Economic analysis of Pakistan's mango exports towards the European Union

Abstract

Mango accounts for the second largest share in Pakistan's fruit exports. Therefore, it is important to investigate its export supply challenges in order to reorient the industry towards being efficient and competitive in the international market. In this study, a firm level evaluation of Pakistan mango industry's export performance for different markets is presented. For a better understanding of the export supply chain, import demand of the mango by the EU market was also analyzed. In export efficiency evaluation, Data Envelopment Analysis (DEA) shows that exporters are operating most efficiently in Specialized EU market while exporting least efficiently in the Diversified EU market. This finding reveals that in approaching to high value markets like EU, adopting specialized export practices can enhance exporters' efficiency instead of following the mixed procedures. Overall, independent exporter, GAP certification, large number of varieties, treatment type HWT, procurement timing early, and outsourcing of treatment plant & pack house facility were identified as the major determinants of export efficiency. Furthermore, the results of the profitability analysis confirm the results of export efficiency, as the Specialized EU market turns out to be the most profitable market compared to the other two markets. However, to secure high profit margins, major cost factors which need to be optimized are; purchase & production cost, international freight cost, treatment and packing costs. By employing the choice modeling technique, the study establishes the counterfactual effects of transport mode choice attributes and their willingness to pay. For EU market, freight charges in air transport mode and loss & damage in sea transport mode are found to be the major challenging factors which need to be addressed for enhancing exporters' competitiveness in this high value market. Almost Ideal Demand System (AIDS) and various export indices were used to identify the competitiveness of Pakistan among leading mango exporters in the EU market. It was found that Pakistan has a comparative advantage only over Israel and there is a huge potential for Pakistan to increase mango exports in this market. Optimized freight charges and compliance with sanitary and phyto-sanitary (SPS) requirements can help exporters in enhancing their export competitiveness in European market. The overall findings of this study has contributed valuable information for decision makers and the mango export industry's stakeholders in designing the appropriate policies to enhance Pakistan mango export efficiency and its competitiveness in the international market.