ANALYSIS OF PAKISTANI

INDUSTRIES
TERM REPORT
(SECONDARY RESEARCH)

"THE MANGO INDUSTRY"

GROUP MEMBERS :
AISHA QADRI
RUBA ADNAN
SHAMS NASIR
TOOBA WASEEM
MUJEEB MURTAZA

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INTRODUCTION
Pakistan is an agricultural country and production of fruits is an important part of this
sector. Mango is the king of fruits and one of the most important fruit crop in the world
as well as in Pakistan. Its a tropical, climacteric fruit liked by all due to its taste, flavor
and excellent nutritional properties. Mango is a delicious fruit being grown in more
than 100 countries of the world. Today, the annual estimated world over production of
mango is over 25-million tones. In Pakistan, total area under fruit cultivation is 853.4
thousand hectares with the production of 7178.8 thousand tones while area under
mango cultivation is 167.5 thousand hectares with the production of 1,732 thousand
tones being the second major fruit crop of Pakistan after citrus and is ranked fourth in
the world for its production.
The mango is the national fruit of India, Pakistan and the Philippines. It is also the
national tree of Bangladesh. The main mango growing districts in the Punjab province
are Multan, Bahawalpur, Muzzaffargarh and Rahim yar Khan. In the province of Sindh
it is mainly grown in Mir pur Khas, Hyderabad and Thatta in the province of NWFP it is
grown in D.I Khan, Peshawar and Mardan. Subsequently, a new trend of growing late
varieties in Punjab has received a wide popularity which has extended the market
period and added to the exportable surplus.
This delicious fruit is nutritionally superior, source of several vitamins and minerals.
Pakistan produces 3.95 percent world's mangoes being the fourth largest producer. Its
export is progressing resulting into substantial foreign exchange earnings. Mango
export including Middle East has also found its way to the UK and other European
markets. It is believed that the demand would rise to as high as 50 percent given the
right impetus and expanding the export to Germany, Japan China and Hong Kong.

SECONDARY RESEARCH

PORTER'S FIVE
FORCES

THE DIAMOND
MODEL

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PORTER'S FIVE FORCES:

THREAT OF NEW ENTRANTS

This year, Pakistan will face strict competition from India, one of the worlds largest
mango exporters, in tapping the European market. This comes after the EU lifted the
.import ban on Indian mangoes in January this year
Brussels had outlawed Indian mangoes in May 2014, stating that it had found pests
that could have harmed European crops in 207 Indian consignments of fruits and
vegetables. But, an inspection by the EU found that India has since tightened controls
.and also promised corrective measures
The measures will allow the import of mango before the start of the next import
.season in March 2015, the European Commission said in a statement
Last year, Pakistans mango demand was comparatively high in the European market
due to the EU ban on Indian mangoes. The United States Agency for International
Development (USAID) says it has helped Pakistan boost mango production and
exports to world markets, leading towards 75 per cent increase in farm revenues and
.creation of hundreds of new jobs across the country
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The direct support from USAID in terms of on-farm infrastructure for disease control,
cold storage and hygienic packaging, market linkages, capacity building and
acquisition of international certifications, has resulted in an overall increase in sales of
.$20.5 million
With a budget of $5.8m to date, USAID Firms Project has implemented focused
.initiatives to improve the capacity of farmers, exporters and value-added processors

THREAT OF SUBSTITUTE PRODUCTS AND SERVICES

Mangoes are a major ingredient in many raw food recipes such as green smoothies
and soups, we certainly can substitute them for other fruits. A fruit that will give the
same texture will be required. Bananas are a great alternative to mangoes because,
like mangoes, they provide a creamy texture in a smoothie. They can also be used to
make dairy-free ice cream and they can be used in raw soups. We wont get the same
tropical flavor that you will with mangoes, but they should be a decent replacement.
Thus, banana industry comes as a threat to mango industry. Substitute in the export
market (and somewhat local market) are the foreign mangoes like Peruvian and South
.African
varieties
of
mangoes
Other substitute products of mangoes are beverages and juices. Processed food and
beverages industry constitute largest contribution in industrial zone of Pakistan.
Nonalcoholic beverages are consumed abundantly in Pakistan. The rapid growth of
beverage industry in Pakistan is because of changing in the life style, massive shift of
population from rural area to urban areas and growth in population etc. The most
popular beverages in Pakistan are fruit juices, soft drinks, tea and coffee. Nowadays, it
.is very common to have beverages in meals

