Food Processing Industry

Index

Introduction.
Pakistan food industry over view.
Linkages.
Food Industry Survey.
Food Manufacturing Industries on KSE.
Pakistan's Food Potentials.
Scope of Frozen Food in Pakistan.
Value of Fast Food Industry in Pakistan.

Introduction
The food industry can make a variety of different products from a given
commodity. These food products have different expiration dates and different
economic value as a result of food processing.
Physical (heat), Chemical (preservatives) and Biological (fermentations) are used
to preserve food.
The food industry adds value to commodities, creates a varied year-round food
supply and does so at very low consumer cost.

Pakistan Food Industry Overview:

Pakistan is considered in top ten food and Beverages manufacturing countries in the
world, attracting foreign direct investment of US $ 593.83 million in the last two
years.
Agriculture contributes 21% of the countrys GDP and is the 2 nd largest source of
foreign exchange earnings of the country. It employs 44% of the total work force
and is the main source of livelihood for the 66% of the countrys population.
Wheat is the major source of the Pakistans food sector with a current production of
21.7 million tons. Rice also holds a strong position I agriculture sector and its
production increased by 2.3 % to 56 million tons I 2007-08. Sugarcane which is also
a major crop of Pakistan recorded highest production level of 63.9 million tons.
Products like dairy, fisheries, fruits and vegetables also play a vital role in the
countrys economy. Pakistan ranks as the 3rd largest producer f milk in the world,
producing 42.19 million liters per day annum. The fisheries sector registered a
growth rate of 11% this year, with the export of fish and fishery products reaching
over 100,000 tons.

The beverage industry in Pakistan also possess tremendous potential and currently
there a about 170 units operating in Pakistan that produce water, syrups and
squashes.

Linkages
Backward linkages:
Agriculture sector
Fertilizers
Butchers
Farmers

Forward linkages:
Hotel & Restaurants
Auto Industry (Transportation)
Small Units (House Hold Units)
Plastic Industry

Food Industry Survey:

IN jan,1997 by iqbal haidari.
According to the Census of Manufacturing Industries there were 924 units
engaged in the manufacture of Food and Beverages. According to the UNIDO it is
the largest manufacturing industry of the country. Value of production stood at
Rs.74.094 billion and manufacturing value added (MVA) stood at Rs.24.287 billion.
Food processing is a relatively capital intensive industry. The share of food in the
manufacturing industry has declined from 22.66 per cent in 1981-82 to 19.76 per
cent in 1990-91. Figures for 1995-96 are not available.
The growth rate in the food industry has been estimated at 10.00 per cent per
annum. The most rapidly growing items are dairy products fish processed, bakery
items, sugar, biscuits and confectioneries, fruit juices and other soft beverages.
Rapid export growth has characterized fish preparation, fruit preserves, dry fruits,
some beverages and sugar, and honey preparation. Food products (except rice) do
not however, make up a significant proportion of Pakistani exports and there is a
considerable potential for expanding such exports, specially to Europe and the Gulf
region.
As many as 86 food manufacturing companies are on the list of Karachi Stock
Exchange out of total 783 companies (end January 1997). The paid-up capital of
food companies stood at Rs.7.519 billion as end December 1996. They include,
some of the biggest groups in the market such as Bawany, Crescent, Habib, Fecto,
Premier, Lakson, Burma Oil (producing vegetable oils) Brooke Bond, Clover Foods,
Lever Brothers and National Foods. The food manufacturing firms have generally
performed well on the stock exchange in 1994-95 with capitalization registering an
above average increase. Net profit as percentage of shareholders equity has
averaged at about 22 per cent during 1990-93 for the sugar and allied group, and
about 25 per cent for the vegetable oil groups. The net profit ratio for the tobacco
subsector has been 30 per cent. This compares well with the overall net profit ratio
for KSE companies during this period, and averages to about 19 per cent.
Thus, there is a significant scope for investment expansion in the food
manufacturing sectors. Domestic demand is buoyant and export prospects are
bright-although they are yet to be adequately
explored. Several major companies including well known multinationals have
substantial investment
commitments and there are also a large number of middle sized upward mobile
domestic firms. Scope,
thus exists both for the establishment of wholly owned subsidiaries. There is also a
need for technology transfer agreements which can facilitate the access of Pakistani
companies, to modern technology and know-how in the areas of processing,
preservation and packaging of food manufactures. Several Pakistani firms have
developed ambitious modernization programs.

