PAKISTAN’S horticulture sector, it goes without saying, has a huge export potential and its fruits and vegetables are in great demand in several regional markets.

Russia is one such market currently interested in Pakistan’s kinnows and potatos.

However, things are not going as smoothly as one expected. Over the years, trade relations between the two countries, though on the rise, have never been amiable, with a tendency of suddenly becoming sour. For instance, in 2012 a Russian quarantine team that visited Pakistan’s horticulture growing areas showed its reservations on the quality of the crops and spelled out its pre-condition: that the exporters must get a certificate from a certain private laboratory in Lahore about the efficacy of the commodities being exported to Russia, in addition to routine phytosanitary certification from the Plant Protection Department (PPD).

The lab in question, the Russians said, possessed technical expertise that no other lab in Pakistan had in conducting molecular tests. Exporters were hardly impressed as this lab was neither registered with the PPD, nor did the PPD have any credentials for this lab. The fact remains, as also pointed out by the All Pakistan Fruit and Vegetable Exporters, Importers and Merchants Association (PFVA), that the lack of close understanding between Russia and Pakistan, on quarantine protocols, has often created problems for local exporters.

The latest problem between the two countries relates to the valuation of import duty on Pakistani kinnow and potato by Russian Customs, which the PFVA claims is unfair and biased

In 2007, Russian inspection authorities lodged a complaint with Pakistan about the presence of the pest ‘Khapra beetle’ in some rice shipments dispatched from the country. The chairman of the Rice Exporters Association, however, clarified that the pest was found in the wheat crop, not in the rice crop. Some 20,000 tonnes of Irri rice was exported to Russia in 2006.

The latest problem between the two countries relates to the valuation of import duty on Pakistani kinnow and potato by Russian Customs which, the PFVA claims, is unfair and biased. Exporters believe that if the valuation issue is quickly resolved, there can be an immense increase in exports.

In a letter to Finance Minister Ishaq Dar sent on Sept 10, PFVA Chairman Waheed Ahmed, while seeking his intervention in the matter, refers to what he says is the discriminatory attitude of Russians towards Pakistani horticultural goods. Citing an instance, he says that during the 2015 season the import duty imposed by Russian Customs on Pakistani potato was 61 cents/kg, while it was 48 cents on Egyptian potato. The fair cost-and-freight (C&F) value of Pakistani potato, he contended, was 36 cents/kg.

Similarly, a fair valuation of C&F of Pakistani kinnow comes to 75 cents/kg, but Russian Customs fixed it at 90 cents for December 2015-January 2016, and $1.05 from February onward. Under the circumstances, exporters have to sell their kinnow at cheaper rates. The PFVA considers it an ‘unfair trade practice’ by Russian Customs.

The problem arises from the fact that Pakistani kinnow is being compared with that of Spain and Morocco, which are highly priced for they are seedless and have an impressive look. Their kinnows are available at $10-19/10 kg while the Pakistani kinnow is sold at $6.5-7.5/10 kg. The issue of unfair valuation is a matter of great concern for Pakistani traders as the export potential of these two products to the Russian market cannot be fully exploited.

On Sept 09, PFVA chairman Waheed Ahmad along with other office-bearers met the Consul General of Russia in Karachi and raised, among other things, the issue of ‘unfair valuation’ of Pakistani goods by Russian Customs. The Russian diplomat, however, assured the Pakistani delegation that he would look into the complaints brought to his attention and would extend all possible support to facilitate exporters to enable them to enhance exports, particularly of kinnow and potato, to Russia. Waheed wanted all the companies registered with the PFVA to be allowed to export potatoes. His major demand was of opening banking channels between the two countries that he believed could spur trade volume up to $1bn.

However, there is no denying the fact that what is woefully lacking is the application of the latest technology in the production and export of popular fruits and vegetables. According to the Federation of Pakistan Chambers of Commerce and Industry, the country has certain geographical advantages and is considered a backyard farm of the Central Asian States and the Middle East, with a remarkable potential for export of farm products.

Meanwhile, export of fresh fruits, according to the latest data of the Pakistan Bureau of Statistics, has registered an increase of 56.99pc during the first two months of the current financial year. As much as 74,297 metric tonnes of fresh fruits of different kinds were exported during July-August 2016.

A year ago in this period, 49,036m tonnes were exported. However, vegetable exports have nose-dived by 43.11pc during this period, recorded at 73,944 metric tonnes compared to last year’s exports of 127,810 metric tonnes. In the first two months of the current financial year, no quantity of leguminous vegetables (pulses) was exported.

Published in Dawn, Business & Finance weekly, October 3rd, 2016