National Centre for Agricultural Economics and Policy Research (NCAP) Bilateral Agricultural Trade between India and Pakistan: Trend, Compositions and Future Directions Prof Ramesh Chand Director and Dr. Raka Saxena Senior Scientist LOGO
Introduction Agricultural trade constitutes the major chunk of trade between India and Pakistan In 1996, India accorded Most Favored Nation(MFN) to Pakistan; Pakistan not yet given the MFN status to India There have been disruption in normal trade: India stopped trade via air and land routes between 2001 and 2004 The cross border trade was stopped in 2013. Both countries part of South Asian Free Trade Agreement (SAFTA) which came into effect on 1.1.2006; the trade governed under the SAFTA agreement
Contents Trend and composition of bilateral agricultural trade Emerging and loosing commodities Regional orientation Trade intensity and complementarity indices Trade policy of India and Pakistan Way forward
`..WHAT HAS BEEN THE TREND AND COMPOSITION OF AGRICULTURAL TRADE BETWEEN INDIA AND PAKISTAN?
India s Trade (all commodities) with Pakistan (US $ million) 2500 2000 1,663 1,707 1500 1,297 1,523 1000 1,026 1,070 1,144 500 426 510 0 121 99 25 123 79 161 229-108 -500 Exports Imports Net trade Source: Department of Commerce, Government of India
India s Agricultural Trade with Pakistan (US $ million) 1200 1000 BEFORE SAFTA AFTER SAFTA 800 600 400 200 0-200 -400 Agricultural Exports to Pakistan Agricultural imports from pakistan Net trade Source: Department of Commerce, Government of India
Broad Composition of India s exports to Pakistan - agricultural and non-agricultural (US $ million) 2500 2000 Agri share high, rising 1500 1000 500 0 Agricultural Exports to Pakistan Non Agri exports to Pakistan Source: Department of Commerce, Government of India
Share of agriculture in Pakistan Imports from India % 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00
Composition of India s imports from Pakistan: agricultural and non-agricultural US $ million) 600 500 Agri share falling 400 300 200 100 0 Agricultural imports from pakistan Non Agri imports from Pakistan Source: Department of Commerce, Government of India
Share of Agri in India s Import from Pakistan 100.00 90.00 80.00 70.00 91.76 92.19 96.54 74.12 81.44 81.32 85.62 76.70 60.00 59.41 60.49 50.00 40.00 30.00 46.99 43.80 28.99 42.88 34.57 40.65 34.33 20.00 10.00 0.00
Major agro commodities exported to Pakistan (US 000 $) 700000 600000 500000 Raw cotton and vegetables emerged and dominates 400000 300000 200000 100000 0 TE 1998/99 TE 2001/02 TE 2004/05 TE 2007/08 TE 2010/11 TE 2012/13 Edible Vegetables Coffee Tea Cotton Sugar Cereals oilseeds fruits Meat Source: Department of Commerce, Government of India
Share of major commodities in agricultural exports to Pakistan (%) Commodity/ commodity groups 1996-1997 2000-2001 2004-2005 2009-2010 2012-2013 Dairy Products 0.00 0.00 2.13 0.64 1.71 Vegetables 0.27 1.28 11.73 14.41 17.27 Coffee, Tea etc 10.56 18.36 26.99 8.89 10.00 Fruits 0.63 0.31 0.18 0.45 2.99 Cereals 0.04 0.53 7.81 2.63 1.73 Oilseeds 2.25 3.33 8.36 8.55 6.26 Sugar 80.60 71.20 1.00 0.26 0.06 Cotton 0.12 0.09 30.40 58.46 56.38 Others 5.54 4.90 11.40 5.71 3.61 Source: Department of Commerce, Government of India
Trends in exports of major commodities (US 000 $) Edible Vegetables Beverage and Spices 80000 70000 60000 50000 40000 30000 20000 10000 0 TE 1998/99 TE 2001/02 TE 2004/05 TE 2007/08 TE 2010/11 TE 2012/13 50000 40000 30000 20000 10000 0 TE 1998/99 TE 2001/02 TE 2004/05 TE 2007/08 TE 2010/11 TE 2012/13 Pulses Tomatoes Onion Other Fresh Vegetables Tea PEPPER SEEDS OF CORIANDER CARDAMOMS GINGER 300000 250000 Cotton 12000 10000 Cereals 200000 8000 150000 100000 50000 0 TE 1998/99 TE 2001/02 TE 2004/05 TE 2007/08 TE 2010/11 TE 2012/13 6000 4000 2000 0 TE 1998/99 TE 2001/02 TE 2004/05 TE 2007/08 TE 2010/11 TE 2012/13 COTTON, NOT CARDED OR COMBED COTN YRN WOVN FBRCS RICE GRAIN SORGHUM BUCKWHEAT MAIZE (CORN) Source: Department of Commerce, Government of India
