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 Chapter 3

Citrus Value Chain(s): A Survey of Pakistan Citrus

Industry
Muhammad Imran Siddique and Elena Garnevska
Muhammad Imran Siddique and Elena Garnevska
Additional information is available at the end of the chapter

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.70161

Abstract

Pakistan is producing more than 30 types of different fruits of which citrus fruit is leading
among all fruit and constitutes about 30% of total fruit production in the country. Above
90% of citrus fruits are produced in Punjab province and distributed through different value
chains in domestic as well as in international markets. A large part of citrus fruit produced
in Pakistan is mostly consumed locally without much value addition; however, 10–12% of
total production is exported after value addition. The value chains are very diverse, and a
number of different players actively participate in these chains, which ultimately decide the
destination of citrus fruit in these supply chain(s). Knowing all these facts, the main aim of
this research is to identify different value chains of citrus fruit (Kinnow) in Pakistan and also
to identify and discuss the role and function of different value chain players in the citrus
industry in Pakistan. A survey involving of different players of Pakistan’s citrus industry
was conducted in 2013–2014 to better understand the citrus value chain(s). Using a conve-
nience sampling technique, a total of 245 respondents were interviewed during a period
of 4–5 months from three leading citrus-producing districts. It was found that citrus value
chains can be classified into two major types: unprocessed citrus value chain and processed
citrus value chains. It was also found that in the past, a large number of citrus growers
were involved in preharvest contracting for their orchards and only a small number of citrus
growers sold their orchards directly into local and foreign markets. The proportion has been
gradually changed now and growers are becoming progressive and more market oriented.

Keywords: citrus fruit, value chains, key players, citrus growers, pre-harvest contractors,
Pakistan

1. Pakistan citrus industry

The agriculture sector plays a pivotal role in Pakistan’s economy and it holds the key to pros-
perity. A number of agricultural resources, fertile land, well-irrigated plains and variety of

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38 Agricultural Value Chain

seasons are favourable for the Pakistan agricultural industry. Despite the decline in the share
of agriculture in gross domestic production (GDP), nearly two-thirds of the population still
depend on this sector for their livelihood [1]. Agriculture is considered as one of the major
drivers of economic growth in the country. It has been estimated that in 2014–2015, the total
production of agriculture crops was 116 million tonnes. Pakistan produces about 13.5 million
tonnes of fruit and vegetables annually. In 2014–2015, the total fruit production was recorded
at 7.01 million tonnes, which composed of 48.3% of the total fruit and vegetables production
in the country [2, 3].

1.1. Citrus production

The overall trend for all fruit production in Pakistan is increasing except for the year 2006–
2007, when a great decrease of production of all fruits as well as citrus fruits was observed
due to unfavourable weather (hailstorm) and water shortage, as shown in Figure 1. The area
under all fruits and production both has been increasing gradually. Citrus fruit is prominent
in terms of its production followed by mango, dates and guava. The total citrus production
was 2.4 million tonnes in 2014–2015 that constitutes 35.2% of total fruit production) [3]. Citrus
fruit includes mandarins (Kinnow), oranges, grapefruit, lemons and limes, of which manda-
rin (Kinnow) is of significant importance to Pakistan.

Pakistan’s total production of citrus fruit (primarily Kinnow) is approximately 2.0 million
metric tonnes annually. Although there is no remarkable increase in area under citrus
production, the production has increased up to 30.8% since 1991–1992. In 1991–1992, Pakistan
produced 1.62 million tonnes citrus, which increased to 2.1 million tonnes in 2008–2009 and
2.4 million tonnes in 2014–2015 [3].

8000
7000
6000 Area
'000'
5000
hectares
4000
3000 Productio
n '000'
2000 tonnes
1000
0

Year

Figure 1. Area and production of all fruit in Pakistan. Source: [3, 5, 6].
 Citrus Value Chain(s): A Survey of Pakistan Citrus Industry 39
http://dx.doi.org/10.5772/intechopen.70161

