the crop. The
chillies are covered at night by DuPont sheets, also provided by the mill owners, to prevent dew from moistening
the chillies. Private sector investment in machine-drying plants is still a lucrative venture for investors who will
reap the benefits of larger volumes due to reduced wastage.
2.1.7.1.4 Bacteria Control
Fumigation using chemicals such as ethylene oxide and methyl bromide was the old technique for bacteria
control. However, the practice has stopped because these chemicals are found to be dangerous for humans as well
as the environment. Food irradiation is researched to be a safer process of contamination control and the WHO
decided in 1994 that it was safe process of contamination removal (Dwyer, Picciano, & Raiten, 2003). This
technology is insufficiently available in Pakistan, although much research has been directed towards it after the
ban in 2006, and the gap provides an opportunity for private sector investment in contamination control
equipment.
2.1.7.1.5. Mixing and Grinding
Grinding results in conversion to chilli powder. At present the Pakistani domestic market for ground chillies is
dominated by two major global brands followed by smaller, domestically known brands, and there is ample room
for quality brands to enter. A lot of chilli powder is sold loose and unbranded as well. There are two types of
grinders available, manual grinders and mechanical grinders. Manual grinders may be found in small-scale spice
processing factories whereas larger spice brands use mechanical grinders. Grinding mills are plentiful and are
available in various sizes. Large mill owners buy dry chilli directly from the farmers, hand pick chillies to ensure
grading, and use quality chillies for grinding to chilli powder in their mills.
2.1.7.1.6. Storage
Not only do chillies require immediate drying but they also need adequate storage and transportation facilities.
This is a requirement for grinding mills as well who do not possess adequate storage and warehousing facilities
that cater to the requirements of this sensitive product. Chillies need to be stored in a dry place with temperatures
between 0 to 300C. Fresh chillies need immediate transportation through cold chains whereas dried chillies and
chilli powder may be held for longer duration. Setting up of storage and transportation facilities by investors is
another area of consideration.
2.1.7.1.7. Packaging
Chillies should preferably be packaged in polypropylene since flavour may be lost in polythene packaging. Many
small scale mills sell loose chilli powder since packaging makes the product expensive for the consumer. Packaged
product is considered of better quality and thus priced higher. Cheap polythene packaged unbranded chilli
powder is also available in the domestic market and is considered to be of lower quality. Sealing of this packaging
is achieved through small sealing machines that do not have timers and may over heat the
polythene/polypropylene. These small machines are sometimes available in stores where the store keeper seals
the package after the consumer purchases his desired quantity by weight.
2.1.7.2. Farm Classification
As a cash crop, chilli is seen as a lucrative venture by farmers and few prefer it to the cultivation of cotton.
However, due to viral infections and lack of support in terms of value addition, large farmers do not opt for
allocating a sufficient portion of their farmland for chilli growing and have only taken up the venture as
experimentation. Broadly speaking, chilli growers in the country can be categorized as:
Small Growers
Medium-sized commercial growers
Commercial farmers
Community gardens and developmental project
31
While it is difficult to develop an accurate assessment of the number of chilli growers, it is estimated that the
number of small chilli growers is increasing and may be in the order of thousands. The vast majority of these
growers are growing on land of less than 10 acres and very few commercial growers cultivate more than 50 acres.
There is a Red Chilli Growers Association of Pakistan that acts as a spokes-body for Pakistans chilli growers and
negotiates with the government for betterment of chilli cultivation. The Red Chilli Grocers Association caters to
the grocers dealing in chillies and maintains records of domestic and export sales. However, farmers, especially
small scale farmers, state that these associations are not supportive to their needs. There is no system of farmers
cooperatives in Pakistan.
2.1.7.3. Current Challenges
Farmers of chilli growing areas have identified some challenges that are unique to them and cause a hindrance in
extracting the full potential of climate and terrain that Pakistan has to offer. These problems are explained below.
2.1.7.3.1. The Issue of Middlemen
Most of the private extension services in Pakistan are provided by Input Supply Firms. These are the middlemen
who buy the produce from the farmers and carry out various marketing functions that transfer the produce from
producers to consumers. They are classified as commission agents, brokers, wholesalers and retailers.
The role of the middlemen is crucial to farmers because they provide farmers with finance to cultivate the crop
and provide access to markets. Farmers acquire interest-free loans from the middlemen which the middlemen
recover when they purchase the farmers produce. Thus the farmers are committed to sell their products to the
middlemen at the middlemens quoted prices. Farmers may be at a disadvantage when prices are quoted below
market. Many farmers do not take loans from banks on the understanding that interest rates are high. The major
issue here is lack of knowledge of farmers due to illiteracy. Middlemen may also help farmers by providing
support with procurement of raw materials for sowing and cultivation. They also act as advisors on issues with
the crop. These roles demand that the middlemen be knowledgeable enough to provide farmers with the support
they seek. Often though, the middlemen do not possess sufficient expertise to provide proper guidance to the
farmers because their knowledge is not based on professional training but on years of experience in the field.
Small-scale farmers are far removed from the markets because of their location in villages and lack of means of
transportation. Another reason why farmers sell their produce to middlemen at cheaper rates is because they do
not have direct access to markets whereas the middlemen have the means to provide the link between the farmers
and the consumers. If farmers were to form cooperatives then they would be able to consolidate their produce
and offer one place for consumers to access them. As it is, farmers are scattered and it is problematic for
consumers to approach them. Inadequate and under-developed road infrastructure also makes it inconvenient for
consumers to have direct access to farmers, thus promoting the need for middlemen. This results in middlemen
having a strong position of power in the supply chain at the expense of benefits to farmers, and subsequently to
the crop.
