A term paper on

Issues in Supply Chain Management

of
Mango & Mango Products in Pakistan

Submitted to:
Prof. Dr. Khalid Mustafa
Course instructor
“International Marketing”

Submitted by:
Mr. Zahid Ali
Regd. No. 88-ag-1357
MBA-Marketing & Agribusiness
Leading to Ph.D.

Department of Marketing & Agribusiness

University of Agriculture, Faisalabad

Issues in Supply Chain Management
of Mango & Mango Products in
Pakistan
Abstract: The objective of the article is to explore the mango supply chain in Pakistan with a
focus on the potential problems that are affecting the overall efficiency of the chain. The article
started with a contextual overview giving a sufficient understanding of the significance of the
mango and mango industry in Pakistan. The following sections discussed the domestic and export
markets of mangoes, Supply chain participants, structures and potential constraints. The closing
sections are dedicated to presenting the important impediments and possible remedies.

1. Mango: the Context & Significance

1.1 Overview

Pakistan is blessed with vast agricultural resources on account of its fertile land, well-
irrigated plains, extremes of weather, and centuries old tradition of farming. It is
because of its central importance in the economy that the Government has identified
agriculture as one of the four major drivers of growth. According to an estimate, the
total value of agriculture crops at current factor cost is estimated at Rs.550.268 billion,
divided into major crops Rs.407.623 billion and minor crops including horticulture
Rs.142.645 billion. The horticulture crops (fruits, vegetables & condiments) alone
contribute Rs.116.645 billion, equivalent to US$ 2 billion, which is 26% of the total
value of all crops and 81.8% of the total value of minor crops.

Pakistan annually produces about 12.0 million tons of fruits and vegetables. Citrus
fruit is leading in term of production followed by mango, dates and guava. Potato and
onion are leading among vegetables and condiments. Fruit and vegetable export trade

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in Pakistan amounts to US$ 134 million (2003/04), of which fruits account for US$
102.7 million (76.6%), vegetables US$ 25.7 million (19.2%) and fruit & vegetable
preparations (mostly juices) US$ 5.6 million (4.2%). Their share in Pakistan’s total
exports is slightly over one percent.
Pakistan has unique but unsophisticated network of up to six or seven intermediaries
between the primary source (producer and growers) and the end user. Because of the
presence of so many layers and the lack of adequate marketing infrastructure facilities,
30 to 40% of the perishable produce gets spoiled before reaching the ultimate
consumer.

Mango is one of the most important tropical fruits, which has experienced tremendous
developments in recent years. One of the main reasons is shift from air to sea freight
with bulk deliveries at competitive prices. Pakistan is the 5th largest producer and the
3rd largest exporter of mango in the world. Its soil and climatic conditions enable
production and market supplies of good quality fresh mango over a period of about 5
to 6 months. Pakistani mangoes therefore enjoy a prominent position in the
international market.

1.2 Mango Production & Mango Industry in Pakistan

Mango (Mangifera indica), ‘the king of fruits’, is native to Southern Asia, especially
Burma and Eastern India. Mango is considered as the fruit of excellence and thus has a
prominent position among the commercial fruits grown in Pakistan.

Pakistan is the world’s fifth largest mango producer with an annual crop of around one
million tones. It exports about 80 000 tones, mainly to the Middle East and the UK.
Less than 3 per cent of the crop is used for processing, mostly into mango pulp.
Production is centered in the regions of the Punjab and the Sindh. Harvest begins in
the Sindh in late May and finishes in the Punjab in late August. The principal varieties
are Sindhri, which dominates Sindh production, and Chaunsa, which dominates
Punjab production. Pakistan mangoes are sweet, aromatic, yellow skinned and soft.
Mango farms range in size from less than 2ha to more than 400ha.

Production of mangoes in Pakistan has exhibited an overall increasing trend over the
years as is evident from the data presented in Table 1:

Table 1: Production of Mangoes in Pakistan

Year Production (000 tons)

1999/00 937.7
2000/01 989.8
2001/02 1037.1
2002/03 1034.6

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 2003/04 1056.0
2005/06 (Provisional)* 1200.0
Source: Fruit, Vegetables and Condiments Statistics of Pakistan, 2003/04, Ministry of Food,
Agriculture & Livestock, Islamabad
* Based on key informants (farmers & traders) opinion survey
Punjab and Sindh are main mango producing provinces. Province-wise production
(Table 2) shows that Punjab leads with 67.0% share in mango production in the
country followed by Singh with 32.1%, Balochistan 0.6% and NWFP 0.3%.

