GEARING UP FOR CPEC (2016-17)AGRICULTURE SECTOR OF PUNJAB

22nd January 2019

What are we discussing today?

What is

CPEC?

What do Chinese want?

What do we want?

What are opportunities for

agriculture sector?

How can Punjab capitalize on

them?

What are we discussing today?

What is

CPEC?

What do Chinese want?

What do we want?

What are opportunities for

agriculture sector?

How can Punjab capitalize on

them?

ONE BELT ONE ROAD

Creation of a maritime road that links China’s port facilities with the African coast, pushing up

through the Suez Canal into the Mediterranean

Creation of an economic land belt that includes countries on the original Silk Road through

Central Asia, West Asia, the Middle East and Europe

What are we discussing today?

What is

CPEC?

What do Chinese want?

What do we want?

What are opportunities for

agriculture sector?

How can Punjab capitalize on

them?

What does China want – Overriding objectives

• Look for new growth drivers

• Capitalize on China’s domestic over capacity

• Direct Chinese capital for regional infrastructure

• Improve trade and relations with ASEAN, Central Asian and European

countries

Critical for Kashgar (Xinjiang)

BRI

CMREC

SREB

MSR

NELB

CCWAEC

CICPEC

CPEC

BCIMEC

Chinese objectives within agriculture sector

through CPEC

Technical cooperation and exchange

Investment in upstream and downstream industries

High grade cotton to secure textile value chains

Xinjiang Production and Construction Corps’ (Bingtuan) - an economic and paramilitary

organization in the Xinjiang Uyghur Autonomous Region

“agricultural production is large-scale, its degree of mechanization and technological content is

high, and water conservancy and other facilities are solid”

China - experience, technology and financing

Pakistan - favorable resources, labor force and market opportunities

What are we discussing today?

What is

CPEC?

What do Chinese want?

What do we want?

What are opportunities for

agriculture sector?

How can Punjab capitalize on

them?

What does Punjab want – Overriding objectives

Source: Punjab Agriculture Sector Plan

FARMER-CENTRIC SERVICE DELIVERY

PRIVATE SECTOR-LED GROWTH

ENHANCED PRODUCTIVITY

Instruments to achieve these objectives

Wider Access to

Requisite Inputs

and Knowledge

Efficient Access to

Market

Promoting New

Investment and

Access to Finance

Improving Quality

Standards

1 2 3 4

Source: Punjab Agriculture Sector Plan

How to approach CPEC?

Mapping Opportunity

Canvass

Digging Deeper

Looping in Private Sector

Designing Targeted

Interventions

Expanding the Canvass

1

2

3

4

5

What are we discussing today?

What is

CPEC?

What do Chinese want?

What do we want?

What are opportunities for

agriculture sector?

How can Punjab capitalize on

them?

Opportunity?

Paradigm Shift

1.3 billion people - Rising incomes,

consumption, urbanization

$1 trillion of food consumption in China every

year - Another $500 billion in 10 years

2012 – China surpassed USA to become the

world’s largest importer of agri products

Sales of packaged food almost quadrupled in

the last 15 years

Multinationals with long-term China plans

Pakistan's exports to the world in 2015 (HS codes up to HS24 - agricultural and agro-processed excluding cotton and

livestock-related products)

0

500

1000

1500

2000

2500

Cere

als

Edib

le f

ruit a

nd n

uts;

peel of

citr

us f

ruit

or

melo

ns

Sug

ars

and

sug

ar

conf

ect

ionery

Pro

duct

s of

the m

illin

g ind

ust

ry; m

alt;

starc

hes;

inu

lin; w

heat

glu

ten

Bevera

ges,

spir

its

and v

inega

r

Edib

le v

egeta

ble

s a

nd c

ert

ain

roots

and

tubers

Oil s

eeds

and

ole

ag

inous

frui

ts;

misce

llane

ous

gra

ins,

seeds

and f

ruit;

indus

tria

l or

medic

inal p

lants

; st

raw

…

Coff

ee, te

a, m

atÃ

© a

nd s

pic

es

Anim

al or

veg

eta

ble

fa

ts a

nd o

ils a

nd

their c

leava

ge p

roduct

s; p

repa

red

edib

le f

ats

; a

nim

al or

vegeta

ble

waxes

Pre

pa

rations

of

cere

als

, fl

our,

sta

rch

or

milk

; p

ast

ryco

oks' p

roduc

ts

Pre

pa

rations

of

vegeta

ble

s, f

ruit, nut

s or

oth

er

part

s of

pla

nts

Lac;

gum

s, r

esi

ns

and

oth

er

vegeta

ble

sap

s a

nd e

xtr

act

s

Resi

dues

and w

ast

e f

rom

the

food

ind

ustr

ies;

pre

pa

red

anim

al fo

dd

er

Mis

cellane

ous

edib

le p

repa

rations

Toba

cco a

nd m

anuf

act

ured t

oba

cco

subst

itute

s

Vegeta

ble

pla

itin

g m

ate

rials; vegeta

ble

pro

duct

s not elsew

here

speci

fied o

rin

cluded

Live tre

es

and

oth

er

pla

nts;

bulb

s, r

oots

and the lik

e; cu

t fl

ow

ers

and o

rnam

ent

al

foliage

Coco

a a

nd c

oco

a p

repa

rations

10 8 17 11 22 7 12 9 15 19 20 13 23 21 24 14 6 18

Export

Valu

e (

Million $

)