2.1.7.3.2. The Issue of Aflatoxins
Drying of crop is done mostly through traditional method of sun-drying in open air. This results in production of
high levels of aflatoxins that contaminate the crop. Recently, in an experiment by the ASF (Agribusiness Support
Fund) groups of 12 to 15 farmers with farm sizes of 3 to 15 acres were selected to form Farmer Enterprise Groups
(called FEGs). About 7 FEGs formed a cluster and 7 clusters together were needed to form an association, which
was a formally registered body. An association would have around 700 farmers. This set-up resembled a
cooperative where farmers could combine resources and combat issues in a concerted manner. Platform of the
association was used to train farmers in chilli cultivation. After providing adequate training and advice to the
farmers, they were given around 588 small units of solar dryers for chilli drying on an experimental basis and at
an approximate cost of Rs. 6.4 million. The chilli growers who took part in the experiment recorded reduced
aflatoxins levels up to 3-5 PPB. This is well within the SPS measures set by both Europe and the USA.
The farmers also reported an increase in price of their product from Rs. 45/kg to Rs. 70/kg in the open market,
and a reduction in drying time from 5 days from an initial 12 day drying time with the traditional open air sun
drying method. ASFs aim was to acquaint farmers with the technology and show them the benefits accrued so
that they would see incentive in its adoption.
Chilli growers are cultivating two varieties Nagina and Kunri-I and they feel that there is a need to come up
with more varieties including a hybrid one.
32
Sindh farmers cost of transportation from Sindh to Punjab and N.W.F.P. - Rs. 80,000-100,000
Indian farmers cost of transportation to Punjab and N.W.F.P. through Wagah border - Rs. 4,000-20,000
These experts feel confident that given the perishable nature of their produce, if their product reaches the
markets before Indian farmers then they would be able to compete well. This clearly identifies a potential for
better and more efficient transportation services that ensure faster delivery with minimal waste.
2.1.7.3.4. Wastage and Spoilage
Sun drying in open field not only causes aflatoxins to develop but also results in uneven colouring and lower
grading of chillies. This reduces the quality of produce which then fetches a lower in the open market. Big brands
of spices select better quality produce and the lower graded product is sold in the domestic market at a lower
price. Unattractive prices result in many farmers shifting production to more lucrative crops such as cotton.
Floods spoil the crop as well. The chilli crop grows better in dry environment and floods make soils water-logged,
causing damage to the roots and plants.
Drip irrigation technology is employed sparingly and by very few farmers. Irrigation is done mostly through
tube wells supplying water to the farms.
3.
Use of mulches during nursery and planting has been shown to result in larger plant size and better yield
(Iqbal, 2009) and some farms have adopted the technology. However, these are very few in numbers and use
of straws spread over land to protect the seeds and assist germination is more common.
4.
Chillies are hand-picked during harvesting. Machine picking destroys the crop by breaking it and spilling the
seeds contained in the chilli pod.
5.
Upon harvesting, a pre-cleaner is used to blow air and remove dust and dirt from the crop. Pre-cleaner is a
simple device that comprises of fans blowing air through grids to remove particles that can be blown away. A
simple version of pre-cleaners is manufactured locally.
6.
A drier may be used to remove moisture from ripe crop. A simple form of drier is manufactured locally.
However, this is not commonly used and the more common methodology is to use sun-drying by laying out
the ripe red chillies on open fields and allowing to dry under the sun. The use of geo-textile sheets is on the
rise but not yet fully adopted by the farmers. The sheet is spread on the ground and ripe red chillies are laid
out on it in thin layers. This way the chillies are prevented from coming into direct contact with sand and
33
dust on ground. A simple procedure to raise the sheets above ground is being experimented. Sheets may be
tied to bamboo sticks on all sides and the frame thus prepared may be placed on a stack of bricks on the four
corners. This would allow air to circulate and dry the chillies from below as well, thereby decreasing drying
time further. At night the chillies are covered by DuPont sheets to safeguard against dew. Such methods are
more easily adopted because they are simple, economical, and cost effective.
7.
A Sortex machine is used to remove any impurities, sort the various qualities of chillies, and separate them
for grading. Large-scale farmers have their own Sortex machines whereas small scale farmers sell the dried
product to the middlemen or grinding mill owners who may do the grading. The price of Sortex machines
ranges from 7,500,000 to 20,000,000 Pakistani rupees. The perception regarding these machines is that
they provide the desired quality required by the farmer/mill owner. The more expensive a Sortex machine is,
the better the quality of product it sorts.
8.
Packaging of the produce is done in clean dry gunny bags. This is not an expensive process and may be done
by any actor of the process chain. Packaging into gunny bags is done in order to store the product. Chilli
processing factories employ more sophisticated machinery for packaging depending on the process and
product. Ground red paper has a primary polypropylene packaging that ensures longer shelf life, and a
secondary box packaging which carries information regarding the brand, label, weight etc. Mixed spices use a
similar kind of packaging. Tertiary packaging consists of cardboard boxes or cartons used for transportation
and storage.
9.
