Agri sector is reeling with multiple challenges with no respite for fruit farmers
The agricultural sector, already struggling with an ongoing wheat shortage, faces further challenges as fruit purchases by juice and nectar producers decrease. This decline is attributed to the recent imposition of higher taxes on the industry, according to a report published in Dawn newspaper.
Reports indicate that juice manufacturers have curtailed their presence in fruit markets by reducing their procurement and contract-farming goals. Historically, the formal juice sector bought over 100,000 tonnes of fruits annually from local growers, but these numbers have significantly dropped, the report said.
Typically, fruit pulp processors would engage with orchard owners and exporters several months prior to harvest, agreeing on informal contracts to buy sub-export quality fruits. This year, however, there has been a noticeable decrease in such agreements, leaving orchard owners waiting anxiously for industry buyers.
According to the report, Mubashar Durrani, a mango farmer from Multan, expressed concern over the change in industry behavior. “This year, no company has approached me for the leftover mangoes,” he said. “Previously, they would secure contracts for even more than they needed to accommodate for potential defaults by some suppliers.”
Purchases by pulp, nectar, and juice-making units once stabilized the local market, ensuring fair returns for growers. However, their reduced involvement has led to falling fruit prices, disadvantaging orchard owners.
Mr. Durrani notes the added strain from limited fruit exports to Russia, Ukraine, and Central Asian countries, compounded by trade route issues through Afghanistan and Iran. “The disappearance of the juice industry from the market and plummeting fruit prices may force us to cease planting and even uproot existing trees to sell as fuel wood, offsetting losses in light of rising costs for power, diesel, fertilizer, and labor,” he explains.
Ebadur Rehman, a guava grower from Sheikhupura, laments that government policies are damaging rather than supporting the fruit value chain, which is vital for enhancing agricultural productivity and bolstering the rural economy, currently facing issues like unemployment-driven urban migration. “Adding value is the only way to salvage our economy. Without it, we’ll continue to be a nation that produces raw materials, depending on other countries for finished goods,” states Mr. Rehman.
The imposition of a 10% Federal Excise Duty (FED) in the 2022-23 budget led to a decline in industry sales to Rs43 billion, a figure that could have reached over Rs70 billion based on past growth trends. The increase of the FED to 20% in the 2023-24 budget intended to address revenue shortfalls has instead resulted in reduced sales and volumes, contributing to the growth of an undocumented sector that offers cheaper, lower-quality, and potentially unsafe products. This change has severely impacted the rural fruit farming economy linked to this value chain. Industry representatives report that the 20% FED has cut their sales