Food manufacturing Industries listed on KSE

Industry

No of Companies

Paid-up Capital

Market value

Sugar and allied

Tobacco
Edible Oil
Food and allied

38
7
19
22

466.594
541.011
395.702
1921.244

4430.194
1823.451
257.125
1439.079

Pakistans Food potential

According to an eminent agriculture expert, Pakistan through intensive cultivation
can increase its cereal grain production more than three times the amount currently
produced in the country
The present cereal production is around 26.3 million tones.
A production target of 54 million tons of cereal production would be sufficient to
meet Pakistan's entire food needs and also to enable it to be the major exporter of
grains to South Asia and the Middle East.
Thus Pakistan has immense potential to turn into the food granary for the
countries of Asia and Africa in view of its vast potential of water resources and its
biggest canal system in the world.
Pakistan's soil and climate are conducive to year round crop production.
Major sources of dietary proteins are cereals, pulses, fruits, vegetables and
animals. In the case of rice Pakistan already exports more than a million tons of rice
to Middle Eastern and South Asia countries.
Against the requirement of 20 million tons the production of wheat would be less
than 18 million tons this year.

Wheat
Target for wheat crop for the year 1996-97 has been fixed at 18.0 million tones
showing an increase of 5.3 per cent over last year. Of the target 18.0 million tons,
Punjab would produce 13.5 million tons, Sind 2.47 million tons, NWFP 1.28 tons and
Balochistan 911 thousand tons. Per hectare yield is extremely low unless this chief
deficiency is firmly overcome the overall prospect for wheat will not
brighten up. Yet another drawback is the wastage of wheat crop, Pakistan
Agriculture Research Council (PARC) estimated that 40 per cent of wheat produced
in the country is wasted annually either in the field, in storage or during
transportation. Wheat stocks can be built for consumption and export only when
scientifically constructed godowns are available in all regions.

Rice
Rice is the most important cash crop in Pakistan and it has assumed the first
position in regard to foreign exchange earnings. Pakistan has moreover, a
distinction of being one of the only two producers of Basmati rice in the world
though with some justification to be the world's finest, of delicate
long grain and exotic. A unique combination of soil and climatic conditions confine
this distinctive rice to Pakistan. While long grain rice has been grown with success
elsewhere, notably in the United States, nowhere has it been possible to duplicate
or rival the particular flavor characteristics of fine Basmati rice. Rice production is
estimated at 4.2 million tons during 1996-97 as compared to 3.97 million formers
harvested last year.

Economic Survey 1995-96

The gross inadequacy of storage capacity is, however, acutely felt. Although the
Rice Export Corp. of Pakistan (RECP) has now a storage capacity of 831 thousand
tons as against 590,000 tons at the time of its inception, it leaves much to be
desired. The storage capacity must be increased without delay to cope with the
increasing exports. If that has been done, it will make a difference for the better.
This year there would be an exportable surplus of 1.5 million tons as against 1.37
million tons exported last year. It is estimated that rice exports are likely to fetch
about $595 million as against $503 million last year.

Pulses
Pulses are called the poor man's meat in view of their comparative cheap
availability and for possessing high contents of protein, minerals and vitamin B.
Pulses are now grown on a total area of
1.50 million hectares which constitutes hardly 8 per cent of the total cropped area.
If new varieties were evolved the yield of pulses could be increased from 25 to 50
per cent. The Eighth Five Year Plan estimated to increase the production of pulses
from 780,090 tons in 1992-93 to 900,000 tons in 1997-98.