Chillies may be processed into ground chilli powder, mixed spices, chilli paste, and sauces. The process used
for mixed spices involves three steps. Whole spices are procured and sent for grinding. The ground spices are
mixed in pre-determined proportions based on the type of spice to be produced. Some whole spices, such as
cardamoms and cloves are also mixed with ground spices depending on the recipe for which the spices are
being prepared. These mixed spices are stored in tanks or tumblers, ready for packaging. They are then
packaged into their primary and tertiary packaging in the desired quantities. Packaging of 50g - 100g are
common for preparation of one single dish. Machinery used in the process includes the grinding mills and
packaging machines.
10. When chillies are made into a paste, the additional processes involved, besides grinding, include concoction
where chillies are cooked with water and vinegar and/or lemon juice to make the paste of desired consistency
and then bottled into glass bottles or cans and pasteurized to increase shelf life.
11. Chillies are also processed into chilli sauce. Chilli garlic sauce is a favourite among domestic consumers, and
trails close behind ketchup and tomato sauce. Chilli garlic sauce is present at all places, restaurants, and fast
food outlets where tomato ketchup is the usual condiment. The technology involved in the production of
chilli sauce includes a plant which allows to mixing, heating, and packaging similar to the chilli sauces.
12. Chilli pickle production does not require heavy mechanical equipment and many brands of pickles are
produced in households. Drums for mixing and adding preservatives are the major equipment needed for
chilli pickle preparation. The process involves keeping the mixture of ingredients in well-ventilated jars in
order to allow the vegetables to mature and acquire the flavour of spices.
34
as well as promoting health benefits of hygienically processed chillies would create, and increase, demand for
processed chilli powder.
Rationale: consumers will pay acceptable premium and switch to processed chilli powder when they are clearly
able to see the benefits associate with clean and hygienic processing. Thus the plant should ensure that most
hygienic processes are in place to set the packaged brand apart from the loose, unbranded chilli powder. There is
a growing middle class that has become conscious of health related consumption habits. For example, consumers
are unaware that they consume high levels of aflatoxins that are unacceptable by most developed countries. They
need to be made aware of the fact so that they can make a conscious choice towards safer production methods
that may be costly but that may protect them from harm.
Tetra Pak has successfully done this in the dairy industry. Fresh milk, that is perceived to taste better than
tetrapak, has been replaced by packaged milk in most of the middle class houses because of the large-scale
campaign by Tetra Pak on creating awareness about the harmful germs in, and unhygienic handling of, loose
milk. As the dairy report shows, the market for safe and germ-free milk is on the rise and there are various
opportunities for investment in the processing of milk and dairy products.
2.3.1.2. Pickled Pepper
Consumption of pepper preserved in vinegar or brine is low in Pakistan but there is a large market for it in the
export market. Negligible domestic consumption makes it non-profitable for production for local market only.
Therefore, the promise of a clear export market needs to be present if investors are to be attracted to the
production this product.
Rationale: global demand is high and Pakistan has the raw material required to produce the finished product
for export.
2.3.1.3. Chilli Paste Processing Plant
There is some production of chilli paste but it is not very pronounced domestically. Pakistani families like to cook
their meals at home and use of chilli powder is perceived as more natural than chilli paste. Very few Pakistani
recipes require chilli paste as an ingredient. But as more and more families convert to dual income households,
time becomes a more precious commodity and faster and more efficient means of concocting food become
desirable.
Rationale: The most obvious rationale for investing in chilli processing technology is that Pakistan has a
superior quality of hybrid chillies that offer a good advantage to Pakistan over its neighbouring countries. But
Pakistan is unable to achieve a competitive advantage and its yield per hectre is lower. Pakistan has a product,
and as shown earlier, the world has a growing market for that product. It would be logical to fit the two together,
but this is not the outcome we observe. If the product was tailored to meet the requirements of the market then it
would be naturally acceptable.
As mentioned above, a lot of chilli powder sold domestically is in loose form and perceived to be of a lower quality
whereas packaged branded chillies are considered to be more hygienic and healthy. Most of the chillies sold
contain levels of aflatoxins that are unacceptable by the developed countries. Using chilli paste that is processed
hygienically and considered free from aflatoxins will be one reason to buy chilli paste. Another reason is that
during cooking, while ground chillies need to be cooked and take some time to acquire the right flavour, chilli
paste is pre-processed and does not require extra cooking time. This also makes it possible to apply chilli paste
directly on to food for immediate consumption, much like the chilli sauce.
2.3.1.4. Chilli Sauce Processing Plant:
Chilli sauces in Pakistan hold the same colour and consistency as ketchups but have a distinct hot taste that is
suitable to South Asian palate.
Rationale: Very few brands are currently producing these sauces and there is ample opportunity to enter this
segment. Chilli garlic sauce is a hot favourite of Pakistanis and is consumed with most foods and as a replacement
for ketchup.
2.3.2. Details of Red Chilli Producing Area and Total Production
Sindh grows around 85% of the countrys chillies and therefore this is also the area for possible investment in
chilli processing plants. The reason behind this is the cost efficiency in terms of transportation and logistics. Raw
chillies, both fresh and dry, require careful handling and controlled temperatures. This means that transporting
35
the raw material would require the use of cold chains over longer distances whereas location of chilli processing
units closer to the farms will substantially reduce transportation costs.
Processed food that is packaged is easier to handle and loss due to transportation is minimized. Since
preservatives in processed food increase shelf life, the cargo is able to withstand higher temperatures than chillies
in their raw state.
2.3.3. Possible Reasons for Declining Yield
Chilli production in Pakistan faces fluctuations which may be depicted in the graph below. These fluctuations may
be attributed to inefficiencies in production methods and climatic uncertainties. Floods and cyclones destroy the
crop which grows best under dry to humid conditions and does not thrive well in very extreme weathers.