Trends in exports of major commodities (US 000 $) 20000 Oilseeds 160000 Sugar 15000 140000 120000 10000 100000 5000 80000 60000 0 TE 1998/99 TE 2001/02 TE 2004/05 TE 2007/08 TE 2010/11 TE 2012/13 40000 20000 PLNTS AND PRTS OF PLNTS GROUND-NUTS SEEDS FOR SOWING SUNFLOWER 0 TE 1998/99 TE 2001/02 TE 2004/05 TE 2007/08 TE 2010/11 TE 2012/13 16000 14000 12000 10000 8000 6000 4000 2000 0 MEAT OF BOVINE ANIMALS TE 1998/99 TE 2001/02 TE 2004/05 TE 2007/08 TE 2010/11 TE 2012/13 Source: Department of Commerce, Government of India
Major commodities imported from Pakistan by India (US $ million) 200 180 160 140 Fruits and cotton. Sugar imports banished 120 100 80 60 40 20 0 TE 1998/99 TE 2001/02 TE 2004/05 TE 2007/08 TE 2010/11 TE 2012/13 Edible vegetables Edible Fruits Coffee Tea Oilseeds Cotton Sugar Wool Hides and Skin Source: Department of Commerce, Government of India
`..HOW DIVERSIFIED ARE THE INDIAN EXPORTS IN TERMS OF COVERAGE OF COMMODITIES AND FOREIGN MARKETS?
Diversification Index (Gini-Hirschman Coefficient) Commodity and Geographical concentration indices were calculated by Gini-Hirschman Coefficient Formula Explanation Commodity Concentration/ diversification C xt = 100-100 (X it /X t ) 2 X it is the value of exports of the commodity i in the year t. X t is the total agricultural exports in the year t. C xt is the diversification coefficient Geographical Concentration/ diversification G xt = 100-100 (X it /X t ) 2 X it is the value of exports of the export destination i in the year t. X t is the total agricultural exports in the year t. G xt is the diversification coefficient
Commodity diversification of India s Agri Exports to World 71.00 70.00 69.79 69.45 69.51 70.15 69.55 69.00 68.36 68.00 67.64 68.38 68.41 67.00 66.89 67.57 67.51 66.00 65.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
`HOW MUCH IS INTENSITY OF INDO PAK AGRICULTURAL EXPORTS W. R. TO TOTAL AGRICULTURAL EXPORT FROM INDIA?
Trade Intensity Index s is the Source d is the destination TII = sd X sd / sw X sw wd X wd / wy X wy X is the exports w is the world The numerator is the export share of the source region to the destination, the denominator is the export share of the world to the destination. Trade Intensity The statistic tells us whether or not a region exports more (as a percentage) to a given destination than the world does on average to that destination
Trade intensity index for Indian export to Pakistan 8.00 7.17 7.00 6.00 6.18 6.22 6.37 6.11 5.00 4.00 4.00 3.00 2.00 1.00 0.00 1.79 1.04 0.85 0.67 0.66 0.68 0.71 0.88 1.01 0.31 0.10 0.14 0.32 0.30 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 tea pulses cotton Source: International Trade Centre
`..WHAT HAS BEEN THE GROWTH IN BILATERAL AGRICULTURAL TRADE AND WHICH COMMODITIES ARE GAINING MOMEMTUM?
Growth in India s agricultural exports to Pakistan 100.00 89.28 80.00 60.00 40.00 36.08 30.54 29.14 38.31 31.20 20.00 21.02 0.00-20.00 Edible Vegetables Coffee Tea Cotton Sugar Cereals oilseeds Fruits meat -9.73-40.00 CAGR(1996/97 to 2004/05) CAGR(2004/05 to 2012/13)
Growth in agricultural imports from Pakistan 80 70 60 50 40 30 20 10 12.37 4.90 16.20 5.09 19.57 24.58 0-10 Edible vegetables Edible Fruits Coffee Tea Oilseeds Cotton Sugar Wool Hides and Skin -0.82-20 -30-21.29 CAGR(1996/97 to 2004/05) CAGR(2004/05 to 2012/13)
Emerging and losing commodities in agricultural exports to Pakistan Sugar Vegetables Fruits Losing Commodities Emerging Commodities Tea and spices Cereals Cotton Oilseeds
Emerging and losing commodities in agricultural imports from Pakistan Vegetables Fruits Losing Commodities Emerging Commodities Oilseeds Cotton Hides and Skins
Share of Indo Pak Agri Trade in Total Agri Trade of Pakistan % 4.00 3.50 3.00 2.98 3.72 3.10 3.27 3.11 2.50 2.00 1.50 1.60 1.74 2.36 2.27 1.00 1.12 0.50 0.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Share of Indo-Pak Agri Trade in India s total Agri Trade % 0.70 0.60 0.50 0.52 0.57 0.40 0.30 0.32 0.34 0.34 0.39 0.39 0.31 0.20 0.24 0.24 0.10 0.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
`..WHAT HAS BEEN THE TRADE COMPLEMENTARITY IN BILATERAL TRADE BETWEEN INDIA AND PAKISTAN?