Sugarcane
Pakistan is ranked fourth after India, Cuba and Brazil in the world as area under
sugarcane cultivation is concerned. However, cane per hectare yield is low. The
1996-97 production target has been fixed at 49.20 million formers. This is 7.6 per
cent more compared to the crop of 45.47 million tons produced in 1995-96. Last
year growers failed to achieve the target of 46.20 million tons as estimated
production fell short of the target by one per cent. It was also 3.0% less compared
to a crop of 47.17 million tons produced in 1994-95. With high rate of cane
production, the sugar production has touched an all time high record of 3.0 million
tons in 1994-95 making Pakistan not only self sufficient in sugar but also leaving
surplus for exports. However, production in the last two years was dismal and

Pakistan had to make arrangement to import sugar. Total sugar imports in 1996-97
(July-June) including 375,000 tons ordered by October are likely to be around
750,000 tons.

Edible Oil
Consumption of edible oil in Pakistan has increased rapidly. The demand has been
rising by more than 50,000 tons annually over the past five years. In 1995-96 the
requirement reached the level of 1.803 million tons and it is estimated that the
demand for edible oil will be around 2.0 million tons in 1997-98. Pakistan's imports
of edible oil stood at 1.20 million tons in 1995-96 worth $706 million. Imports have
shown declining trends. The decline was attributed to smuggling from the borders of
Iran and Afghanistan. They are easy routes to smuggle vegetable oil into Pakistan.
Mostly Afghan traders are involved in smuggling. Edible oil imports have declined
from $1394 million in 199495 to $1200 million in 1995-96. Per capita consumption
of edible oil has increased from 11.83 kg. in 1990-91 to 12.60 kg. in 1995-96.
According to PVMA annual edible oil and fats consumption is little over two million
tons. Almost 50 per cent of it is met by local sources including sunflower oil,
rapeseed oil, and cottonseed oil. There remains a need to import about one million
tons of different edible oils to meet the total requirement. At present 200,000 tons
oil is imported above requirement which is smuggled to Afghanistan, or other
countries.

Fruits and vegetables

Pakistan is ranked fifth amongst the world citrus growing countries. At present
Pakistan produces 5.0 million tons of fruits and vegetables annually. Since improved
methods of cultivation are now in use both the production and acreage continue to
rise. However, it is observed that 50 per cent of fruits and vegetables harvested in
the country go waste during harvesting, transportation, preservation and storage. If
only 25 per cent of the wastage could somehow be avoided Pakistan could earn
$100 million worth of foreign exchange annually through the exports of fruits and
vegetables. Pakistan is expected to have enough surplus of vegetables (onion and
potato) and fruits, which will help in sustaining the growth and momentum of
exports achieved so far. Exports of fruits and vegetables during 1996-97 stood at
$62.022 million as compared to $54.570 million in the preceding year. The
importers were mainly Gull countries including Kuwait and Singapore and Malaysia
in the Far East. Through mechanized grading, quality of fruits has also been
improved. Improvement in packing had also been made.

Animal Protein
It is estimated that the beef production in 1995-96 was around 937,000 tons,
mutton at 544,000 tons. Poultry sector grew by 2.7 per cent over the last year.
However, modern poultry production in Pakistan is constrained by high morality of

flocks, high incidence of disease, poor quality of day old chicks and high cost of feed
combined with improper marketing system. Despite various, concessions and
incentive
provided by the government, the poultry industry has yet to make a rapid progress.
Pakistan has population of 14 million of layers and 190 million of broilers. Production
of poultry meat was estimated at 308,000 tons in 1994-95. Eggs production stood at
5927 million $ during the same year. The
production of fisheries for the year 1995-96 is estimated to be 559,000 tons of
which 419,000 forms is marine and 140,000 metric tons inland.