The second reason for decline in yield is the presence of various bacteria and microbes that destroy crop and
affect the quality of the remaining plants.
The third reason is loss due to inappropriate drying and processing. If not dried evenly, the chillies tend to get
blisters and uneven colouring associated with low quality/bad crop. If moisture is not reduced up to the levels of
8-10% then harmful mould, aflatoxins, form on the produce. High levels of aflatoxins render the product unfit for
human consumption. While selecting chillies for grading, a lot of the produce is rejected due to very high levels of
aflatoxins.
Source: FAO
36
substantially if they performed well. The model also assisted farmers to break the vicious circle of borrowing loan
and facilities from middlemen and watching their profits taken away on various expense heads that they had not
anticipated initially.
National Foods receives better crop by providing farmers with geo-textile sheets and DuPont covering sheets to
ensure better and faster drying cycle. Large firms also engage in vocational training of farmers to increase
technological knowhow and spread the use of pesticides that are not harmful to humans. Companies such as
Bayer, Novartis, and ICI Chemicals work with farmers to promote knowledge of fungicides and pesticides.
Following on this model, in order to promote Swiss machinery and establish a market for it, some collaborative
work and assistance is expected to improve acceptance of more costly methods of food processing. The investors
need to see a clear benefit to setting up expensive processing plants. They have the means to invest but must be
assured of returns not too far into the future. Pakistanis are known to have high risk aversion (Hofstede) and
want quick returns. Working with farmers would improve infestation conditions of the crop. Food processing mill
investors would be assured a healthy stock for their product and will find acceptability in the European and North
American markets.
Another form of assistance would come from providing training on how to improve crop productivity and size.
Knowledge about the kind of practices and pesticides that are considered harmful and the means to improve
performance effectively and efficiently would be beneficial for crop improvement. Training on global standards of
quality and compliance practices would create awareness and increase an understanding of what is required in
the international markets.
2.4.2. Issue Two: International Demand Global Commodity Buying Houses
The Swiss corporations may assist food processing mills by providing links between the mills and the global
commodity buying houses. If the Pakistani mills are able to meet a set level of aflatoxins (this could be set at 3-5
parts per billion) then they would be assured of an export market at a competitive price. Good quality product
would fetch a higher price.
Global commodity buying houses could assist in setting up of labs for testing of micro and fungal bacteria. These
labs should be able to provide credible certificates accepted for export of various perishable products such as
chillies, rice, pulses, maize etc.
2.4.3. Issue Three: Domestic Demand Consumer Awareness
Much of the market for chillies is domestic because at present export into EU has been banned due to high levels
of aflatoxins. The quality of chilli consumed in Pakistan contains higher levels of aflatoxins than are
recommended for human consumption. A nationwide campaign to create awareness of the harmful effects of
aflatoxins in our diets would result in increasing consumer knowledge about what is present in the market and
how it affects them. Consumer demand for better product will increase incentive for investment in processing
units. Consumers will be more accepting of higher prices for processed chillies because they would be expected to
be of better quality. Benefits to a Swiss firm would be that they could promote their machinery as the one
providing clean, toxin-free products. Nestl has followed the same strategy for milk and introduced tetrapak
packaging as an alternative to unhealthy, infested open milk.
2.4.4. Conclusion: Chilli Processing and Investment Opportunities for SMEs
The report suggests that there are various opportunities in chilli processing that can be availed by investors in
Pakistan and that would increase the market for food processing machinery from Switzerland. In a capitalist
environment, the investor needs to be assured not only of an opportunity but also of a positive return on
investment and a steady stream of profits that will make the business self-sustaining and lucrative. With a clear
and present foreign market, investors would be happy to invest if their product was compatible and able to pass
the quality measures.
Investors would find opportunities in chilli powder processing, pickled pepper processing, chilli paste processing,
and chilli sauce processing plants. In order to make these attractive for investors, it is suggested that assistance be
provided in terms of collaboration with investors to improve cultivation conditions for farmers and to create
awareness among domestic consumers of the harmful effects of contaminated chillies. Another venue for
investors interest is to make the prospect of export market attractive by providing assistance through linkages to
large commodity houses and other export means.
37
38
Milk economy in terms of value is over 27% of the total agriculture sector.
As far as the formal dairy sector is concerned, there are five product categories which operate in the LDP
(Liquid Dairy Product) market. In the year 2009, there was a volume of 808 million litres of LDP out of
which 72.8% was accounted for white milk, 22.3% out of the total was tea creamers, and flavoured milk
constituted 2.4%, liquid creams share was 1.7% whereas the remaining 0.8% was of low fat milk products.
3. Loose milk constitutes approximately 62% of the total dairy supply which is sold directly to consumers.
Based on a study conducted in 200919, about 38% of the total milk supply obtained by milk collection
centres/milk purchasers was utilized to manufacture by-products of milk like cheese, yogurt, ghee, butter
(milk shortening), khoya (dried milk cream), and flavoured milk.
17
39
20
Abid A. Burki, Mushtaq A. Khan, and Faisal Bari, A State of Pakistans Dairy Sector: An Assessment, 2004
40
41
500,000
lit
500,000
lit
Safe Supply
Threatening Supply
2,000,000Li
t
1,000,000
lit
25%
75%
1,000,000
lit
It is evident from the figures in Figure 15 that the demand for milk is higher compared to its supply. There is a
dearth of skilled and trained human resource. There is little or no awareness about the skilled and trained human
resource.