The production of citrus fruit has been increasing since 1993–1994; however, it started to
decline in 1999. The citrus fruit crop requires a critical low temperature for its ripening
which if not achieved may lead to decline in the production of fruit [4]. Therefore, one
of the reasons of varied citrus fruit production might be due to the temperature varia-
tions in the citrus growing areas of Pakistan. Such a great variation in temperature was
recorded in 2006–2007 in citrus-producing areas due to which citrus production dropped
from 2.4 to 1.4 million tonnes; however, the area under citrus fruit orchards remained the
same [3].
In Pakistan, citrus fruit has been predominantly cultivated in four provinces, namely: Punjab,
Khyber Pakhtunkhwa (KPK), Sindh and Baluchistan. Among all four provinces, Punjab is
considered to be the hub of citrus production. Table 1 represents the major citrus growing
districts in all the four provinces of the country.
Punjab province, according to Pakistan Horticulture Development and Export Company
(PHDEC) (2005), produces more than 90% of total Kinnow production whereas KPK
mainly produces oranges among all citrus fruits in the country. Sargodha, Toba Tek Singh
and Mandi Bahauddin are three known districts for their citrus production in Punjab
province. Different varieties of citrus fruits are also grown in small proportions in other
districts.
Mandarins (Feutrell’s Early and Kinnow) and sweet orange (Mausami or Musambi and
Red Blood) are very important among all the citrus varieties cultivated in Pakistan.
Table 2 shows different varieties of citrus produced in the country. Punjab province,
being the hub of citrus production (Kinnow), produced 97.1% of citrus fruit (Kinnow) in
2014–2015 [3].
In Punjab province, three districts, Sargodha, Toba Tek Singh and Mandi Bahauddin, consti-
tute around 55% of the total area under citrus cultivation and produce nearly 62% of citrus
fruit [6]. In Sargodha district, Bhalwal produces 650,000 metric tonnes of Kinnow annually

Province Major districts

Punjab Sargodha, Toba Tek Singh, Mandi Bahauddin, Sahiwal,
Khanewal, Vehari, Bahawalpur, Multan, Okara, Layyah,
Jhang, Kasur, Bahawalnagar, Faisalabad

Khyber Pakhtunkhwa (KPK) Malakand, Swat, Nowshera, Lower Dir, Dera Ismail
Khan, Mardan, Haripur

Sindh Naushero Feroze, Khairpur, Nawabshah, Sukkur,

Sanghar

Baluchistan Nasirabad, Dolan, Lasbela, Gwadar, Sibi,

Source: [7, 8]

Table 1. Major citrus growing areas in Pakistan.

40 Agricultural Value Chain

Sweet Orange Succri, Musambi, Washington Navel, Jaffa, Red Blood,

Ruby Red and Valencia Late.

Mandarins Feutrell’s Early and Kinnow

Grapefruit Mash Seedless, Duncan, Foster and Shamber

Lemon Eureka, Lisbon Lemon and rough Lemon

Lime Kagzi lime and Sweet lime

Source: [8]

Table 2. Varieties of citrus fruit in Pakistan.

and is considered as the centre of Kinnow (mandarin) production (Pakistan Horticulture

Development & Export Company (PHDEC), 2005). Figure 2 demonstrates citrus fruit produc-
tion in four provinces of Pakistan.

In 2014–2015, the total citrus production in Khyber Pakhtunkhwa (KPK) was 1.29%, in Sindh
1.26% and in Baluchistan it was 0.29%. In the late 1990s, the production of citrus fruit in the
Baluchistan province increased and it was due to the increase in the area under citrus cultiva-
tion and hence production under citrus fruit was increased in Baluchistan in the late 1990s
[3, 6, 9].

In Punjab province, Kinnow production was 1.80 million tonnes followed by oranges, which
was about 94 thousand tonnes in 2009–2010 among different varieties of citrus fruits. In

Figure 2. Province-wise production of citrus fruit in Pakistan. Source: [3, 6].

 Citrus Value Chain(s): A Survey of Pakistan Citrus Industry 41
http://dx.doi.org/10.5772/intechopen.70161

Production and area of different types of citrus fruit in Punjab

Type of Citrus 2011–2012 Percent of total citrus
production
Area Production
(‘000’ Hectares) (‘000’ tonnes)
Kinnow 154.6 1876.0 89.43

Oranges 9.4 80.0 3.81

Musambi 7.2 61.5 2.93

Mandarin 1.2 9.3 0.44

Sweet Lime 3.9 29.5 1.41

Sour Orange 0.1 1.0 0.05

Lemon 4.6 26.0 1.2

Sour Lime 0.8 3.8 0.2

Grapefruit 0.3 2.3 0.1

Other 1.2 8.4 0.4

Total 183.2 2097.7 100.00

Source: [10]

Table 3. Production of different types of citrus fruit in Punjab.

Punjab, Kinnow was 87.1% of the total citrus production and 80.3% of the total area under
citrus cultivation. Oranges come next to Kinnow in production and area under cultivation and
constitutes 4.5% of the total citrus production and 6% of the total area under citrus cultivation
in Punjab. Grapefruit production is the lowest and it was only 3 thousand tonnes. Different
types of citrus grown in Punjab province in 2009–2010 are shown in Table 3.