CUSTOMER POWER
Bargaining Power of Buyer, when they are strong enough to be able to put collective pressure on the
companies producing a product or a service. At the point when a solid gathering of purchasers is show in the
business sector, it can altogether effect an organization's item and offering choices. The strongest force that
purchasers can apply is to lower costs, which thus affects the benefit potential. Purchasers can likewise
request higher nature of administrations or items, and expand intensity by compelling distinctive
organizations into value wars. These variables wind up diminishing the engaging quality of the business by
bringing down its profitability.
As in context to mango industry of Pakistan, the bargaining power of buyers is not much. The number of
suppliers is much more concentrated giving less power to buyers. Similarly the production of different types
of mangos are divided of the geographic bases which means that producers in an area are few indulge in
cultivation of a specific type of mango, this in turns means that the product is differentiated giving less
power to the buyer. One of the factor is information, the information available to buyers is less which
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reduces the bargaining power of buyer. Similar cases are defined below which tells the factors that affect the
bargaining power of buyers.

Bargaining power of buyers will be strong and powerful depending on:

Buyer Concentration: When buyers are fewer in number and more concentrated, they have a higher
power over the producer. The producers sales revenue will be dependent on these few customers and
they will not be able to ignore any demands. Conversely, if the buyers are widespread, then their
business is also smaller and they are easy to ignore for a producer.

Percentage of Sales: Another bargaining chip for a buyer or buyer group is the amount of business
they give to a producer. If the percentage of sales from one buyer is significant, then the producer will
not want to risk losing their business.

Undifferentiated products: If the producer sells a standard or undifferentiated product, then they
will usually have the potential threat of a buyer switching producers. If there are many producers
supplying the same type of product, a buyer will have the option of exploring possibilities.

Switching Cost: If switching costs are low for a buyer, then any dissatisfaction with a producer or a
product will lead to loss of business as the buyer will be able to find an alternate with minimum hassle
and inconvenience.

Threat of Integration: If there are possible threats of a buyer integrating backwards, then the
producer will have less power. This means that they may begin producing what they buy in-house, or
actually acquire the producer.

Information: If buyers have full information regarding the producers operations and what their
actual costs are, then they will be able to demand better prices from the producer.

Price Sensitivity: If the buyers are sensitive to changes in prices and may stop purchase, the
producer will not be able to ignore their demands.

Available Substitutes: If there are many substitutes or alternatives in the market, then the buyers
will have a lot of options to switch and shop around, making their power over the producers
substantial.

SUPPLIER POWER
The demand for Pakistani mangoes and mango items is continually on the ascent in abroad markets,
especially in China, UK and UAE. Pakistan earned over $61 million by sending out 130,000 tons mangoes a
year ago. The amount traded spoke to under five every penny of the aggregate generation of mangoes, which
remains at 1.7 million tons, in the nation. The specialists accept that there exists a colossal potential to fare
nearly 35 to 40 every penny of the aggregate creation of mangoes, which was far beyond the residential
interest.
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An essential drive inside the Five Forces model is the bargaining force of suppliers. Everything commercial
ventures need crude materials as inputs to their procedure. This incorporates work for some, and parts and
segments for others. This is a crucial capacity that requires solid purchaser and vender connections. In the
event that there are less suppliers or on the off chance that they have particular qualities and information,
then they may wield noteworthy control over the business.

Different types of Suppliers

Manufacturers: Manufacturers are producers of either the entire product or components that feed into the
end product manufacturing process
Distributors & Wholesalers: These types of suppliers purchase products in large quantities from different
companies, store these goods and eventually sell to retailers. These products may be made available at
higher prices than if bought directly from the manufacturers, but this allows purchases to be made in smaller
quantities than a manufacturer will be willing to supply.
Independent Suppliers/Craftspeople: These people manufacture unique items in small quantities and
provide them exclusively through representatives or trade shows.
Importer: These suppliers will purchase from international sources and sell to local retailers. They
essentially act like domestic wholesalers/distributors for these products
At the point when suppliers have bargaining force, they can apply pressure on an organization by charging
higher costs, changing the nature of the item or controlling accessibility and conveyance timetables. Inside
the five strengths system, there is a comprehension that when suppliers have this bartering force, they can
influence the aggressive environment and specifically impact benefit for the organization.