3.1.6. Milk Collection and Distribution System
Most of the milk produced is collected using out-dated collection methods and majority of the transport is carried
out by Gawalas (milkmen). The current procedure of milk collection from a large number of subsistence
farmers is very time consuming, costly plus there is also threat of adulteration. Most of the rural milkmen are
uneducated hence they add different chemicals and adulterants in order to increase the shelf life of milk because
generally the shelf life of milk is only about 3 to 4 hours after milking. These people add preservatives which
include urea, formaldehyde, borax, salicylic acid, sodium bicarbonate and penicillin which are not fit for
consumption and these milk men hardly know the side effects of these chemicals.
The milk distribution system in Pakistan consists of the following main channels:
The informal sector constitutes about 84% of the total distribution network of milk whereas the formal sector is
16% of it. A graphical representation of milk collection and distribution has been given below:
42
The category of milk collectors can be divided into the following three segments:
Small: these collect around 200-400 kg of milk per day from various farms which are often in far flung areas.
Medium: these milk collectors collect about 400-800 kg milk per day and conduct door to door delivery of
milk. Apart from that they also market milk in nearby urban markets.
Large: in this category milk collectors collect about 1.5 to 3 tons of milk in a day and serve as middlemen
between milk producers and wholesalers/retailers. Adulteration is widely practiced amongst these collectors.
Other problems in the supply chain include perishability of milk, seasonality of milk production, issues between
middlemen and milk processors etc.
3.1.6.1. Milk Selling to Gawala for Cities
Committed Disposal
Un-restricted Supplies
Ensured & Scheduled Payment
Long term prospects
Safe delivery of product to consumer
Commercial Awareness
Hygienic & Quality Focus
43
Lack of Level Playing Field between the middlemen and the processors.
High degree of adulteration due to the inefficient distribution system and also due to the demand and supply
gap. Also, the initial stage identified under the value chain head indicates that there exists a lack of proper
milking and storage techniques
Lower tax paying tendencies of middlemen
Seasonality (seasonal production vs. year round production)
Milk is highly perishable in nature and the lack of cooling systems and chillers lead to wastages. Also,
wastages are a result of lack of hygienic practices in raising and milking the animals.
Variability
The uneducated labourers/dairy farmers have limited knowledge of vaccination. They are unable to use
modern technology due to low economic backgrounds and affordability issues. Overall profitability for the
farmers is low because the middlemen/Dhodis take away the major chunk of the profit. The poor farmers
also have lack of contact to the market mechanism. Due to their lack of education they are unaware of the
right breeding, cattle farming and optimal feed practices.
Lack of a cold chain to protect milk quality.
Consumers are unaware of the quality of the milk they are buying, and most cannot afford the higher
cost/higher quality presentations offered by the processing industry. The product range offered to consumers
is not well developed.
Lack of access to well-trained support service staff such as veterinarians.
21
Pre Feasibility Study for Dairy Processing Plant, May 2006, Planning & Development Division, Government of Pakistan.
44
Despite the huge volume of milk produced in Pakistan, processors find it hard to procure sufficient milk to
meet consumer demand, increasing demand for imported products.
Insufficient research facilities to drive productivity and enhanced farming systems through the industry, and
to drive genetic gain.
Lack of pasteurization law and strict implementation mechanism of milk food safety standards.
There is huge demand and supply gap because the population growth is approximately 3% annually
compared to the milk production which is not growing at the same pace. The overall milk production has
been increasing but the cause is the increase in the number of animals and not the per animal yield. Due to
this huge demand and supply gap the import costs of dry milk and milk related products has been increasing
at fast pace.
Low yield per animal could be attributed to the low level of government support in increasing the genetic
potential of animals through artificial insemination techniques and cross breeding. The low yield could also
be attributed to lack of availability of quality nutrients, feed dearth, unorganized marketing systems and
conventional farming methods.
Inadequate or poor chilling and processing units
Lack of value addition facilities
Raw milk
Collection and reception, test for raw
milk quality
Pre-pesteurisation
Storage in tank
Standardisation
Pasteurisation
(730C/850C, 15s)
Homogenisation
Storage in tank
Packing
Cold store
Quality of product in laboratory test
To market
To unlock the potential it is imperative that we should look at the overall milk process:
Cattle breeding
45
Cattle feed
Milking parlours
High yield per animal could be ensured through import of high yielding animals or through semen import for
crossbreeding.
There is lack of proper milking parlours when it comes to the milk collection, lack of chilling systems and lack of
packaging materials.
Currently, aseptic packaging material for UHT milk is $0.02-0.022 / pack. High quality milk powder packaging
material costs $0.01-1/Piece. Tetra pack packaging material costs $0-1/Pack.
The price of one litre packaged milk has gone up by Rs.5 in the retail market to Rs.100 with effect from March
15, a market survey revealed on Friday. (The News, March 22, 2014). This indicates that the demand for local
milk is higher than the supply and if proper processing and packaging machineries are installed than it will be
overall beneficial for the end consumers.
3.1.9.4. Developing the Value Added Market
A Public-Private sector joint initiative to bring about structural long term change in the dairy industry in Pakistan
was initiated in 2005. Other initiatives that have been taken up from 2005 so far are mentioned below:
Model farms - to introduce enhanced farm management and to demonstrate commercially viable dairy farms
Water cooling tanks milk chillers introduced to enhance its quality and farmers feasibility to reach the
market.