1.2. Citrus consumption

The consumption of fresh citrus fruit in developing countries has been increasing; however,
it is still low compared to the developed countries. In Pakistan, per capita consumption of
citrus fruit is almost static since 1999 except in 2007 when it dropped to 7.8 from 13.5 kg,
as shown in Figure 3. The rapid increase in the population may be one of the major factors
keeping the consumption level nearly constant despite the increase in citrus production from
1.8 million tonnes in 1999 to 2.1 million tonnes in 2009. Per capita income has increased from
US$450 in 1999 to US$917 in 2009 [11]. However, the sharp decline in per capita consumption
in 2007 was a result of lowest production of 1.4 million tonnes from 2.4 million tonnes in 2006,
which resulted in lower domestic supply and availability of citrus fruit in the country. The
high peak of 2005 in Figure 3 reflects the highest per capita consumption of citrus fruit due
to decreased exports of the citrus fruit from 151.3 thousand tonnes in 2004 to 79.2 thousand
tonnes in 2005.
42 Agricultural Value Chain

70.0
Brazil
60.0
Consumption (kg/capita/year)

Mexico
50.0

40.0 USA

30.0 Spain

20.0 Pakistan

10.0 China

0.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Year

Figure 3. World citrus fruit consumption trend. Source: [12].

Figure 3 shows the annual per capita consumption (kg) of fresh citrus fruit in important coun-
tries. There was an increase in per capita consumption in Brazil that reached to the highest
level in 2011 and then dropped very sharply in 2012 and 2013.

1.3. Citrus exports

With the changing consumer preferences towards consumption of fresh and convenience
food, the global demand for fresh fruit is increasing [8, 13]. Pakistan is one of the largest citrus
producing countries and ranked 13th in the production of citrus fruit [5]. It has been observed
that fresh citrus exports from Pakistan have been increasing since 1995–1996 as shown in
Figure 4.

Among all citrus fruits, Kinnow mandarin constitutes about 97% in the total exports of citrus
fruit from the country [8, 14]. In 2014–2015, the total exports of citrus fruit from Pakistan
were 393 thousand tonnes, which account for a total value of $204 million that represents
about 16.4% of the total citrus production. As compared to 2000–2001, the total exports of
citrus were exactly threefold in 2009–2010 which accounted for $99.4 million of foreign rev-
enue. Despite the increase in production, only a small amount of citrus fruit (8–12%) is being
exported.

The majority of the farmers in Pakistan own and cultivate a small size of agricultural land
of less than 2 hectare. However, in Punjab, average citrus farm size was 12.3 hectare, which
is considered relatively large compared to other crops [15]. The size of citrus orchard ranges
from less than 1 hectare to as big as 65 hectare in different regions of the country. A few large
citrus growers do exist; however, small and medium size growers are the majority [16].
 Citrus Value Chain(s): A Survey of Pakistan Citrus Industry 43
http://dx.doi.org/10.5772/intechopen.70161

Figure 4. Pakistan citrus area, production and exports. Source: [6, 14].

The agricultural value chains in Pakistan are very diverse and start with citrus growers/
producers. Like other fruits, citrus fruit value chain is primarily controlled by the private
sector. However, Government plays a facilitative role by providing basic infrastructure and
regulatory measures for easy business transactions. It is generally observed that marketing
intermediaries exploit agricultural crop producers by charging high margin on their invest-
ment [16]. Citrus fruit value chain(s) starts with the involvement of pre-harvest contractor
directly with citrus growers. According to Chaudry [15], the typical citrus value chains in
Pakistan are shown in Figure 5. The role of each player in the citrus value chain is presented
later in the results and discussion sections.
All the players involved in these value chains execute their usual functions as they do in
other food value chains; however, the pre-harvest contractors are the most important power-
ful player in Pakistan citrus value chains [15, 16].
Keeping in mind the increase in production, constant domestic consumption and avail-
able surplus of citrus fruit for export, a number of questions arises; how many different
citrus value chains operate in the country? Who are the players involved in the citrus value
chains? Despite the availability of citrus fruit, why only a small amount of citrus fruit is
being exported? To answer these questions, this study aims to identify and analyse different
value chains of citrus fruit (Kinnow) that are operating in Pakistan and also to identify and
discuss the role and functions of each value chain players in the citrus industry in Pakistan.
Furthermore, this study identifies future opportunities and challenges of citrus sector in
Pakistan.
44 Agricultural Value Chain

Figure 5. Value chains of citrus in Pakistan. Source: [15].

