Islamabad, 27 September 2007 -- The second meeting of the Task Force on Horticulture, Finance and Competitiveness (TFHF&C) was held today at the Ministry of Finance. Dr. Salman Shah, Advisor to Prime Minister on Finance, Economic Affairs, Revenue and Statistics chaired the meeting. The meeting was attended by key stakeholders, including representatives from the Ministries of Food Agriculture and Livestock, Commerce, Science & Technology, Industry and Health. The Board of Investment and other private sector representatives from banking, bio-technology and leading horticulture exporters also attended.

Dr. Salman Shah briefed the task force members that the Competitiveness Support Fund, a joint initiative of the Ministry of Finance, Government of Pakistan and United States Agency for International Development (USAID) was tasked by the Ministry of Finance to undertake a comprehensive study entitled “The Competitive Advantage of the Food Processing Industry: Focus on Quality, Safety and Standards”. As a result, CSF was asked to undertake more specific work on horticulture, a sub-sector of agriculture accorded national priority by the Government of Pakistan. An Action Plan for the horticulture industry was subsequently developed by CSF in close consultation with MinFAL and other stakeholders in May and June 2007.

The Action Plan proposed a Task Force chaired by the Ministry of Finance. The approach is based on the many agencies and projects involved in horticulture, duplicating efforts. CSF proposed that this issue be tackled by a Task Force for Horticulture Finance & Competitiveness. The first meeting of the Task Force was held on 12 July 2007.

The overarching goal of the Task Force was set to establish a world-class horticulture industry in Pakistan. Its aim is to provide guidance for restructuring the finance, management and organization of the industry on a nationwide basis. Its objectives are to ensure that agreed changes are included in Government policy and in the work plans of the various agencies actively involved in horticulture development. The Task Force also wants to facilitate the work of the active agencies and to encourage the private sector and especially the commercial banks to provide the industry with the investment and resources required for success.

“There must be a holistic, integrated and coordinated approach based on leadership by key agencies, principally MinFAL/NAPHIS, PHDEB, the BOI and the State Bank of Pakistan” said Dr. Salman Shah. He also emphasized the importance of the private sector, including the commercial banks, as key players in the development of this sector.

The Task Force decided that an Implementation Committee would be formed and chaired by the Secretary, Ministry of Agriculture, Livestock and Fisheries (MinFAL) The Implementation Committee would then form operational sub-committees chaired by the secretaries of relevant line ministries. The sub-committees are Production, Processing and Marketing; Quality, Standards and Regulations; Infrastructure; and Horti-business Finance.

Speaking on the occasion, Arthur Bayhan, Chief Executive Officer of the Competitiveness Support Fund informed the Task Force that, each sub-committee reported their findings to the Implementation Committee which are reflected in the final Report made to the Task Force on 12th September 2007. He also said that “the lackluster performance of horticulture industry is due to a multitude of factors. CSF brought these to the attention of the Government of Pakistan which has emphasized the need for swift corrective action”.

The Competitiveness Support Fund made a presentation to the Task Force members and briefed them on the findings of the four sub-committees.

Mr. Geoffrey Quartermaine Bastin, Senior Advisor to the Competitiveness Support Fund (CSF) informed the members that the Sub-Committee on Production, Processing Marketing (SC-P) identified the major issues to be inadequate institutional mechanisms to support the industry and to allow the technical solutions to be understood and implemented. The SC-P has recommended: adopting an integrated approach to the total management of all sectors of this industry; establishment of priority production “zones” and products for development and to provide incentives for investment in post harvest handling and processing; and improvement in human capacity

Highlighting the recommendations of the Sub-Committee on Quality (SC-Q), Bastin, said that there is a need to rationalize and utilize existing quality control laboratories, set up labs in the production areas, revise laws applying to food standards and more coordination of work that various agencies involved in food health and safety are currently undertaking.

Chairman of the Sub-Committee on Infrastructure (SC-I), Mushtaq Malik, Secretary Board of Investment, identified lack of infrastructure, poor logistics especially cold storage, refrigerated transport and sea and air cargo, and insufficient processing capacity to deal with second and third grade fruits as the main infrastructure issues. The recommendations from the (SC-I) include the development of a Geographical Information System (GIS), and undertaking an Action Plan for transport interventions and investment in an integrated cool chain including building cold storage/controlled atmosphere at key airports

The Sub-Committee on Finance (SC-F), chaired by Javed Malik, Additional Secretary Ministry of Finance, also recommended basic guidelines for the banking sector. A public awareness campaign and workshops for training bankers to understand the industry issues were recommended. The SC-F identified that the provision of collateral was essential, where it may not be possible to borrow against the future, but on the value of a crop. Access to finance is a key issue and almost 80% of the small farmers are excluded from the formal banking system. A need for insurance; both for production and export has also been identified as a critical element to improve the competitiveness of the sector.

The Sub-Committees have also suggested that the Pakistan Horticulture Development and Export Board should be made an independent body under Section 42 of the Companies’ Ordinance. It also recommended that National Animal and Plant Health Inspection Service (NAPHIS) should be restructured as an autonomous agency empowered to enforce the law.

The Implementation Committee emphasized that product quality as per international quality standards and effective accreditation and certification mechanisms including pre-shipment inspection are critical areas for horticulture development in the country.

Dr. Salman Shah in his concluding remarks told the sub-committees that we have to adopt a two pronged strategy: firstly, the quality of produce both for the domestic and international market should be improved, by adopting good agricultural practices including disease-free planting materials and enforcing grades & quality standards, branding etc through pre-shipment inspection especially in case of exports; and secondly, to diversify product range.

Dr. Shah also tasked the Implementation Committee to come up with at least two major processing projects to be developed in the production and processing areas, where entrepreneurs can approach the banks for financing. He also asked that at least three projects should be submitted to the Task Force in terms of Infrastructure development. Dr. Shah put special emphasis on the establishment of wholesales markets in major cities as mega projects as well. The Punjab Agriculture Marketing Company (PAMCO) will be coming up with a few projects on identified initiatives.

The Sub-Committee on Quality was asked to work with Ministries of Health, Finance, MinFAL and Planning Commission to work on the food safety laws.

Identifying the role of the banking sector, Dr. Shah asked the banks and other financial institutions to look at the three aspects of the financing i.e. production/farmer, export and projects.

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

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

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

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