Exporters blame rising shipping cost, climate change
The juicy kinnows of Pakistan are an essential part of enjoying winter as they become a staple when families sit together on chilly nights.
Not only within the borders, but Pakistan’s kinnows are craved outside its borders as well. Last year, traders hit a bumper prize when they far overshot their export target.
Their target was 300,000 tons, but they managed to export 450,000 tons of kinnows.
However, winter this year, didn’t bring the usual excitement for traders. They are worried they will not be able to export enough this season.
Estimates put this year’s exports at 300,000 tons, a 35 percent fall from that of the previous year.
Global trade is feeling the pressure from rising costs of shipping. A report by the United Nations Conference on Trade and Development estimates that the surge in freight could increase global import price levels by 11 percent. This would mean consumer price levels would go up by 1.5% till 2023.
The rising shipping cost will impact the export of Pakistan’s kinnows to Canada, Russia, Ukraine, Indonesia and the Philippines. These countries account for 50 percent of Pakistan’s total kinnow export.
The All Pakistan Fruit and Vegetable Exporters Association patron-in-chief Waheed Ahmed said that freight charges were between $2500 and $3000. Now, this rate has gone up to $7000. Even at this cost, there is no guarantee the consignment will be delivered on time.
The schedules of shipping companies have fluctuated and since the fruit has a shelf life, exporters are faced with a double whammy – rising cost and rotting product.
Russia is a big market for Pakistani kinnows where it is sold because it costs less than kinnows from Morocco and Turkey. A 10kg crate of Pakistani kinnows cost $6 less than what it costs in the other two countries. But, this gap is expected to close if high shipping costs are factored in.
If Pakistani kinnows cost the same as the fruit from Morocco and Turkey, it will lose in the Russian market. In that case, Turkey will have an edge over Pakistan as it can export to Russia over land.
In this situation, Pakistan can also export kinnows to Russia overland through Central Asian countries and Iran.
But despite Pakistan being a party to the TIR Convention, transportation via land border costs the same as through the sea.
The TIR Convention is a multinational treaty that enables goods to move under customs control across international borders without paying duties and taxes that would normally apply.
Now, exporters are looking to the government for a subsidy to minimize their losses.
There is also a need to tap into new markets like Iran, which can be a lucrative alternate for local exporters. But the Iranian authorities haven’t issued an import permit for 10 years. The country issued a limited permit last year, but it hasn’t been issued this year.
Exporters say they can send 8,000 tons of kinnows to Iran if they get the permit.
The shipping cost is not the only headache for exporters. The cost of growing kinnows has sky-rocketed as petrol, electricity and gas becomes expensive. The packaging material cost 40 percent more compared to last year.
The impact of climate change has also increased the worries of exporters as their yield has shrunk. In 2021, the total kinnow production is estimated to be 1.7m ton against the target of 2.4m tons.