2. Method

Both qualitative (exploratory) and quantitative (descriptive and inferential) research methods
were used for this study depending upon the research questions. A survey involving differ-
ent players of Pakistan’s citrus industry was conducted in 2013–2014 using semi-structured
interviews assisted by a questionnaire. Primary data were collected through surveys, while
secondary data were obtained from published documents, reports, journals and government
publications of various public and private institutions and departments.
Using a convenience sampling technique, a total of 245 respondents were interviewed during
a period of 4–5 months from three leading citrus producing districts, namely Sargodha, Toba
Tek Singh and Mandi Bahauddin. The respondents included were 126 citrus growers, 99 pre-
harvest contractors and 20 processing factories/exporters from these three districts. Due to
unavailability of population size (sampling frame), time and budget constraint, a convenient
sampling technique was used for the selection of the respondents. The underlying reason of
interviewing different players in the citrus value chains was to study closely their functions
and participation in different existing value chains. It also helped identifying and understand-
ing different value chains operating in the country. This study also identified future opportu-
nities and challenges of citrus sector in Pakistan.
 Citrus Value Chain(s): A Survey of Pakistan Citrus Industry 45
http://dx.doi.org/10.5772/intechopen.70161

A statistical package Predictive Analytics Software–version 21 (PASW-21), previously known

as Statistical Product and Service Solutions (SPSS), was used to analyse the collected data.
Fisher’s exact test was used to test the significance of different demographical variables and
the selection of the value chain particularly involving pre-harvest contractor.

3. Results and discussion

3.1. Citrus (Kinnow) value chain systems

The results of this study revealed that citrus (Kinnow) value chains can be classified into two
major types: unprocessed citrus (Kinnow) value chain and processed citrus (Kinnow) value
chain. The description of these value chains is presented in the next section.

3.1.1. Unprocessed citrus (Kinnow) value chain

Unprocessed citrus (Kinnow) graded and packed before selling to the local market and does
not include usually washing and waxing. Figure 6 presents the unprocessed citrus (Kinnow)
value chain in the country.
About 50–60% Kinnow is marketed in the country for domestic consumption while nearly
30% Kinnow is accounted for post-harvest losses [8]. Citrus growers, pre-harvest contractors,
local (provincial) commission agents, inter-provincial commission agents, local wholesalers,
inter-provincial wholesalers, local and inter-provincial retailers are different actors of unpro-
cessed citrus (Kinnow) value chain in Pakistan.
The major players of the unprocessed citrus (Kinnow) value chain are citrus growers and pre-
harvest contractors and their marketing strategies intensely affect the citrus supply chain in
the country. It was common practice in the past where about 90% of the citrus growers used to
sell their orchard to pre-harvest contractors. The predominate reasons include unavailability
of finances, lack of market information, ease of the transaction, avoiding the future price fluc-
tuations and norms of the business [15]. Citrus growers are becoming more market oriented
and adapting different marketing channels to get high price for their products instead of sell-
ing solely to pre-harvest contractors. The improved education level, government support and
technological developments are the reasons for this change. One of the citrus growers replied
when asked about direct marketing of his fruit in the market:
‘Now nearly every citrus grower has an access to prices of different local and provincial markets which
has helped us to involve ourselves into direct marketing of our fruit. Being ignorant of different market
prices in the past, we were unable to decide where to sell, hence carried out with the pre-harvest con-
tractor. Thanks for the government support, who provided us this opportunity to market our produce
directly and earn good profit’.

3.1.2. Processed citrus (Kinnow) value chain

Kinnow processing is of two types: (1) for export and involves washing, waxing, grading and
packing and (2) for juice extraction.
46 Agricultural Value Chain

Figure 6. Unprocessed citrus (Kinnow) value chain for local market.

3.1.2.1. Processed citrus (Kinnow) value chain for export

Only 8–12% Kinnow is processed for export to different countries. In 2013–2014, the major
exports of Kinnow mandarin were to Afghanistan (113,000 tonnes), Russian Federation
(72,000 tonnes) and United Arab Emirates (68,000 tonnes). A complete list of countries is
attached in Appendix A [17]. Processed citrus (Kinnow) value chain comprises citrus growers,
pre-harvest contractors, local commission agents/wholesalers, Kinnow processing factories
and exporters (Figure 7). The processed citrus value chain and unprocessed citrus value chain
are nearly similar except Kinnow processing factory, and exporters are involved in processed
value chain at the end stage of the process.
Citrus growers, pre-harvest contractors and commission agents sell citrus fruit directly to
factories (Kinnow processing) and exporters. Pre-harvest contractors and some commission
agents act on behalf of these Kinnow processors and exporters and purchase citrus fruit for
them. These agents are provided with some credit or advance payments to buy citrus fruit.
A good family and financial background, market reputation and ability of constant supply
 Citrus Value Chain(s): A Survey of Pakistan Citrus Industry 47
http://dx.doi.org/10.5772/intechopen.70161

