All Pakistan Fruit and Vegetable Exporters Association has sent the budget proposals for the next financial year to the Federal Government. The proposal includes, allocation of 10 crore rupees for Research & Development in context with cultivation of new variety of Kinnow, withdrawal of 10% withholding tax on juice industry, elimination of sales tax on mushrooms grown in Pakistan for promotion of mushroom production in Pakistan, reduction in fee for issuance of Phyto-sanitary certificates, withdrawal of import duty on aseptic bags used in the pulp industry and exemption of import duty on spare parts used the juice industry.
Waheed Ahmed, the Patron-In Chief of Pakistan Fruit and Vegetable Exporters Association (PFVA), informed that like other industries of the country, the fruits and vegetable and value added industry is also facing problems due to high cost of production hence it is important that steps should be taken to reduce cost of production in the next budget for fresh fruits along with the value- added sector.
He shared that since the orchards of Kinnow in Pakistan are 60 years old and thus do not have the ability to fight against various diseases and the production is also decreasing. Pakistan’s Kinnow industry has an investment of 130 billion rupees, however the export has declined from USD 220 million to USD 110 million The Kinnow industry consists of 250 processing factories and provides employment to a gigantic workforce of 250,000 people. If 10 crore dollars are allocated for R&D in the next fiscal year’s budget, the export of Kinnow can be enhanced to 35 crore dollars during the next four years.
Waheed Ahmed said that the package juice industry in the country has a volume of 70 billion rupees, but it is feared that the sales will be reduced to 43 billion rupees. Due to a sharp decline in sales, the juice industry is not utilizing its full production capacity. Due to sales tax, new investment or production expansion plans are “standstill” leading to reduction in revenue of the juice industry and associated employment opportunities.
He disclosed that the juice industry is the main source of income for the farmers. In year 2022, the local juice industry purchased one lakh tons of mangoes from mango farmers only, but during the current season, this purchase is expected to be less than fifty percent. The issues associated with the juice industry are also affecting the livelihood of our farmers. The imposition of a 10 percent federal excise duty (FED) on juices has led to inflation-prone consumers shifting to lower-priced and lower-quality juices that account for around 20 percent of the market and are largely part of the “undocumented” economy. He said that due to the implementation of 10% FED on juices in the supplementary finance bill of February 2023, the sale of juices has decreased by 45% during March and April, making it difficult for the survival of this industry and the protection of farmers, hence it is imperative that 10% FED should be withdrawn in the next budget.
Waheed Ahmed told that currently mushrooms are being imported from China and other countries while 70 to 80 percent of the demand for mushrooms is being met by imported mushrooms, although the weather and climate are favorable to mushroom cultivation in Pakistan, so mushrooms are grown locally. To encourage locally grown mushrooms, whether frozen, canned or bottled, sales tax on local mushrooms in all forms of packaging should be eliminated.
In the proposals sent to the Federal Government for the budget of the next financial year, the PFVA attributed increase in the cost of export to exorbitant increase in fee for issuance of phyto-sanitary certificate which jumped from Rs.300 to Rs.2500 in Sept. 2014. He said that an abnormal increase of 800% in the fee is unjustified, which has further multiplied the difficulties of the “By Air” exporters, who are already confronted with high freight cost, badly impacting the cost of exports and hence it is necessary to revise the fee of the phyto-sanitary certificate downwards bringing it back to a reasonable level.
According to Waheed Ahmed, to meet the growing demand of the local juice industry, the concentrates, pulps and pastes are packed in imported aseptic bags but the import of these bags is subject to 20% import duty, 6% additional customs duty, 10% regulatory duty, 18% sales tax and 5.5% income tax. Due to the high rate of taxes, the cost of production has multiplied many folds. Aseptic bags help farmers to preserve their hard-earned produce for up to 2 years, providing economic benefits to farmers and providing consumers with high-quality, safe juice products. Since there no substitute for imports of aseptic bags, the Association (PFVA) has proposed to abolish the import duty on aseptic bags in the next fiscal year’s budget.
According to Waheed Ahmed, production units manufacturing mango, guava, peach pulp, Kinnow, apple, carrot and beetroot concentrate, mango puree and tomato paste import spare parts from different countries since these spare parts are not available locally. There is an import duty of up to 35%, 2-6% additional customs duty, 18% sales tax and 5.5% income tax on the import of parts, leading to an increases in the cost of production, making it difficult for the Pakistani industry to compete in the international market as well as the local market. It is therefore necessary that the import duty on spare parts of value- added industry should be eliminated in the upcoming budget.