Objectives and Approach
This Short Research Activity (SRA PLIA/2005/159) was undertaken as part of an Agriculture Sector Linkage Program (ASLP) between Pakistan and Australia, bringing together stakeholders involved in mango research, development and extension (RD&E). The aim of this SRA was to broadly identify and analyse the constraints currently limiting the competitiveness of supply chains for Pakistan mangoes. The specific objectives of this constraints analysis were to:
- broadly identify the types of markets and their needs;
- broadly identify the various components and associated impediments in representative supply chains;
- identify options to build better commercial linkages between all components of the supply chain;
- provide recommendations for an R&D project PLIA/2005/159 ‘A constraints analysis of mango supply chain improvement in Pakistan (scoping study)’ to improve the competitiveness of mango supply chains in Pakistan;
- review the policy environment influencing mango production, distribution and marketing and assess whether this is likely to hinder development of more competitive mango supply chains.
A project team comprising Associate Professors Ray Collins (team leader) and Tony Dunne from the University of Queensland, Ms Jodie Campbell from the Queensland Department of Primary Industries and Fisheries, Mr Peter Johnson from the Western Australia Department of Agriculture, and Dr Aman Ullah Malik from the University of Agriculture Faisalabad, Pakistan, undertook the research in Pakistan and Singapore from 25 March to 9 April 2006. Valuable assistance was provided by the Pakistan Horticulture Development and Export Board (PHDEB). A parallel small research activity (HORT2005/154) was carried out by a six-member Australian team whose task was to investigate mango production systems with an emphasis on disease and pest management. The results from this team’s findings provided input to the activities of the supply chain team. Linking the two teams’ activities and findings reflects the systems-based approach that is being proposed to improve the Pakistan mango industry.
Scoping study activities began with a four day workshop in Multan, attended by a wide range of industry and government stakeholders. The objective of the workshop was to consider the present Pakistani mango industry, the Australian mango industry, the prospects for future development of the Pakistan industry, and any implications for development of the Australian industry.
Following the workshop, the team undertook field visits, interviews and observations involving the full range of participants in mango supply chains, including growers, contractors, commission agents, transport operators, exporters, importers (Singapore), retailers (Singapore), quality management companies, freight forwarders, shippers, and support agencies such as
PHDEB, universities, government departments and wholesale market committees. This phase of the project took a further nine days.
Pakistan is the world’s fifth largest mango producer with an annual crop of around one million tonnes. It exports about 80 000 tonnes, mainly to the Middle East and the UK. Less than 3 per cent of the crop is used for processing, mostly into mango pulp. Production is centred in the regions of the Punjab and the Sindh. Harvest begins in the Sindh in late May and finishes in the Punjab in late August. The principal varieties are Sindhri, which dominates Sindh production, and Chaunsa, which dominates Punjab production. Pakistan mangoes are sweet, aromatic, yellow skinned and soft. Mango farms range in size from less than 2ha to more than 400ha.
Production, postharvest and marketing systems are poorly developed and returns are distributed quite unevenly, favouring middlemen. Fruit quality is generally poor and 30 to 40 per cent of fruit is wasted in the harvest-to-market system. Modern infrastructure for cool storage, grading, postharvest treatment and transport is almost non-existent. Periodic gluts occur on domestic markets and with no capacity to store fruit, heavy discounting of retail prices is common. The export market faces similar challenges. Pakistan mangoes have a reputation as being cheap and of poor quality, and exporters have a tendency to dump fruit in markets such as the UAE. In general, there is little evidence of a value-oriented approach to supply chain management and there are concerns that current returns for growers are unviable. Compounding this situation, mango tree dieback and decline is beginning to further reduce productivity.
Existing Supply Chains and Impediments
Domestic retailers include street hawkers, fruit and vegetable shops, supermarkets, roadside stalls and food service outlets. Most mangoes in Pakistan are sold by street hawkers, who purchase their daily requirements from local wholesale markets. Specialist fruit and vegetable shops are uncommon, but are found in larger cities. Very few supermarkets operate in Pakistan but multinationals are expected to open in 2-3 years. Roadside stalls in mango production areas sell fourth or reject grade fruit at low prices. Food service outlets include better quality hotels, which may include mangoes in fruit baskets in guests’ rooms, and restaurants that serve mangoes in season. The major export destinations for Pakistan mangoes are the Middle East, the U.K. and Europe. The majority of exports are consumed by expatriate Pakistanis and other Asian communities living abroad. On export markets, Pakistan mangoes have a reputation as low priced, of low postharvest quality, yet with inherently good eating properties.