Figure 7. Processed citrus (Kinnow) value chain for export.

of fruit in the season are the qualities of sellers preferred by these Kinnow processors and
exporters. Sellers to processors and exporters are paid through cheques. One of the exporters
commented on the selection of seller (grower/contractor/commission agent/wholesaler):

‘In our export business, we need to make promises with our importers for certain quantity of fruit in the
season; therefore, all exporters try to deal with the seller who can commit constant supply of citrus. A
well reputed, financially strong with good moral character seller is our first choice to deal with’.

In Sargodha, about 150 Kinnow processing factories are functioning but only 25–30 process-
ing factories are exporting citrus to different countries. The reasons of such a low export from
the country include high demand for seedless Kinnow (hybrid mandarin) in the developed
countries (not produced in Pakistan), marketing practices and failure to meet the quality cer-
tification standards. One of the respondents who wanted to export to European countries
commented:

‘I always take good care of my orchards; hence, I manage to get good quality fruit in each season. Realis-
ing the quality, I decided to export my fruit to Europe last year but I was told that I should grow citrus
to meet quality certification standards required for export which I am following now. Hopefully, I would
be able to export my citrus to Europe soon’.

A few processing units are also being constructed in other districts as well, for example, dis-
trict Mandi Bahauddin, district Toba Tek Singh and district Multan.

3.1.2.2. Processed citrus (Kinnow) value chain for juice extraction

A total of 52 fruit processing and juice extraction factories are operating in Pakistan [18]. Only
five of them are processing citrus fruit for juice extraction. About 6% to the total citrus pro-
duced in the country is processed for juice extraction [18]. These factories are concentrated in
the major citrus producing areas such as Sargodha, Bhalwal and Mateela cities. Citrus grow-
ers and pre-harvest contractors sell mostly drop off, low quality and non-marketable fruit to
48 Agricultural Value Chain

these juice factories, which process it into juice concentrate and sell it to different retail shops
and supermarkets in the country.

One of the contractors who supply to exporters and processors replied:

‘I always try to sell exporters and processors because they pay premium price for my fruit. However,
these exporters and processors only purchase selective fruit from me and leave small size, non-uniform
and unripe fruit. I don’t mind it; I sell this non-selective fruit to juice factories and recover my cost.
Job done’.

Figure 8 shows different functionaries of processed citrus (Kinnow) value chain.

3.2. Description of different value chain players

Different players of citrus (Kinnow) value chain including citrus growers, pre-harvest con-
tractors, commission agents, wholesalers and retailers are described and discussed below.

3.2.1. Citrus growers

The results of this study revealed that majority of the citrus growers (76.2%) were 31–60 years
of age and only 6.3% were quite young (under 25 years old) in the citrus industry. However,
about 17% citrus growers were above 60 years of age. The literacy rate was more than 90%
in the citrus growers (having at least 5 years of schooling) and only 3.2% respondents were
illiterate. It was reported that the literacy rate was increasing in the citrus growing areas in
Pakistan, thus providing basis for the growth of citrus growers and making them more market

Figure 8. Processed citrus (Kinnow) value chain for juice extraction.