The Livestock Wing is taking regulatory measures that included: duty free import of veterinary dairy and
livestock machinery and equipment, allowing import of feed inputs and vaccines at zero rates. In order to
reduce input costs in livestock, poultry feed production, certain feed ingredients, growth promoters and
vitamin premixes have been zero rated. Along with this, allowing the import of high yielding animals is also
considered.
Sales tax exemption has been allowed to uncooked poultry meat.
New milk and meat processing units have been established in the private sector.
Milk Collection Processing and Dairy Production and Development Program formed 207 Milk Producer
Groups (MPG) in all the four provinces, Azad Jammu and Kashmir and Gilgit, Baltistan.
SMEDA (2013-2014 in process): Dairy farming may prove a profitable business for small landholders.
Dairy farming is one of the best projects if professionally done on small land holdings. The farm would start
the operations with 12 animals (10 cows and 2 buffaloes having daily per animal milk production of 13 and 8
litres respectively) to achieve milk production of 34,560 litres by the end of first year, excluding the milk
consumed by suckling calves. The milk will be primarily sold to bulk buyers at the rate of average Rs.60 per
litre. The farm will also offer milk sale to domestic individual consumers. A dairy farm with 12 animals (80%
cows and 20% buffaloes) needs a total investment estimated at Rs. 2.19 million out of which the capital cost
of the project is Rs.2.01 million with working capital of Rs. 0.17 million.
Following are the list of set-ups done by the local companies and joint-ventures between local and foreign
companies:
46
These are some of the initiatives that have already been undertaken. The foreign investors have a huge potential
in creating joint ventures with organizations such as SMEDA and Dairy Associations for the purpose of providing
the right technical support at the milking, chilling and at the packaging level.
47
3.
4.
5.
6.
7.
Wali farm situated at Dumloti Road number 8 Malir district, has a Milking machine set up where 10 cattle
at a time can yield milk.
Bukhari Dairy Farm Pipree Steel Town, Karachi, has a 20 animals milking parlour, nowadays not active.
Bukhari Dairy Farm also chills milk, manually packs the fresh milk in pouches and markets it with name of
Leeche and supplies it at the consumers door step.
Aziz Memon Model Dairy Farm Steel Town Filter Plant manually boils the milk, chills and packs it in
bottles and supplies to the door step of consumer with trade name Safe Milk.
Chadder Cheese (PECHS, Karachi) collects cow milk from market and processes it for cheese and Raeta
(traditional flavoured Yogurt).
Malir Cantonment Military Farm yields milk by hands, pasteurizes it, chills the milk and supplies to the
armed forces.
Haji Nizakat Farm Landhi Cattle Colony, Karachi, has a 10 animals milking parlour, but is not active
nowadays.
Dr Dairy Milk, having milk plant at Landhi Cattle Colony, collects milk from Landhi, Karachi, pasteurizes
it at the plant, and supplies the milk in pouches with Dr Dairy Milk trade mark.
The list of countries which export dairy machinery to Pakistan (with imported values in thousands of US dollars)
are given below:
22
23
FAO. 2011. Dairy development in Pakistan, by Umm e Zia, T. Mahmood and M.R. Ali. Rome
http://www.fao.org/docrep/011/i0588e/i0588e07.htm
48
Table 18: List of Supplying Markets for a Product Imported by Pakistan: Product: 843420 Dairy Machinery
Table 19: List of Supplying Markets for a Product Imported by Pakistan: Product: 84342000 Milking Machines and Dairy Machinery Dairy Machinery
49
Table 20: List of Supplying Markets for a Product Imported by Pakistan: Product: 84349000 Milking Machines and Dairy Machinery Parts
24
http://tribune.com.pk/story/241432/divine-bovination-how-cross-breeding-can-save-the-dairy-industry-in-pakistan/
www.nbp.com.pk/Agriculture/DairyReport.pdf
25
50
51
The average annual cost of vaccinations is 1200 PKR per cow. The vaccines are produced at the Veterinary
Research Institute at Ghazi Road, Lahore.26
3.1.9.9. Tariff Rationalization for the dairy sector
Currently, finished goods and input materials of dairy and stationery industry are zero-rated subject to conditions
as specified under SRO 670(I)/2013, dated 18-07-2013.27
26
www.nbp.com.pk/Agriculture/DairyReport.pdf
http://www.brecorder.com/taxation/181:pakistan/1189460:government-of-pakistan-revenue-division-federal-board-of-revenue-budget-2014-15part-ii/
28
http://www.slideshare.net/hassankh/powder-milk-industry-in-pakistan
27
52
3.2.2. Yogurt
3.2.3. Butter
53
3.2.4. Cheese
Table 25: Sales of Cheese by Category: 2008 - 2013
54
The market shares of other value added products of the dairy industry such as cheese, butter, yogurt etc. are given
below:
55
29
http://tribune.com.pk/story/649118/loose-vs-uht-milk-processed-milk-still-has-a-minuscule-market-share/
56
30
http://tribune.com.pk/story/649118/loose-vs-uht-milk-processed-milk-still-has-a-minuscule-market-share/
57
continue not only will the demand-supply gap be minimized but these programs will also help investors to
provide feeding and breeding solutions to the farmers.
The second stage which is the milking stage presents opportunities in terms of milking parlours. The farms have
herd size of more than 100 animals will be ideal to pitch this. The right way forward is to pitch this product
category to the dairy associations of various areas of Pakistan who act as opinion leaders and educators and will
recommend the importance of it to the farm owners.