Milk
Pakistan produces 20 million tons of milk annually which is half of milk produced
by rest of the 49 countries of the Muslim world. Punjab alone produces more milk
than all the 12 OPEC countries put together. Pakistan is also importing milk and milk
products. In 1995-96 import of milk products stood at $30.6 million. The interest of
dairy industry remained grossly neglected. Milk is available in abundance. What is
required is modern technology to preserve milk for later consumption or for
reducing the bulk for economic storage or for shipment for distant markets in and
out of the country.
Pakistan is ranked amongst those few fortunate countries where milk is produced
in excess of consumption. Yet it is ironical, 0.20 million tons of dry milk worth 1,000
million PKR is imported every year, only because we have failed to keep national
interest in view while assigning priorities. Instead of wasting foreign exchange on
imports [TABULAR DATA OMITTED] of a commodity which is already available
aplenty within the country, had we paid due attention towards development of an
effective infrastructure, appropriate farm management and facilities of chilling,
storage and transportation of
milk, we might have been exporting instead of importing milk. What in fact was
needed, was to conserve the 75 per cent of the dairy produce which is lost because
it cannot be conveyed up to the consumer market. The short-sighted relief measure
of imports has very adversely affected the dairy industry whose development
stands strangulated.

Tea
All tea is imported in Pakistan, valuing 170 million dollars a year. At that level,
after edible oil, tea is the second largest food item imported. Tea imports are 1.5
per cent of the country's overall import bill of about Rs. 12 billion a year. Tea
drinking, over the last five years, has doubled mainly because other drinks,
especially fresh milk, have virtually disappeared as the dairy production was
neglected. Another reason is high population growth a year.
According to Federal Bureau of Statistics, 114,447 metric tons of tea worth
$169.2 million was imported 1995-96 against 116,629 metric tons, worth $187.78

million in the corresponding period of 1994-95, showing a decline of 1.87 per cent
and 09.85 per cent in terms of quantity and value respectively. These figures don't
show millions kg. of tea smuggled into the country via border areas of NWFP and
Baluchistan. Owing to bulk smuggling, only 20 to 25 genuine tea importers were
active against 200 firms two years ago out of 400 importers registered with
Pakistan Tea Association (PTA). Pakistan mainly imports tea from Kenya and other
African countries like Uganda, Burundi and Tanzania while multinational blenders
also import tea from Sri Lanka, Indonesia and Bangladesh. Annual black tea
consumption in Pakistan is 01 kilogram per head, slightly lower from British whose
consumption is 1.25 kilogram per person.
Pakistan has the potential to plant tea over an area of 25,000 acres, out of an
approximate 50,000 acres in the mountainous region. Pakistan's northern areas
have an average of 50 inches of annual rainfall, and a rolling elevation of 3,500 to
6,500 feet above the sea level, which is considered conducive to tea growing. At
least three past attempts to grow tea in Pakistan have failed in 1959, 1964, and
1977, mainly because of mismanagement. One reason for the 1959 and 1964
failures was politics.

Value of Fast food Industries in Pakistan

Almost everywhere you look you'll see a familiar sign symbolizing our fast food
nation. You find them on the corners of streets, off the side of interstates, airports,
malls, schools, gas stations, your local shopping center, and even in hospitals. More
money is spent on French fries than on higher education, personal computers, or
new cars! Looking at how our society has become faster paced, it is no wonder less
time is spent. Today, eating out definitely is part of our fast paced lifestyle, not just
a special treat as it was in years past. Fast food is mainly targeted to children. The
high fat foods taste good to these youngsters, which in turn make them believe that
fast food is quick, easy and satisfying. Fast food restaurants are now making "value"
meals for children that are increased in portion sizes. Today, fast food has become a
fashion, as customers are not only eating, they are enjoying the environment not
adults, children are also fond of going to the fast food restaurants for celebrating
their memorable occasions like birthdays, results and even get together parties.