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Sector Profile Food Processing

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Sector Profile Food Processing Sector Profile Food Processing Sector Brief ► Global food retail sales are about $4 trillion annually. Annual global food $4tn retail sales ► Pakistan is home to the world’s sixth largest population with a growing middle class. As of 2018, there are 6th largest population in the approximately 17 million middle class households and world 102 million middle class individuals. 207.8m ► nd nd The food and beverage processing industry is the 2 2 largest Industry in Pakistan largest industry of Pakistan after textiles, accounting for Accounts for 27% value added production, 27% of the value-added production and 16% of 16% employment in manufacturing employment in the manufacturing sector. $223.5m Average annual FDI ► Food processing accounted for an annual average of (2014-2018) $223.5m in FDI from 2012-2018. Value Added & ► Pakistan’s food processing industry is broadly frozen foods categorized into the following 4 sub sectors: Edible oil & fats 1. Value-added and frozen food processing sectors, Bakery and including canned foods ConfectionaryText 2. Edible oils and Fats manufacturing/processing units Beverage Production 3. Beverage production units Main Sectors 4. Bakery and confectionary manufacturing units. ► Food processing companies are further categorized into 2500+ either informal/cottage establishments or formal establishments. Food 6% Processing ► The three major industry groups are (1) frozen food (2) value addition in major food crops and (3) fruits, Units vegetables and intermediate products. 60% ► Most of the food industry in Pakistan is concentrated in 2% Punjab (60%) followed by Sindh (30%), KPK (6%), Baluchistan (2%) and ICT (2%). In total, there are 30% approximately 2500+ food processing units in Pakistan. ► Pakistan was awarded the Generalized Scheme of Preferences (GSP) Plus Status (Zero to Low Duty) by the Major players European Union in 2014 which has the potential to greatly uplift the exports of processed food products. ► Major players in the sector include Pepsi, Coca Cola, Unilever, Nestle, Mitchells, Engro Foods, K&N’s, Shezan, Shan Foods, Dawn Foods. Food Processing Stats Pakistan's Food Processing Imports and Exports (2010-18) Food Processing Exports (Quarterly) Projected Food Processing Imports (Quarterly) Projected Food Processing Stats Pakistan's Food Processing (2010 - 2018) Main Category of Exports Animal or Vegetable Fats, Oils and Waxes Prepared 4% 25% Foodstuffs; Beverages, Spirits, Vinegar and Tobacco 71% Vegetable Products Main Category of Imports Animal or Vegetable Fats, Oils and Waxes Prepared Foodstuffs; 49% 15% Beverages, Spirits, Vinegar and Tobacco 36% Vegetable Products Food Processing Stats Pakistan's Food Processing Exports (2010 - 2018) Food Processing Exports by Commodities (Quarterly) Food Processing Imports by Commodities (Quarterly) Top Exports Top Imports 1. Cereals 1. Animal or Vegetable Fats, Oils Cleavage 2. Sugar and Sugar Confectionary 2. Oil Seeds and Oleaginous Fruit 3. Beverages, Spirits and Vinegar 3. Coffee, Tea and Spices Market Structure and Dynamics The different categories within food processing Value Addition in Frozen Foods Major Food Crops The market for frozen Crops such as wheat, rice, foods has grown rapidly which are in abundance, are in the recent years used to produce products owing to an adaptation such as cereal, noodles, towards a more urban macaroni, pasta, spaghetti way of lifestyle. etc.. Beverages Agri Food Processing The beverage industry of Pakistan has been categorized This area includes all the food into two broad categories: that is produced agriculturally. 1) Aerated Beverages This includes primary processing of fruits and vegetables, fresh 2) Juices, squashes and syrups produce, flour, sugar, pulses and grains. Fruits, Dairy, Vegetables & intermediate value added products Edible Oils & Fats Pakistan is known for its high quality fruits, vegetables and dairy. There The edible oil and fats sector are more than 25 fruits, vegetables includes vegetable oil, ghee and and intermediate value added margarine. The domestic source processing plants in Pakistan of edible oil is cotton seed, sunflower, canola and rapeseed. Market Structure and Dynamics A growing population, coupled with an increase in urban lifestyles has been Frozen foods the primary driver behind the rising demand for frozen food products. Additionally a budding retail phenomenon is finding its way in the urban markets. This factor has been complemented with the rise of malls, super markets, hyper marts, drug marts e.g. Metro, Al Fatah and Hyperstar, instead of the traditional kiryana and general stores. Local organizations such as Dawn Foods, season foods, K&N’s, Sabroso & Sufi have made significant impact in the market with their frozen food products. Value addition in Pakistan is one of the largest producers of industrial crops such as rice and wheat. Such crops can be used in the production of a variety of different major food crops products such as cereals, macaroni, spaghetti, pasta etc. Good food processing techniques such as extrusion are being