Factors Affecting the Bargaining power Of Supplier.

Concentrated numbers compared to buyers: if the number of supplier of mangos is more than the
buyer than the supplier have less bargaining power than buyers and vice versa.

High switching costs associated with a move to another supplier: if the switching cost of moving
from one mango supplier to another will be high the power of negotiating will be more of supplier and
vice versa.

Able to integrate forward or begin producing the product themselves. (self- sufficient): if the buyer is
self-sufficient i.e. its able to produce the mangos itself than the supplier would have less bargaining
power.

Have specific expertise or technology needed to manufacture goods: if the supplier have specific
expertise in the good in this case in the production of mangoes than the bargain power of supplier will
be more and vice versa

Product is highly differentiated.: product differentiation gives the supplier more bargain power, if the
product is more differentiated then the supplier has more power to bargain

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No substitutes available: Availability of substitutes give the supplier less power to bargain or in other
words less substitutes available more bargaining power of supplier.

MARKET COMPETITORS
The force of competition among rivals in an industry alludes to the degree to which firms inside an industry
put pressure on each other and breaking point one another's benefit potential. On the off chance that
contention is wild, contenders are attempting to take benefit and piece of the overall industry from each
other. This decreases benefit potential for all organizations inside the business. As indicated by Porter's 5
powers system, the power of rivalry among firms is one of the primary strengths that shape the focused
structure of an industry.
Porter's power of competition in a mango industry influences the aggressive environment and impacts the
capacity of existing firms to accomplish productivity. High power of competition means suppliers of mangos
are forcefully focusing on one another's businesses and forcefully estimating items. This speaks to potential
expenses to all contenders inside the business.
High force of aggressive competition can make an industry more focused and diminishing benefit potential
for the current firms. Then again, low power of aggressive competition makes an industry less focused and
builds benefit potential for the current firms.

Factors affecting the competition among rivals:

Competitors are numerous

Competitors have equal size
Competitors have equal market share
Industry growth is slow
Fixed costs are high
Products are undifferentiated
Brand loyalty is insignificant
Consumer switching costs are low
Competitors are strategically diverse
There is excess production capacity
Exit barriers are high

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THE DIAMOND MODEL:

DEMAND CONDITIONS
Consistently increasing mango production capacity with over 1 million metric tons of mangoes produced in
each of the last 10 years and an increase of an average 1.5% in production on a yearly basis.
There is a sincere lack of awareness in the domestic consumers in Pakistan at all income levels. Almost all
of Pakistan consumes mangoes that are artificially matured using calcium carbide which is banned in most
every other country on account of it being a carcinogenic substance. The use of this substance allows
wholesalers to bring premature fruit to the market and decreasing prices substantially. This makes certified
and
global
GAP
adopters
uncompetitive in the domestic
market and
has forced them to look for
alternate
markets in the USA, UK, EU,
Middle
East, Far East and Africa.
The demand for Pakistani
mangoes
and mango products is constantly
on the rise
in overseas markets, particularly in China, UK and UAE. Pakistan earned over $61 million by exporting
130,000 tons mangoes last year. Of the total production of mangoes, which stands at 1.7 million tons, less
than 5% of the produce was exported. The rest catered to the mounting and thriving local demand. The
experts believe that there exists a huge potential to export some 35 to 40 per cent of the total production of
mangoes, which is over and above the domestic demand.
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RELATED AND SUPPORTING INDUSTRIES

The mango production and distribution industry, until recently, required little to no support from any
singular related industry. This was majorly due to the lack of awareness and education in the modern
practices of cultivation. In production, two of the most obvious contributors are the fertilizer and the
pharmaceutical industries.

Fertilizer
A good mix for most soils in Pakistan is 6 to 10 percent nitrogen, 9 to 15 percent available potash and 2 to 4
percent available phosphorous. The frequency of application however depends heavily on the age of the tree
as well as the sand to clay ratio in the respective regions soil. It is to be noted that the centuries old practice
of reliance on organic fertilizers is a very important one. Organic fertilizers often work best for young
bearing trees as well as large bearing trees because they are extremely sensitive and prone to fertilizer burn.
They require regular and semi-high doses of nitrogen, a nutrient that is prone to burning plants, especially in
synthetic, chemical form. Composted manures, blood meal and organic growth fertilizers will suit this need.