$4.062 billion

0

20

40

60

80

100

120

140

160

180

Cere

als

Bevera

ges,

spir

its

and v

inega

r

Edib

le f

ruit a

nd n

uts;

peel of

citr

us f

ruit o

rm

elo

ns

Lac;

gum

s, r

esi

ns

and

oth

er

vegeta

ble

sap

sand e

xtr

act

s

Resi

dues

and w

ast

e f

rom

the

food indus

trie

s;pre

pa

red a

nim

al fo

dd

er

Oil s

eeds

and

ole

ag

inous

frui

ts; m

isce

llaneous

gra

ins,

seeds

and f

ruit; in

dust

rial or

medic

inal

pla

nts

; st

raw

and f

odd

er

Edib

le v

egeta

ble

s a

nd c

ert

ain

roots

and

tubers

Vegeta

ble

pla

itin

g m

ate

rials; vegeta

ble

pro

duct

s not elsew

here

speci

fied o

r in

clud

ed

Sug

ars

and

sug

ar

conf

ect

ionery

Pre

pa

rations

of

vegeta

ble

s, f

ruit, nut

s or

oth

er

part

s of

pla

nts

Live tre

es

and

oth

er

pla

nts;

bulb

s, r

oots

and

the lik

e; cu

t fl

ow

ers

and

orn

am

enta

l fo

lia

ge

Coff

ee, te

a, m

atÃ

© a

nd s

pic

es

Pre

pa

rations

of

cere

als

, fl

our,

sta

rch

or

milk;

pa

stry

cooks' p

roduc

ts

Mis

cellane

ous

edib

le p

repa

rations

10 22 8 13 23 12 7 14 17 20 6 9 19 21

Pakistan's exports to the China in 2015 (HS codes up to HS24 - agricultural and agro-processed excluding cotton and livestock-

related products)

$303 million

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

Oil s

eeds

and

ole

ag

inous

frui

ts; m

isce

llaneous

gra

ins,

seeds

and f

ruit; in

dust

rial or

medic

inal

pla

nts

; st

raw

and f

odd

er

Cere

als

Edib

le f

ruit a

nd n

uts;

peel of

citr

us f

ruit o

rm

elo

ns

Resi

dues

and w

ast

e f

rom

the

food indus

trie

s;pre

pa

red a

nim

al fo

dd

er

Bevera

ges,

spir

its

and v

inega

r

Pre

pa

rations

of

cere

als

, fl

our,

sta

rch

or

milk;

pa

stry

cooks' p

roduc

ts

Edib

le v

egeta

ble

s a

nd c

ert

ain

roots

and

tub

ers

Sug

ars

and

sug

ar

conf

ect

ionery

Mis

cellane

ous

edib

le p

repa

rations

Pre

pa

rations

of

vegeta

ble

s, f

ruit, nut

s or

oth

er

pa

rts

of

pla

nts

Coff

ee, te

a, m

atÃ

© a

nd s

pic

es

Lac;

gum

s, r

esi

ns

and

oth

er

vegeta

ble

sap

s a

nd

extr

act

s

Live tre

es

and

oth

er

pla

nts;

bulb

s, r

oots

and

the lik

e; cu

t fl

ow

ers

and

orn

am

enta

l fo

liag

e

Vegeta

ble

pla

itin

g m

ate

rials; vegeta

ble

pro

duct

s not elsew

here

speci

fied o

r in

clud

ed

12 10 8 23 22 19 7 17 21 20 9 13 6 14

China’s total imports in 2015 (HS codes up to HS24 - agricultural and agro-processed excluding cotton and livestock-

related products – only those with Pakistan’s exports to China)

$76 billion

Distances matter for us too!

But why are we missing out on China?

Mapping the opportunity canvass

China Russia Mongolia STANs

Crops and

Sugar

Fruits

Vegetables

Others

Zoom in to find prospective

opportunities

Crops & Sugar

Fruits Vegetable

Zooming in!

Zooming in on crops and sugar!

Commodity Code Commodity Trade Value (US$)

1006 Rice 1,927,200,362

1701 Cane or beet sugar 234,355,718

5201 Cotton (not carded or combed) 105,593,504

Story of Rice!