 Citrus Value Chain(s): A Survey of Pakistan Citrus Industry 49
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oriented [19]. The results also showed that nearly 80% of the citrus growers were very experi-
enced and were involved in the citrus industry for many years. The size of the citrus orchards
was small, and majority of the citrus growers possessed less than 20 acres (Table 4).
The size of these citrus orchards was further reduced when the orchard was divided among
the next generations. Previously, it was found that majority of the citrus growers (more than
90%) preferred to market their produce through pre-harvest contractors, thus reducing the
direct involvement of the citrus growers in the value chains. Due to better government poli-
cies in the education sector and increasing market awareness, the level of literacy rate has
increased in the last 10 years. All citrus growers were educated and became aware of market
information and opportunities. As citrus growers are becoming more market oriented, they
are searching for reliable market information to find alternative value chains other than sell-
ing directly to pre-harvest contractors. According to this study, about 46% of the citrus grow-
ers are selling their orchard to pre-harvest contractors. This finding is contrary to the previous
study conducted by Chaudry [15] and Ali [16] who reported that 95% of citrus growers sold
their orchards to pre-harvest contractors about 15 years ago.
Nearly 30% of the citrus growers in the sample sold their orchard to commission agents/
wholesalers or exporters. Price was settled on commission basis at a rate of 7–8% of the total
sale price of the produce with the commission agent or wholesaler. Exporters and processing
factories usually announce citrus fruit purchase price per 40 kg for the season. It is negotiable
in certain cases, for example, if citrus grower(s) contract for complete season fruit supply.
There is no government control over prices of Kinnow and it is determined by market forces
(demand and supply). The only problem while selling to exporter was that it only purchased
good quality fruit with good size and colour (selective fruit purchase). This was one of the
reasons, citrus growers switch to alternative buyers who purchase and pay the price for the
whole produce. Nearly 6% citrus growers sold their produce to different buyers instead of
selling to only one buyer.

Age (years) 1.0–30 31–60 61–90

Percent (%) 6.3 76.2 17.5

Education Illiterate Undergraduate Graduate Postgraduate

Percent (%) 3.2 74.6 15.1 7.1

Experience (years) ≤10 11–25 >26

Percent (%) 21.4 40.5 38.1

Area under citrus 1.0–20 20.1–60 60.1–160

(acres)

Percent (%) 53.2 30.2 16.7

Sell orchard to Pre-harvest Commission agent/ Processing factory/ Different buyers

contractor wholesaler exporter

Percent (%) 46% 30% 18% 6%

Table 4. Descriptive statistics for citrus growers.

50 Agricultural Value Chain

Size of contractors Less than $0.1 million $0.1–$0.5 million More than $0.5 million
Percent (%) 20% 70% 10%

Experience Less than 10 years 10–20 years More than 20 years

Percent (%) 20% 45% 35%

Sell fruit to Commission agent/ Exporter Different buyers

wholesaler

Percent (%) 50% 40% 10%

Education status Illiterate Educated to minimum level

Percent (%) 35% 65%

Table 5. Citrus pre-harvest contractors general information.

3.2.2. Citrus pre-harvest contractors

A total of 99 pre-harvest contractors were interviewed for the study. About 70% pre-harvest
contractors had US$0.1–$0.5 million business volume and were considered medium-sized
contractors. Pre-harvest contractors either used their own money to buy the orchards or acted
as an agent on the behalf of the other actors of the citrus supply chain, for example, commis-
sion agents, wholesalers, processors or exporters. The results revealed that majority of the
pre-harvest contractors (80% of the respondents) had more than 10 years of experience, as
shown in Table 5. However, small pre-harvest contractors had less than 10 years of experience
due to the fact that they work seasonally in the market and were not a regular player of citrus
supply chain in the country.

Majority of the citrus growers were well educated and experienced businessmen, whereas,
only 35% pre-harvest contractors were illiterate (not even 2 years at school) but they work
with either well-educated business partners or family members (brother, son).

About 50% of the pre-harvest contractors sold their fruit to commission agents or wholesalers,
as shown in Table 5. Price is paid on commission basis at a rate of 7–8% of the total sale price
of the produce. Usually, there was 1-year contract (written or verbal) between pre-harvest
contractors and commission agents or wholesalers to supply a certain quantity of fruit under
the contract on a fix price. Nearly 40% of the pre-harvest contractors sold their fruit directly
to exporters. Usually, price was announced by processors and exporter association; however,
in some cases it was negotiable.

Citrus growers sold their orchards in advance to contractors for different reasons. Firstly, cit-
rus growers in Pakistan were not financially sound enough to market their produce. Secondly,
responsibility of looking after the orchard is shared between farmers and pre-harvest contrac-
tors, and lessen farmer’s financial burden for fertiliser and pesticides which is now provided
by the pre-harvest contractors. On the other hand, pre-harvest contractor took control over
 Citrus Value Chain(s): A Survey of Pakistan Citrus Industry 51
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the produce and bargaining power for selling the fruit in the market. One of the citrus grow-
ers commented on pre-harvest sale of his orchard:
‘It is always a problem for me to buy inputs once my orchard starts flowering. Pre-harvest contractor,
on one hand, purchase my orchard well in time and on the other hand, help in providing me the required
inputs which otherwise I cannot afford’.