Pharmaceutical
The most common types of pests that attack your mango tree and fruit are the common fruit fly, the mango
hopper, the thrip and the shoot borer. Until recent years the Pakistani producer was almost completely reliant
on foreign owned multi nationals such as Bayer Cropscience and Syngenta Pharma. Since these chemical
pesticides had to be imported, the cost was too high for the common farm owner to bear which led to
staggering losses in fruit production of over 30-40% in some areas in Sindh and southern Punjab. However,
in the last couple of decades, companies such as Pak Agro Chemicals and Agri Farm Services have stepped
up to produce chemicals accessible to most if not all.
As far as disease control is concerned, the Pakistani mango isnt too resilient against certain types of disease.
Reason being the high brix (sugar) content, and the relatively sensitive skin on mango varieties such as
chaunsa. In this department, Pakistani growers are still almost entirely dependent on foreign pharmaceuticals
such as Bayer and Syngenta. Common diseases are Anthracnose, Powdery mildew and Sooty mould.

Other Industries
With the growth in the export capability and willingness in domestic Pakistani farmers, there is an increasing
need for the involvement of firms for both the development of its infrastructure and the distribution lines.
One example is the employment of contracts with Maersk shipping for the supply of controlled atmosphere
containers for sea shipping. Another is the contractual dealings of USAID with steel manufacturers and
electrical engineers in the yearly setup and maintenance of the on-site mango pack houses in different
regions of Sindh and Punjab.

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GOVERNMENT
US AID
The US Agency for International Development (USAID) has helped boost Pakistan
mango production and exports to international markets. This has led to a 75%
increase in farm revenues and the creation of hundreds of jobs across the country.
Through USAID, the U.S. government is supporting Pakistans mango farmers by
creating new market opportunities, infrastructure upgrades, and access to
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international certifications. The programmes achievements were celebrated in
.Islamabad on Monday at the 3rd Annual Mango Conference
According the USAID, limitations to Pakistans export supply chain and lack of farm
infrastructure for processing mangoes have been holding back the nations mango
sector. The USAID Firm Project has invested $5.8 million in Pakistans mango
production, providing the means for new infrastructure and marketing assistance
tohelp farmers sell their products globally. $1.6 million has also been invested in small
and medium sized farms to work with USAID to develop commercially feasible fresh
.and dried mango businesses
The program has helped 26 mango orchards receive the Global GAP certification
required for exports to high-end markets. 15 on-farm mango processing facilities have
been established, with around 2,500 jobs created and 3,700 farmers trained in the
process. Mango sales have increased about $20.5 million with a five-fold increase in
.exports of mangoes to the international market
We are thankful to the US government for their support to mango growers and
producers, which has led to increased productivity and jobs for Pakistani people. A
relationship that is based on trade, not just aid is one that we will look forward to in
.our relationship with the United States, said Qasim Niaz
Richard Olson, the US ambassador to Pakistan expressed that the US government will
continue to focus on its partnership with Pakistan in strengthening the countrys
.private sector

EXPORTS

Exports can be boosted if Pakistan can develop an integrated quality system. The government has chalked
out plans to expand its share in new markets like the EU, East Europe, China Canada, Africa and Australia.
But the key remains quality of the produce from the farmer to the consumer. For improving export quality,
experts believe, the process should start by setting quality benchmarks in the domestic market. Pakistan
Horticulture Development and Export Company (PHDEC) have developed such standards for different
produces, like mango and kinnow, but they await implementation. They need to be implemented strictly. The
company should also be made to develop such standards for other produces as well so that erratic domestic
market stabilizes on quality issues, and serves as a launching pad for the increasing exports.
Cotton exports are subject to mandatory quality inspection and certification, and exports of basmati rice are
also subject to quality pre-shipment inspection. Quality pre-shipment inspection is encouraged for other
agricultural commodities (e.g. horticulture products), sometimes by financial inducements, such as payment
of the 25% export fright subsidy, including on mangoes. Seemingly generous income tax concessions (low
rates of income withholding tax levied on the free-on-board value) also assist agricultural exporters, as do
periodic payments of export subsidies on sugar, fruits, vegetables, and occasionally wheat (amounting to
.PRs 500 million in 2002/03)