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

0

500

1,000

1,500

2,000

2,500

3,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Export

s to

Chi

na in

thous

and

US$

Export

s to

the

worl

d in

mill

ion

US$

Pakistan's Rice Exports

Pakistan's exports to the world (million US$) Pakistan's exports to China (thousands US$)

Story of Rice!

Pakistan's total rice exports in 2015: $1.92 billion

-

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

Pakistan’s Top Export Partners for Rice 2015

Story of Rice!

China's total rice imports in 2015: $1.4 billion

0

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

800,000,000

China’s Import Partners for Rice 2015

RICE - What is happening?

Pakistan one of the top five world exporters of rice - $1.9 billion in 2016 represented 5% of global rice exports

Rice exports to China accounted for only 8% of this

China imported $1.4 billion rice

Pakistan’s share 11%; Rest Vietnam and Thailand

Non-favourable tariffs

China maintains a special low tariff of 1% on import of a quota but beyond this quota, rice imports are subject to a tariff of 65%

Asean countries enjoy preferential tariffs as a part of Asean-China FTA — 20% on non-basmati and broken rice and 50% on tariff in basmati rice

In case of Pakistan, no preferential tariff is applicable on any rice category

Story of Citrus!

0

50

100

150

200

250

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Pakistan’s Citrus Exports

Pakistan's exports to the world (million US$) Pakistan's exports to China (US$ thosands)

-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

Afghanistan RussianFederation

United ArabEmirates

Indonesia Philippines Ukraine Saudi Arabia Kuwait Oman Sri Lanka

Pakistan’s Top 10 Export Partners for Citrus

Story of Citrus!

Pakistan's total citrus exports in 2015: $185 million

-

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

China’s Import Partners for Citrus 2015

Story of Citrus!

China's total citrus imports in 2015: $267 million

Are China’s fruit imports aligned with our

exports?

Commodity

CodeCommodity

Pakistan's

Exports ($)

China's Imports

($)

'0805 Citrus fruit, fresh or dried 184,793,000 266,894,000

'0804Dates, figs, pineapples, avocados, guavas, mangoes and mangosteens, fresh or dried 124,676,000 408,425,000

'0803 Bananas, incl. plantains, fresh or dried 20,647,000 772,943,000

'0810Fresh strawberries, raspberries, blackberries, back, white or red currants, gooseberries and ... 12,133,000 2,001,361,000

'0802Other nuts, fresh or dried, whether or not shelled or peeled (excluding coconuts, Brazil nuts ... 2,325,000 576,478,000

'0806 Grapes, fresh or dried 822,000 637,007,000

'0809Apricots, cherries, peaches incl. nectarines, plums and sloes, fresh 314,000 777,189,000

'0801Coconuts, Brazil nuts and cashew nuts, fresh or dried, whether or not shelled or peeled 205,000 180,709,000

'0808 Apples, pears and quinces, fresh 163,000 576,478,000

CITRUS - What is happening?

Pakistan has Category 1 status on the FTA for citrus,

meaning there is no tariff applied.

Popular citrus fruit imports in China are not amongst

the popular citrus exports of Pakistan

Non-tariff barriers have kept the exports from

Pakistan low, such as port of entry and

quarantine/SPS requirements

Digging deeper!Possible reasons we missing out on these opportunities

Tariff measures:

Negotiation of FTA should ensure that the tariffs faced by Pakistan are at least at par with those in other countries such as ASEAN

Non-tariff measures:

Technical measures such as high sanitary and phytosanitary (SPS) requirements compared to other export markets

Lack of mutual recognition of standards and certificates

Testing in China is considered to be time-consuming and complex

Physical access barriers – restrictions on ports?

Other reason

Competitiveness, capacity, quality, etc. – Role of Agriculture Department and Development Partners

What are we discussing today?

What is

CPEC?

What do Chinese want?

What do we want?

What are opportunities for

agriculture sector?

How can Punjab capitalize on

them?

How can Punjab leverage these opportunities?

CPEC Readiness

Aligning public investments

Designing new interventions

Informed through evidence

Advocacy for tariff and non-tariff barriers

Addressing market failures

Incentivize exports

Other options?

Institutionalizing public-private interface

Investor fora

CPEC agribusiness roadshows

Solidify Chinese commitments in up gradation

Institutionalizing this approach!

Mapping Opportunity

Canvass

Digging Deeper

Looping in Private Sector

Designing Targeted

Interventions

Expanding the Canvass

Beyond CPEC – Going Forward

China Russia Mongolia STANs

Crops and

Sugar

Fruits

Vegetables

Others

Newer markets (north and

south)

Products with little or no

exports

Leapfrogging newer

product categories in

growing segments

International Growth Centre

THANK YOU