Trade Complementarity Index (TCI) d is the importing country of interest, s is the exporting country of interest, w is the world, x is the commodity export flow, X is the total export flow, m the commodity import flow, and M the total import flow. TCI = W m iwd w x isw 1- i 2 * 100 w M wd w X sw Mathematical Definition Explanation the sum of the absolute value of the difference between the sectoral import shares of one country and the sectoral export shares of the other. Dividing by 2 coverts this to a number between 0 and 1, with zero indicating all shares matched and 1 indicating none did. Definition It measures the degree to which the export pattern of one country matches the import pattern of another.
Trade complementarity Index 70.00 60.00 50.00 40.00 45.68 59.12 52.94 52.48 57.03 60.31 53.83 50.74 49.91 44.16 30.00 30.30 20.00 10.00 19.22 18.51 19.37 22.13 20.71 17.49 16.05 16.64 19.23 0.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 For Indian ag exports to Pakistan For Indian ag imports from Pakistan
`..WHO ARE INDIA S COMPETITORS IN PAKISTANI MARKET?
Major Suppliers in Pakistani Markets for the commodities exported by India Coffee Tea Edible Vegetables Meat Kenya 49.5% India 33.9% India 73.9% India 13.1 % Australia 21.2% China 16.4% China 7.8% Myanmar 7.6% UAE 5.1% Rwanda 4.8% Ethiopia 6% US 2.4% Vietnam 4.5% China 5.9% Jordan 0.7% Cereals Cotton Dairy Products US China 36.2% 32% India US 27.9% 17.4% US New Zealand France 30.5% 15.1% 11.9% Thailand 10.4% Brazil 15.8% Germany 10.8% India Brazil 6.2% 3.4% China Afghanistan 11.1% 10% Lithuania 8.6% India 2.8% Source: International Trade Centre
`..HOW FAVOURABLE IS THE TRADE POLICY ENVIRONMENT IN TWO COUNTRIES?
India s Import Duty Structure Item Description Basic Customs duty (%) Bound Duty (%) (As on 01.09.2012) ( As on 01.09.2012) Cereals and Pulses Pulses other than peas (pisum sativum) Free 100 Maize (Corn) seed 50 70 Buck wheat and canary seed Free 100 Other cereals (rye, barley etc.) Free 100 Dairy Products Fresh milk and cream 30 100 Butter and melted butter (ghee) 30 40 Cheese 30 40 Milk powder 60 60 Yoghurt 30 150 Plantation Crops Tea 100 150 Coffee 100 100 Other Spices 30/70 150/100 Meat & Poultry Meat of poultry, not cut in pieces, fresh or chilled 30 100 Raw harms, pig fat; meat of bovine animals 30 100 other meat and offal 30 100 Processed hams 30 55 Fish 30 unbound
India s Import Duty Structure Item Description Basic Customs duty (%) (As on 01.09.2012) Bound Duty (%) ( As on 01.09.2012) Sugar 10 150 Edible Oils (Crude) Soyabean Oil 7.5 45 RBD Palmolein 7.5 300 Palm oil 7.5 300 Groundnut Oil 7.5 300 Sunflower 7.5 300 Coconut oil Edible grade 7.5 300 Coconut oil other 7.5 300 Rapeseed oil 7.5 75 Colza or Mustard oil 7.5 75 Castor Oil/ Tung oil 7.5 100 Safflower 7.5 300 Other Oils edible grade 7.5 300 Other Oils other than edible grade 65 100/300
Product India s Exports and Pakistan s Imports: $ Mill TE 2012-13: Identification of Growth Opportunities India's Exports to world Pakistan's Imports from India Pakistan's Imports from world Live animals 11.9 0.0 15.7 Meat and meat products 2720.4 5.0 4.9 Fish and crustaceans 2976.7 0.3 4.0 Dairy products and eggs 289.1 10.2 114.1 Products of animal origin 134.5 0.8 2.6 Live trees and plants of parts 73.0 0.0 1.4 Vegetables, roots and tubers 981.1 121.7 554.8 Fruits and nuts 1355.4 19.4 125.4 Tea and spices 2662.4 86.2 433.5 Cereals 6424.8 21.6 87.1 Oilseeds 1660.3 49.9 644.9 Lac gums etc 2951.5 10.7 10.7 Vegetable planting material and prod. 62.4 2.6 18.8 Animal or vegetable fats 937.6 0.5 2251.5 Sugar and sugar confectionery 1698.0 118.7 323.6 Cereal preparations 357.6 5.3 79.3 Vegeatble, fruits and nuts prep 345.7 0.8 28.6 Misc edible preparations 437.7 0.4 48.4 Tobacco and tobacco products 877.6 2.3 16.4 Raw hides and skins 990.0 0.5 92.1 Wool and other products 184.1 0.6 15.5 Cotton 8261.6 327.6 808.1 Other vegetable textile fibres 364.4 2.2 67.8
