Pakistan has one of the most fertile lands all over the country and that is why its agricultural sector contributes about 20% to the GDP of the country and employs about 40% of the total workforce. And in order to further boost the agricultural sector, Islamabad is now looking to tap the untapped market of the Chinese agricultural products.
China has a shortage of fertile land and hence it is dependent on Asian countries like India, Pakistan, Thailand, and Vietnam for the imports of rice, cotton yarn, and other agricultural products. China imports major crops from these countries in order to feed its people but the problem with Pakistan is that its agricultural trade with Beijing is very low and it needs to increase that volume.
China’s demand for agricultural products is now increasing with the increase in standard of living of the people. According to Ministry of Agriculture China, imports of agricultural products increased in the first five months of 2017 due to the price difference between domestically produced goods and imported goods.
Prices of agricultural products in China are quite high due to the high cost of production in the country. Imports witnessed massive growth in on YoY basis with wheat import increasing by 67.3% soybeans by 20% and beef by 14%. Grain imports of China have increased at an average annual rate of 32.2% from 2011-2016 reflecting the increase in demand for agricultural products in the country.
Thus China and Pakistan have decided to work together on agricultural projects as well under the China-Pakistan Economic Corridor (CPEC). Few projects have been initiated by both the governments in order to enhance agricultural trade.
A fruit processing industry will be set up in Gilgit-Baltistan as the region has the capacity to produce fruits like apricots, apples, cherries, almonds, and others. Exports of fruits will get a boost as thousands of tons of fruits can be exported to China. Similarly a rice research center by the name of Sino-Pakistan Rice Research Center is established by both the countries in order to produce high-quality rice that will be exported to China.
Pakistan will also be helping out China in meat production and exports of live animals. A meat processing facility is being set up in Khyber Pakhtunkhwa to increase meat exports to China along with other Asian markets. The KP government has also started a Donkey Development program to ensure that supplies of live animals do not come to a halt.
Chinese Minister of Commerce Wang Shouwen last week said that Pakistan’s exports to China will increase after the implementation of the second phase of China-Pakistan Free Trade Agreement. The CPFTA will also see more investment from Chinese companies over the course of next five years. Pakistan’s exports to China have gone down from $2.3 billion in 2015 to $1.62 billion in 2017 and Islamabad will be looking to increase these numbers keeping in mind that both the countries are already working on CPEC and other trade projects.