utilized in several developed countries, and are now finding its way to Pakistan as well. Currently, the extrusion technology is being utilized in Pakistan in the processing of food products like cereals, pasta, snacks etc. The total availability of edible oil from all sources in Pakistan is estimated Edible oils and at approximately 3 million tons. 23% of oil seeds are produced fats domestically while the remaining is mostly imported which provides a huge opportunity for an increase in domestic production. These oil seeds are used extensively in the vegetable ghee and cooking oil industry of Pakistan which is one of the largest manufacturing industries in Pakistan. There are approximately 160 small and medium sized vegetable ghee and cooking oil units spread all across Pakistan. The beverage processing industry’s main products include dehydrated Beverages products, fruit products, including fruit juices/drinks, canned fruits and carbonated beverages. The industry has been categorized into two sectors broadly: (1) Juices, squashes and syrups and (2) Aerated beverages. Both the sectors have recorded an impressive growth with major players such as Pepsi, Coca Cola, Nestle, Mitchells, Shezan, Maza etc. Their production units are mostly located in the Punjab specifically Lahore, Sargodha and Bahawalpur. Fruits, dairy, Pakistan is the 4th largest milk producing country in the world which provides tremendous opportunities for value added products in the dairy vegetable and sector. In the fruits and vegetable sectors, there are more than 25 intermediate processing plants. Most of the these are citrus based owing to its abundant acreage. Following citrus are mangoes which are abundant in Southern value adding Punjab and Sindh. The major processing plants are located in Peshawar, products Lahore and Karachi. Value added products include jams, jellies, marmalades, squashes, canned fruits etc. This sector includes all the agricultural food produce (primary). This sector Agri food alone accounts for 21% of Pakistan’s GDP and includes the primary processing of fruits, vegetables, flour, sugar, pulses and grains. More than processing 22 varieties of vegetables are produced in Pakistan and there are (Primary process approximately 1,400 flour mills. The country is ranked 5th in the world cane acreage and 9th in sugar cane production. foods) Pulses are the most important source of vegetable protein in Pakistan and are cultivated on 5% of the total cropped area. Areas to invest Key highlights of Pakistan’s food processing sector Dairy • 4th largest milk producer in the world • 11th largest citrus producer in the world • 35 different varieties Frozen foods of vegetables Value addition (fruits, produced in fruits vegetables and meat) • More than 30 varieties of fruits produced. Olive Oil Potato powder Extraction and flakes Units manufacturing unit Top 5 Sub-sectors. With a population of over 200 million people, Pakistan is the sixth most populous country and the 43rd largest economy in the world. In the current global economic scene, Pakistan is being seen as the top emerging market economy in South Asia that is progressing towards a more advanced stage through rapid growth and industrialization. Pakistan is being classified as one of the Next Eleven (N-11) countries that have the potential to become one of the world's large economies in the 21st century. Economic growth of the country has been on a rise during recent years; measured at 5.4% in 2017 and 5.8% in 2018 with projections forecasting it to be above 5% in the next 3 years. The government is fully committed to capitalizing on the emerging growth trend and is working hard to ensure implementation of all the necessary steps in the right direction to increase the flow of private sector investment. The food processing sector of Pakistan has the ability to create spillover effects in multiple other industries such as food packaging, bottling, retail chains (hypermarts, supermarkets) etc. The main sub-sectors however that need to be focused on a priority basis include: 1. Dairy 2. Value addition in fruits 3. Frozen foods (fruits, vegetables and meat) 4. Olive oil extraction units. 5. Potato powder and flakes manufacturing unit Areas to invest Dairy ► The dairy sector in Pakistan plays a significant role in the national economy and its value is more than that of the wheat and cotton sectors combined. The dairy and livestock sector alone contributes 11% of Pakistan's. GDP and 49% of the value addition in the agricultural sector Pakistan’s current annual milk production is close to approximately 54 billion liters per annum which makes it the 4th largest milk producer in the world. ► Pakistan is a population of 200 million people approximately. Amongst all household expenditures on food items, nearly 30% is spent on milk and dairy products. A major proportion of milk is consumed in tea which is a common drink so milk is demanded by every household in the country. ► Milk is one of the most popular food items in Pakistan and is consumed as fresh, boiled, powdered and in processed form such as yogurt, ghee, lassi (buttermilk), butter, cheese, ice cream, sweets and in other confectioneries.
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