Indian Imports and Pakistani Exports $Million TE 2012-13: Identification of Growth Opportunities Pakistan's Exports India's Imports from India's Imports from to world Pakistan world Live animals 23.0 0.0 10.0 Meat and meat products 166.7 0.0 1.6 Fish and crustaceans 261.4 1.1 83.1 Dairy products and eggs 71.4 0.0 157.0 Products of animal origin 48.0 0.1 39.7 Live trees and plants of parts 1.1 0.0 19.9 Vegetables, roots and tubers 189.0 3.5 2030.7 Fruits and nuts 304.3 78.7 1882.4 Tea and spices 57.8 1.7 432.8 Cereals 2382.6 0.0 32.8 Oilseeds 57.7 4.2 202.3 Lac gums etc 97.8 1.4 135.5 Vegetable planting material and products 6.4 0.0 10.1 Animal or vegetable fats 166.4 0.6 9219.4 Sugar and sugar confectionery 136.0 2.3 486.5 Cereal preparations 40.6 0.0 40.7 Vegeatble, fruits and nuts preparations 0.0 0.6 72.4 Misc edible preparations 0.0 0.1 36.5 Tobacco and tobacco products 25.2 0.0 36.8 Raw hides and skins 447.0 12.1 515.8 Wool and other products 11.7 8.5 399.1 Cotton 4778.7 47.8 572.0 Other vegetable textile fibres 4.8 0.2 251.9
Main Conclusions Agriculture trade has moved to higher level after implementation of SAFTA. Agriculture share in India s export to Pakistan increasing, whereas agriculture share in Pakistan s export to India declining. Export to Pakistan dominated by one to two commodities though diversifying. Sugar share largely replaced by cotton and vegetables. Minor products witnessed consistent and spectacular growth (Psyllium Isabgol) Changes in domestic instability in production is playing major role in determining trade trend and composition thus much trade for stabilization not based on comparative advantage. Demand diversification in both countries is infusing dynamism and consistency in trade. Export to third country promoting demand for raw material and affecting trade pattern.
.. There is high complementarity between Pakistan s imports and India s export of agricultural products, however, there is low complementarity between India s imports and Pakistan s exports. There are opportunities for Pakistan to push export of fruits and nuts, raw hides & skins and cotton textiles. Major import of India are also the imports of Pakistan Large opportunity for India to export dairy products, vegetables, tea & spices, oilseeds and raw cotton. Acceleration of agricultural growth in India post 2005-6 has thrown many surprises. Proximity and regional trade
Growth rate percent per annum Growth Trajectory of Agriculture GDP at 2004-5 Prices, 1971-80 to 2001-12 4.00 3.50 3.00 2.50 2.00 1.50 1.00 Decade ending with
Recent Achievements Indian Agri Growth deceleration to growth acceleration DE 1996-97 to DE 2004-05: 3.5% to 2.0% DE 2004-05 to DE 2012-13: 2.0% to 3.7% Technology fatigue (by end of 10 th Plan) to technology resurgence-resilience of the system TFP growth rate up from 0.5% to 2.0% Net foreign exchange earnings 10 fold rise in 11 years 2001-02: $ 2.5 billion. 2012-13: > $ 25 billion.
Policy Suggestions Agriculture trade need to be classified in 3 categories Trade based on comparative advantage -focus on demand diversification in two countries. Minor products and unique products. Trade to address price and market volatility. Trade in technology and knowledge products Policy and strategy facilitating mechanisms Agriculture innovation led integration Neglect of agri R&D in South Asia Technology spillovers, but serves some purpose Partner in technology generation: Nature of modern research regional research alliance Sharing of knowledge capital Best practices, innovation Trade in seed and planting material including animal
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