3.2.2.1. Types of contractors

There are different types of citrus orchard contractors operating in the country. They can be
divided into three broad categories on the basis of their purchasing power of citrus fruit for
trading purposes.

i) Small-sized contractors
Small-sized contractors with buying power less than US$0.1 million (1 US dollar = 85
PKR) are called ‘Den Daar’ and usually work domestically in the local markets only. Being
a small-scale operator and limited finances, they work in groups and buy an orchard
on shared basis. They sell fruit on daily basis in the local market where they are called
‘Phariwala’ in the local language or sometimes they sell directly to a wholesaler or com-
mission agent.

ii) Medium-sized contractors

Medium-sized contractors buy fruit that value between US$0.1 to US$0.5 million. They
work for commission agents/wholesalers/exporters and usually do not invest their own
money. Sometimes they buy the orchard with their own money but usually they contract
with the citrus grower at the pre-harvest stage by estimating the future production from
the orchard and also make a future contract with the commission agents/wholesalers/
exporters. This way they play an intermediary role between two parties without invest-
ing their own finances. Commission agents/wholesalers/exporters are then responsible to
pay all the money to the contractor in the form of partial payments. Initially, commission
agents/wholesalers/exporters pay one-fourth of the total orchard value under the contract
to the contractor who pays to the citrus grower as an advance. Usually, this whole agree-
ment is not documented; therefore, there are chances of fraudulent through this whole
transaction. One of the possibilities is that citrus grower might refuse to sell at the harvest
stage due to high price offered by other contractors or buyers.
iii) Large-sized contractors
The large-sized contractors are few in number and usually buy orchards from medium-
and large-sized citrus growers. They typically have strong finances with purchasing
power greater than US$0.5M. Sometimes, they work for commission agents/wholesalers/
exporters and buy orchards/fruit for them. They usually sell fruit to exporters and in dif-
ferent local or inter-provincial markets depending upon the price. However, if the prices
are low, they can store fruit in the cold storages (privately owned) for some time and sell
in the market when price increases.
52 Agricultural Value Chain

3.2.3. Descriptions of the other players involved in Pakistan citrus value chains

i) Commission agents

The commission agent (‘Arhti’ in local language) purchases citrus fruit from producers
and/or pre-harvest contractors and sells it to wholesalers /retailers/exporters. Occasionally,
the commission agents work as a wholesaler and sell directly to retailers or exporters. In
some cases, citrus growers and contractors may use commission agents as a selling agent
to sell in the local and far distant markets. Commission agents usually do not take the title
or possession of the commodity (citrus fruit) and act as a link between buyer and seller
and facilitate the whole transaction and receive a fixed amount as a commission for their
services.
Nearly all the commission agents provide credit to citrus growers and contractors with
the condition that they would sell their fruit to them. Usually, contractors do not receive
any payments until the end of contracting period. At the end of contracting season, con-
tractor is paid based on the agreement between the parties.

ii) Wholesalers
Wholesalers buy fruit in large quantities from commission agents and pre-harvest con-
tractors or directly from the citrus growers. Contrary to commission agents, wholesalers
take the possession of the commodity and perform different value-added functions like
grading, sorting, washing, cleaning before selling to the local market, inter-provincial
wholesalers, retailers and consumers. Usually, wholesalers extend credit to pre-harvest
contractors who purchase fruit for them from the citrus growers. In that case, the pre-
harvest contractors work as a commission agent for that particular wholesaler.
iii) Retailers

In Pakistan, citrus fruit is a table fruit and consumed fresh. It is primarily sold by fruit
shops, stallholders and street hawkers (using animal driven carts). The fruit shops are
situated mostly in consumer markets, near residential areas, along roadsides. It is very
convenient to buy fruit from these shops at reasonable prices; however, a large quan-
tity of citrus fruit is also sold by street hawkers on bicycles or animal-driven carts all
around in the cities and country side. Though they sell only a small amount of fruit, yet
they are necessary part of the whole citrus value chain in delivering the product to end
consumers. These retailers also known as ‘Phariwala’ buy fruit directly from small-sized
pre-harvest contractors.

4. Opportunities and challenges for Pakistan citrus industry

Citrus growers are becoming more market oriented; therefore, by increasing the market-
led opportunities like crop management, improving quality of the fruit, adding more value
through processing will develop and expand Pakistan citrus industry. With newly developed
 Citrus Value Chain(s): A Survey of Pakistan Citrus Industry 53
http://dx.doi.org/10.5772/intechopen.70161

infrastructure and transportation systems, domestic as well as international supply chain of

citrus industry will be better established towards becoming more efficient and reducing the
overall waste.
The exports of citrus fruit from the country are only 8–12% of the total production; therefore,
there lies a great opportunity and potential in the export of citrus fruit. By developing the
quality management practices, improving supply chains, establishing certification scheme
and reducing post-harvest losses, the exports can be increased particularly in the European
countries, Middle East, South East Asia, China and Central Asia markets.

