Why Pakistan’s coffee policy needs a rethink

#Pakistans #coffee #policy #rethink

LAHORE: In a developing economy like Pakistan, the strategic import of important commodities can act as a catalyst for industrial growth, job creation and diversity in exports. Unfortunately, Pakistan’s perspective for importing essential commodities is often focused on production of revenue rather than industrial development.

One such commodity is sufficient-raw materials for the global multi-billion dollar industry in which Pakistan has not yet fully tapped. Since consumer tastes are produced and the culture of urban cafes is rapidly increased, bringing trade policy with industrial purposes can give Pakistan a position as a competitive player in the value -added coffee exports.

In 2023, the international coffee market value was more than $ 100 billion, with consumption increasing in both developing and emerging markets. Although producers historically dominated such as Brazil, Colombia and Ethiopia, value-added processing and branding have been rapidly transmitted to non-productive countries-which highlights the potential to create a uniqueness for countries like Pakistan through effective industrial policy.

Despite the increasing demand for coffee in Pakistan, the growth of the industry has been left behind in high import duties. Since the SRO 840 (I)/2021 was introduced in June 2021, the prepared coffee products have faced 42-53 % duties, while also used in Bulk Instant Coffee – also used in manufacturing – it contains 28 % duty, which contains 15 % regulatory duty (RD) and 2.0 %. It is unfairly taxed on the industrial inputs like retail goods at the same rate, which disrupts the incentives for locally implemented or manufacture.

It contradicts the principles laid down in Pakistan’s own National Tariff Policy (2019-24), which emphasizes promoting domestic manufacturing, encouraging local cost increase, and making the safety of consumers rational. Meanwhile, tea – the closest alternative to coffee – only has 13 % of duty. This clear policy distorts the market competition, which discourages consumers and investors from joining the field of prominent capacity in the future.

Local entrepreneurs and SMEs interested in entering a coffee manufacturing space refrain from cost losses, which are hindering the development of innovation, domestic production, and value -added coffee products. These barriers also prevent the formation of new export industries.

Pakistan is not alone at this confluence. Many domestic cultivation economies have turned themselves into global processing centers through smart policy design. For example, Germany Green has become one of the top exporters in the world by imposing zero duty on coffee beans and investing in its processing industry and the ground coffee has become one of the world’s top exporters. In just 2022, Germany exported more than $ 3 billion.

Similarly, South Korea and Japan-both non-producers have become a global player in a non-producer and quick enough segments. South Korea took advantage of low import duty and strong domestic branding to raise its coffee industry in the market for $ 5 billion. Japan has used commercial liberalization and public private partnerships to become a leader in canned and special kufis. Their success suggests that, with the right ecosystem, can be the foundation stone of industrial and export strategies, regardless of agricultural capacity.

These examples focus on the importance of low duties on raw materials, targeted support for domestic processing, and innovation and quality. With the growing young population, rapidly increasing citizenship and increasing trends of consumption, Pakistan is in a well -positioned position to follow a similar pace – if the policy environment allows it.

Currently, domestic production is only 5.0 % of Pakistan’s coffee demand. By removing the regulatory duty and additional customs duty on the bulk instant coffee, the government can understand it as an industrial input – just as it does it with palm oil or rough cotton for textile. Graduate, import duty on retail manufactured coffee products can still be maintained to protect local processors, which creates a two -level system that promotes industrial growth while maintaining justice in the market.

With the change in the right policy, Pakistan can develop a promoted enough processing industry that not only meets local demand but also reaches global markets. By activating value added processing in this high-capacity sector, Pakistan can produce more than better enough-it can create a strong economic future.