The third stage is the storage stage which requires the farmers to install chillers. Due to the lack of proper storage
facilities at the farm level a lot of milk is wasted. The chiller cost starts from Rs. 100,000. PDDC had provided
loans to the dairy farmers to install cooling tanks. However, due to the lack of current government funding
nothing is being done currently. The polymeric pipes which transport the milk from the chillers to the packing
machinery could be used by the big farms and model farms. The cost of these polymeric pipes starts from Rs.
1,000,000. The packaging option is only applicable for the model farms and big farms. Here again the
educational programs by the dairy associations would help because the concept of branding and packaging is
almost negligible. Joint ventures with dairy associations and/or potential investors such as local giants like the
Mansha Group, Dawood Group, Lakson Group etc. is a way forward to avail the opportunities available to Swiss
SMEs.
58
The above map illustrates mango cultivation area (in hectares), and Pakistan lies amongst the top countries of the
world where mango is cultivated. Mangos share in the world export of fruit is about 15%. Annual production of
mangos in Pakistan is about two million ton, out of which 77 thousand ton is exported, which is only 7% of the
total output.
Mango is the 4th most rapidly growing trade after taro, single strength citrus juice and cassava tapioca. The world
trade in mango including re-export grew almost three times during the past decade. Current mango trade is
estimated around 650,000 ton, per annum. The prominent mango exporting countries include Mexico, Brazil,
Pakistan, India, Philippines Ecuador, Peru, South Africa and Thailand. Top producers of mango are shown in the
following table:
59
Rank
Country
India
11,400,000
China
3,130,000
Thailand
1,750,000
Mexico
1,523,160
Pakistan
1,036,000
Indonesia
891,566
Philippines
880,000
Nigeria
730,000
Brazil
542,000
10
Egypt
326,063
45000000
6000000
40000000
5000000
35000000
4000000
25000000
3000000
20000000
15000000
Ha
tonnes
30000000
2000000
10000000
1000000
5000000
0
Production Quantity
Area Harvested
Although, mango is referred to as King of all fruits, it is primarily consumed locally and a significantly low
amount is available for exports. This makes Mango a pricey fruit internationally. The following graph shows
global mango exports in (1000, US$).
60
2003
2004
2005
2006
2007
2008
2009
2010
2011
Pakistani mango exports are gradually increasing but in the recent past floods and heavy rains during harvesting
season has effected it production and exports.
2003
2004
2005
2006
2007
2008
2009
2010
2011
Mango being an expensive commodity attracts farmers and associated business. Over the past few years, Far
Eastern countries have increased their mango production and exports by adhering to international standards and
best practices. As a result, Pakistan has lost its position from 4th largest mango producer and is currently 7th
largest producer. The following table illustrates top mango producers of the world.
61
Rank
Country
Mexico
287,771
India
229,192
Thailand
152,285
Brazil
126,568
Peru
123,863
Netherlands
110,179
Pakistan
105,130
Ecuador
49,066
Yemen
35,727
10
Philippines
30,565
Alamas
Alphonso
Anwar Retaul
Baganapalli
Chaunsa
Chaunsa late
Dosehri
Gulab Khas
Fajri
Langra
Malda
Neelum
Retaul late
Sindhri
Saroli
Sensation
Swarnarika
Totapari
Yakta
Zafran
Zardalu
62
Highest production of quality fruit occurs in those areas with distinctive non-freezing cool periods and an
extended dry period prior flowering, hot temperatures during fruit development and access to water from
flowering to harvest. Drought during fruit onset and development may result in reduced yields and fruit size.
For coastal areas, seasonal flooding of the heavy clays and lower humidity than in the savannah areas
differentiate these two important ecozones. In the case of mangoes, plants may develop extensive canopies and
grow into large size trees in both ecozones, however it is only in the areas with relatively lower humidity that
mango trees are able to consistently produce fruit.
Summer temperatures also affect the production of good quality mangoes. Cool summer temperature with
average minimum temperature 18C delay the ripening of fruit. It is stated that the mango trees produce largest
crop and most brilliant fruit in regions where there is well defined dry season corresponding with the blooming
and ripening periods. Rain during the blooming season (November to March) is deleterious as it stimulates
vegetative growth but interferes with flower production and encourages fungus diseases of the inflorescence and
fruit. Cyclones and windstorms during the fruiting season can play havoc causing excessive shedding of immature
fruit.
4.1.6. Total Area Cultivated, Production and Yield per Hectre
The total area under mango orchards in Pakistan is 157,000 hectares. Out of which 67% of the area falls in
Punjab; 32% in Sindh; 0.8% in Balochistan and only 0.2% in NWFP. The major mango producing areas include
Khanewal, Multan, Bahawalpur, Rahim Yar Khan, Dera Ismael Khan, Sukkur, Hyderabad and Mirpur Khas.
Year
Yeild (Tons/Ha)
2004 - 2005
151.5
1671.2
11.03
2005 - 2006
156.6
1753.9
11.20
2006 - 2007
164.5
1719.2
10.45
2007 - 2008
166.2
1753.7
10.55
2008 - 2009
170.1
1727.9
10.16
2009 - 2010
173.7
1845.5
10.62
2010 - 2011
171.9
1888.5
10.99
2011 - 2012
172.4
1700.1
9.86
2500000
tonnes
2000000
1500000
1000000
500000
0
2002
2003
2004
2005
2006
2007
Pakistan
63
2008
2009
2010
2011
2012
Source: UNIDO
64
Source: ICCI
65
Source UNIDO
Importing Countries
EU, Malaysia
Japan
USA
China
Quarantine Requirements
Hot Water Treatment
Vapour Heat Treatment
Irradiation
Extended Hot Water Treatment
66
Source: SBI
Being a profitable proposition and increasing demand for pulp by local fruit juice and nectar industry, a number
of players are present in the sector. They are:
67
Source: SBI
68
mango; for taking care of the issue of fruit fly. There are some existing facilities in Karachi; however, there is need
for establishing more facilities in mango areas of Punjab.