The challenges that Pakistan citrus industry is facing include, but not limited to, agro-ecological
climate with extreme summer temperatures, frost in winter and water scarcity/shortage.
Inefficient production, irrigation methods, post-harvest losses, low grade fruit, poor disease
control, lack of fertilizers/manures in the soil and inefficient supply chains are the other major
challenges in citrus value chains. To overcome these challenges, citrus grower association
(private entity owned by growers) is working closely with government departments and
institutions to provide required inputs and expertise to growers that can raise the quantity
and quality of fruit.
The lack of skilled and trained labour for fruit picking poses another marketing constraint,
which in turn affects the quality of picked fruit. Even the lack of seasonal or temporary labour
for fruit picking is also a challenge. The efforts are being made by extension workers, medium
and large citrus growers to provide necessary training and accommodation facilities to the
labour. This will not only decrease the fruit damage during picking but also ensure the avail-
ability of the labour when required.
Good agricultural practices (GAPs) and sanitary phytosanitary (SPS) measures are required
for markets such as Europe, the USA and Oceania. However, efforts are being made, both
publically and privately, to uplift the quality of citrus fruit in order to get required certifica-
tion for export.

5. Conclusion

The agro-food value chain system in Pakistan is very diverse and nearly all citrus value chains
are dominated by citrus growers, pre-harvest contractors and exporters of citrus fruit with the
involvement of other value chain members like commission agents, wholesalers, and retail-
ers. It was found that citrus value chains can be classified into two major types : unprocessed
citrus value chain for local markets and processed citrus value chains for export and juice
extraction. In Pakistan, the majority of citrus orchards are less than a hectare; however, the
average size of citrus orchard is almost 20 hectare. In the past, mostly citrus growers sold
their fruit or orchard to pre-harvest contractors and only a small number of the growers were
involved in direct marketing of their produce in the markets. In recent times, due to the avail-
ability of market information, citrus growers are becoming more market oriented and shifting
away from the customary practice of selling the orchard production before harvesting and
54 Agricultural Value Chain

are directly marketing their produce in national as well as in international markets. There are
few challenges and opportunities that can be addressed prudently to make Pakistan citrus
industry more flourishing and prosperous. The biggest opportunity lies in the export horizon,
which if tapped can be a good source of export revenue.

Appendix A: Export of citrus (KINO) fruit, country wise

Commodity/Country 2013–2014

Quantity Value
‘000’ tonnes Thousand rupees
Kino, fresh 353.72 15,665,315

Afghanistan 112.87 4,514,597

Angola 0.09 3593

Armenia 0.00 ––

Azerbaijan 0.00 121

Bahrain 1.64 57,762

Bangladesh 1.87 70,369

Cambodia or Kampuchea 0.27 10,368

Canada 0.73 39,012

Georgia 1.80 121,427

Hong Kong (S.A. Re. Chi) 0.19 6587

Indonesia 17.34 864,293

Iran (Islamic Republic.) 0.00 –

Iraq 0.00 –

Italy 0.00 –

Kazakhstan 0.35 14153

Kuwait 12.16 464,032

Lithuania 0.42 29,000

Malaysia 1.01 52,365

Maldives 0.00 –

Mauritius 1.45 75,519

Netherlands 0.05 2174

Norway 0.08 3419

Oman 5.79 179,048

Philippines 10.15 431,834

 Citrus Value Chain(s): A Survey of Pakistan Citrus Industry 55
http://dx.doi.org/10.5772/intechopen.70161

Commodity/Country 2013–2014

Quantity Value
‘000’ tonnes Thousand rupees
Poland 0.00 ––

Qatar 1.77 79,950

Reunion 0.18 7321

Romania 0.07 4538

Russian Federation 72.00 436,2011

Saudi Arabia 12.63 421,972

Seychelles 0.08 5388

Singapore 2.11 87,588

Sri Lanka 4.65 157,871

Sweden 0.05 2571

Tajikistan 0.04 1172

Ukraine 21.70 1,256,946

United Arab Emirates 67.78 2,234,566

United Kingdom 1.99 86,283

Uzbekistan 0.07 2931

Viet Nam 0.34 14,533

Source: [17]

Author details

Muhammad Imran Siddique* and Elena Garnevska

*Address all correspondence to: m.i.siddique@massey.ac.nz
Massey University, Palmerston North, New Zealand

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