Domestic chains are fragmented and involve numerous stakeholders. Most chain activities are controlled by commission agents, who provide finance to the contractors and determine the scheduling and flow of fruit from the contractor to the wholesale market. The major impediments identified in domestic supply chains were:
- The product subsystem: the poor quality of mangoes that reach the final consumer is a result of poor production systems coupled with inadequate handling, storage and transport systems;
- The communication subsystem: the absence of effective information flows within the chain inhibits feedback from markets;
- The value subsystem: the wide variations among prices at farm, wholesale market and retail levels point to a system where there are few rewards for quality;
- The governance subsystem: the dominant role of commission agents indicates a system where it may be difficult to change the status quo.
The major export supply chain impediments were found to be:
Improving Supply Chain performance
- The product subsystem: there was no effective quality management or trace-back system available for product sourced from the wholesale markets; there is a lack of knowledge concerning appropriate handling, storage and transport systems;
- The communication subsystem: there was little evidence of effective information flows within the chain; there was an absence of market research on existing or potential export markets;
- The value subsystem: while the inherently superior eating quality of Pakistani mangoes was widely recognized, market development and profitability were reported as being undermined by low product quality, inconsistency and unreliable supply;
- The governance subsystem: there was a perception that many exporters were not interested in developing long term marketing partnerships with importers.
Growers, whether large or small, need better access to information, specific skills training and more incentive to take responsibility for the quality of mangoes they produce. Growers are relatively disempowered in the supply chain and would benefit from belonging to alliances for skills development, as well as through-chain commercial alliances. Contractors’ performance was rated low in terms of its impact on product quality. Their operations are guided and financed by commission agents, and they have little power to voluntarily change their present practices. Improving commercial linkages between contractors and other chain members would require the support and encouragement of commission agents. Commission agents hold most of the power in the supply chain, and any chain improvement strategy would depend on their support and involvement. Processors expressed concern that they were seen as a dumping ground for lowest quality fruit when in fact their requirement was for sound, fully mature mangoes. Improving commercial linkages with processors will involve education of suppliers about processors’ needs and their ability to pay for fruit that meets those needs. Exporters expressed a wide range of concerns over fruit quality and the performance of the supply chain. Some of their practices had no scientific basis, each exporter doing what they thought to be ‘the right things’. They were eager to learn how to extend mango shelf life and how to access new markets. There is a clear need for technical information to improve exporters’ practices.
Recommendations for RD&E
Improving product quality and reducing losses is the highest priority, requiring a multi-faceted strategy spanning pre-harvest and postharvest practices, training, R&D, and demonstrations. Value creation and appropriation is characterised by low overall levels of value, distributed asymmetrically. Improvements in quality will drive improvements in value. Information systems must be improved so that they become the vehicle for messages about improving product quality, the needs of other chain members and feedback from markets. Overarching these improvements is the need for integrated supply chain governance. Governance will focus on issues such as rules of operation, efficiency and equity in chain performance, and the chain’s ability to respond to changing circumstances.
Four possible R&D approaches are identified. They are training, research, demonstrations and capacity building. Each can be applied at the industrywide level, at the level of specific operators in the supply chain such as growers, transport operators, contractors, etc., or at the level of a specific supply chain. Not all approaches can be used at all levels. Training will be targeted at specific chains and levels in chains; research will focus on industry-wide problems; demonstration activities will be oriented towards specific chains; and capacity building will be at the industry-wide and specific chain levels.
Three research objectives emerge from this scoping study. They are:
- mango quality improvement and maintenance;
- market research (domestic and export)
- developing demonstration supply chains (domestic and export).
Objective 1 will be informed by a parallel SRA project, HORT2005/154, which is focused on mango pest and disease management. Objectives 1 and 2 will feed into objective 3, which will provide examples of how the four supply chain sub-systems (see above) can be integrated so as to produce mangoes of improved quality, generate improved market returns for this quality, distribute that value equitably, gather and feed back information that encourages continuation of improved practices, and govern the supply chain as a single competitive unit. Participants for these demonstration supply chains have been identified during this scoping study.
A study of institutional frameworks has become the subject of a separate project. In brief, the mango industry in Pakistan operates in a largely unregulated environment. The country’s Rapid Export Growth Strategy could provide considerable impetus to developing the mango industry. The main supporting agency for the mango industry is the Pakistan Horticulture Development and Export Board, which is doing an excellent job. Opportunities exist to strengthen institutions such as the University of Agriculture Faisalabad.