4.3.7. Mango Vapour Heat Treatment
Sanitary and phytosanitary requirements of mango importing countries differ. There are some countries like
Japan, which require vapour heat treatment instead of hot water treatment to ward off dangers of fruit fly.
Therefore, this is also potential investment project.
4.3.8. Irradiation
One important means for meeting the sanitary and phytosanitary requirements for exporting mangoes is
irradiation. This is especially important in the context of exporting mangoes to the largest export market of USA.
One such facility (PARAS Foods) has become operational in Lahore. There is need for establishing a larger facility
in Karachi and Multan for mango, which will be used for other horticulture/food products.
69
5.2. DAIRY
Dairy sector has more than 200% profit. However, it is a risky business. Many textile giants are venturing into
this sector because of the margins. For instance, Mansha Group has their dairy facility. They have more than
1000 cattle on their dairy farm. Another example is that of dairy-land which has 350 cattle. They sell their brand
called Day Fresh in pouch which has a shelf life of 24 hours. Feroze Textile has come up with their brand called
Pure milk. They recently imported cows from Australia and have more than 350 cows on a 175 acres land. The
reason that they gave regarding import of cows rather than buffaloes is because cows milk is better than buffalo
milk.
The machinery requirement is dependent on the overall process:
Dairy farming may prove a profitable business for small landholders. Dairy farming is one of the best projects if
professionally done on small land holdings. The farm would start the operations with 12 animals (10 cows and 2
buffaloes having daily per animal milk production of 13 and 8 litres respectively) to achieve milk production of
34,560 litres by the end of first year, excluding the milk consumed by suckling calves.
The milk will be primarily sold to bulk buyers at the rate of average Rs.60 per litre. The farm will also offer milk
sale to domestic individual consumers.
70
A dairy farm with 12 animals (80% cows and 20% buffaloes) needs a total investment estimated at Rs. 2.19
million out of which the capital cost of the project is Rs.2.01 million with working capital of Rs. 0.17
million.(Large Dairy Farm Owner)
5.3. MANGOES
Mango Farming and processing is a profitable business. It used to be my hobby but now I am fully involved in it.
The weather conditions suit its cultivation and it is a Gods blessing upon us. The problem this sector is facing is
lack of fresh fruit processing facilities. If we have a world class product, our exports are only hampered by
bacterial and fungal control procedures made mandatory by importing countries like USA, Japan and Europe.
(Farm owner).
It is a profitable business. Look at our farms, we are completely integrated and have harvesting to shipping all
under our control. This synergy gives us greater efficiencies and competitive advantage. We export around 6000
tonnes a year and are considering expansion as the demand is ever increasing. (Farm owner).
I have travelled a lot and when I visit fruit markets internationally, I see average fruit but well-packaging
attracting higher prices. Our Mango is best in the world, but we are selling it in ancient packaging. Even if you
look in Karachi, Lahore and Islamabad and all those big marts out there, you see beautifully packaged fruits. We
need packaging and grading plants near our farms. If packaging is improved, local profitability goes up by 30%
and people in large cities are willing to pay more. (Farm owner).
71
Bibliography
Abid A. Burki, Mushtaq A. Khan, and Faisal Bari, A State of Pakistans Dairy Sector: An Assessment, 2004
Business
Recorder:
http://www.brecorder.com/taxation/181:pakistan/1189460:government-of-pakistanrevenue-division-federal-board-of-revenue-budget-2014-15-part-ii/
Data.
(2014).
The
World
Bank
.
Retrieved
April
10,
2014,
from
http://data.worldbank.org/indicator/SP.URB.TOTL.IN.ZS
Dwyer, J., Picciano, M., & Raiten, D. (2003). Future Directions for what we Eat in America-NHANES: The
Integrated CSF II-NHANES. The Journal of Nutrition, 133, 624-634.
Euromonitor.
(2014).
Passport,
Analysis.
Retrieved
May
3,
2014,
from
http://www.portal.euromonitor.com/Portal/Pages/Search/SearchResultsList.aspx
Iqbal, Q. (2009). Biometric and Biochemical Studies on Hot Pepper. Thesis, Institute of Horticultural Sciences,
University of Agriculture, Faisalabad.
PBS.
(2014).
Pakistan
Bureau
of
Statistics.
Retrieved
March
10,
2014,
from
http://www.pbs.gov.pk/content/agricultural-statistics-pakistan-2010-11
PES, P. E. (2014). Ministry of Finance, Government of Pakistan. Retrieved May 9, 2014, from
http://finance.gov.pk/survey_1314.html
SBI. (2010). Red-Chilli Dehydration Plant: Kunri, Sindh. Sindh Board of Investment. Karachi: Government of
Sindh.
SBI. (2012). Red Chillies - Sindh: The Land of Opportunities. Sindh Board of Investment. Karachi: Government
of Sindh.
Trade
Map.
(2013).
International
Trade
centre.
Retrieved
December
09,
2013,
from
http://www.trademap.org/Country_SelProductCountry.aspx
72
ExportHelp
www.s-ge.com/exporthelp
exporthelp@s-ge.com
T 0844 811 812
73