PAKISTAN EXPORTS OF MANGOES TO EU IN DANGER

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Pakistans mango is no doubt famous in the world with its aroma and unique taste
though its exports is limited to few countries owing to quality and health standard but
it has potential to penetrate in different countries of the world with the help of
.advance technology that restricted issues of fruit fly and bacteria
The country unfortunately failed to maintain its exports in EU for the past three years
because of poor quality of mangoes that were rejected by different countries including
United Kingdom which used to import 90 percent of Pakistans mangoes up to 2,000
.tons
in
the
past
It is because the Quarantine Department of EU has tightened its safety standards and
ban India as well after issuing warning to its exporters consecutively three times
during the last three years. Similarly, the consignment of Pakistan of about 300 were
rejected and dumped by EU authorities and showed yellow cards to Pakistan in the
last three years and this season is the final year in which the fate of the country will
.be
decided
EU and different countries allow import of fresh fruit mainly mango if they are treated
and processed with Hot Water Treatment (HWT ) or Vapor Treatment Technology.
Fortunately, Pakistan possesses three HWT plants that could be utilized to tap a high
end market of EU this season. The technology, which paved the way towards opening
of new markets such as Australia, Mauritius, South Korea and many others could make
the difference in the exports segment because not only it will prevent Pakistan from
ban but it could get recognition from EU bloc ultimately. The government concerned
department such as Trade Development Authority of Pakistan (TDAP) is working
seriously to ensure that mango consignment will never be sent to EU without
.processing but it has not made it mandatory for local exporters and farmers as yet
It is because of the fact that local farmers said that processing of mangoes through
HWT plants will add additional cost to them whereas an alternate solution could be
adopted to make sure supplies of highly hygienic mango to EU. In this regard, TDAP
asked Department of Plant Protection (DPP) to identify 100 orchards that could ensure
bacteria free exportable mangoes for EU market but in the last twenty days of almost
stipulated time, merely two orchards have been approved by the department that
.meet
the
standards
of
exports
TDAP was cautious because any embargo of EU will cause a long-term impact to the
country as if fisheries sector which faced six years ban and resumed its supplies of
seafood products after detailed inspections through two companies. Any ban on
Pakistan will be long-term as if India which was slapped embargo of mango exports to
2015-end. However, Indian traders community and its lobby are so strong that
equally influence EU for restoration of exports, on the other hand, it could orchestrate
.a
campaign
against
Pakistan
as
well
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Pakistans exporters are keen to enhance their exports in different countries of
European Union to get the advantage of ban on India in the high valued market.
Exports of mangoes could be increased to 45 thousand tons from 25 thousand tons if
the Quarantine Department of EU allows Pakistan to continue exports shipment to
exporters of Pakistan after conducting its strict inspection and checks on prescribed
.health
standards
The year 2014 is very crucial for Pakistan as it has been shown yellow card of warning
thrice in the last three seasons. But if any negligence as part of quality and health
standards could lead to similar ban to Pakistan as if India, it will be a big blow to the
country. Because not only Pakistan will be banned in EU countries but different
countries in the world which have been exporting mangoes will raise a question on
.quality
standards
of
Pakistan
in
the
coming
season
The ban per se extremely damaging for exports because it will take years to restore
access to the market like EU once the embargo is imposed. The example of fisheries
sector is of evident as it took six years to restore Pakistani access to merely two to
three companies after strict inspections and criteria, Durrain said who is CEO of Pak
Hortifresh Processing Limited, a semi government company of processing mangoes
.through
Hot
Water
Treatment
(HWT)
technology
The mangoes of Pakistan could be accessible to EU countries and different high-end
market if these are processed in HWT plants available to them. Whereas any shipment
without processing could have greater risk of bacteria and fruit fly element. The HWT
treatment of Pakistan has been approved already by strict market of the world like
USA, Australia and South Korea because of its state-of-art technology of enhancing
.shelf
life
The local exporters should strictly follow the quarantine and health standards of EU to
penetrate in the high-end market ensuring consignment could not contain any fruit fly
and bacteria. Mangoes exports are likely to cross a benchmark of 150,000 ton in the
arriving season of 2014 to different countries due to rising demand of European Union
and different exporting countries whereas the values of the exports may exceed to
$40 million after strengthen of Rupee against Dollar. UAE is biggest export market of
.Pakistan's mangoes. It is followed by KSA and Iran

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