Table 2: Province-wise Production of Mangoes in Pakistan, 2003/4

Province Production (Tons) Percent

Punjab 707,799 67.0
Sindh 338,415 32.1
Balochistan 6,625 0.6
NWFP 3,148 0.3
Source: Fruit, Vegetables and Condiments Statistics of Pakistan, 2003/04, Ministry of Food,
Agriculture & Livestock, Islamabad

Production, post-harvest and marketing systems are poorly developed and returns are
distributed quite unevenly, favoring middlemen. Fruit quality is generally poor and 30
to 40 per cent of fruit is wasted in the harvest-to-market system. Modern infrastructure
for cool storage, grading, post-harvest treatment and transport is almost non-existent.
Periodic gluts occur on domestic markets and with no capacity to store fruit, heavy
discounting of retail prices is common. The export market faces similar challenges.
Pakistan mangoes have a reputation as being cheap and of poor quality, and exporters
have a tendency to dump fruit in markets such as the UAE. In general, there is little
evidence of a value-oriented approach to supply chain management and there are
concerns that current returns for growers are unviable. Compounding this situation,
mango tree dieback, decline and poor tree management practices are beginning to
further reduce productivity.

Most farms in Pakistan have a mix of enterprises with very few producing only
mangoes. Mango plantations (called ‘gardens’) range in size from small 2 hectare
holdings up to 400 hectares. The industry has a forward contract system where most
farmers sell their crop at flowering or soon after to contractors acting on behalf of
commission agents. Thus very few mango farmers in Pakistan are responsible for
selling or marketing their own crop.

The industry faces a number of major challenges, particularly in post-harvest handling

systems, where fruit losses of 30 to 40 per cent are common and overall quality is
dramatically impacted. There is no cool chain management and with ambient
temperatures often around 500C during harvest, fruit has a very short shelf life.

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Periodic gluts occur on domestic markets and with no capacity to store fruit, heavy
discounting of retail prices is common. The export market is facing similar challenges.
Pakistan mangoes have a reputation as being cheap and of poor quality, and exporters
have a tendency to dump fruit in markets such as the UAE. Sales of Pakistan fruit in
many export markets are to the local expatriate (Pakistani/Indian) communities and it
is not clear if substantial inroads are being made in the wider global supermarket trade.

In general, there is little evidence of a value-oriented approach to supply chain

management and the industry is concerned that current levels of returns for growers
are making the crop unviable. Compounding this situation, poor mango tree
management practices further reduce farmers’ returns.

1.3 World Mango Production: Some Important Facts

Approximately 50% of all tropical fruits produced worldwide are mangos. As there
has been increasing demand for mangos throughout the world, especially in the United
States of America and in Europe, production has been increasing as well over the past
decade (Department of Agriculture, Germany 1996: 2).

The Food and Agriculture Organization of the United Nations estimates worldwide
production of mangos at more than 23 million tons in 2001. With 10 million tons India
accounts for almost half of the world production of mangos, followed by China (3
million tons), Mexico (1.5 million tons) and Thailand (1.35 million tons) (FAO
Statistics, 2002). In fact, the aggregated production of ten countries is responsible for
roughly 80% of the entire world mango production. And most mango producing
countries still have potential to increase their production. This is especially true for
such countries as China, Indonesia, and Mexico. (Department of Agriculture,
Germany 1996: 2)

One noticeable fact is that basically all of the mango producing countries (more than
99%) are either developing or emerging countries (Department of Agriculture, 1996:
2). Industrialized countries only have very limited mango production. Europe is not
very active in the production of mangos. The same applies to the United States of
America, which only have marginal mango production (under 3,000 tons in 1999) in
Florida and Hawaii (FAO Statistics, 2002). The Australian mango industry is highly
innovative and based upon research. The same applies to Israel. Both countries
consider mangos a serious export industry and spend a lot of money for research and
development of new and better varieties. (Crane et al, 1997: 203-204)

All large mango producing countries have in common that the vast majority of their
mangos are consumed domestically. In 1999, only 2% of all worldwide produced
mangos were exported. The remaining 98% remained with consumers in the
producing countries (own calculations based on FAO Statistics, 2002). Processed
mangos only account for very small percentages of consumed mangos (in the range of

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one and two percent). Most processing is done by the farmers and their families for
their own consumption or for selling it on local retail markets. Only a small part is
commercial processing and intended for international trade. (Department of
Agriculture, Germany 1996: 15-16)
1.4 Mango Harvest Season: Pakistan & World

Pakistan produces quite a few mango varieties. They differ in harvesting time and also
in their physiological characteristics especially size, shape, colour, sugar level, &
acidity etc. Only a few varieties offer volumes and are thus important from export
point of view. Pakistan mango harvest season overlaps with many other countries.

Table 3: Mango Maturity Days/Indicative Harvest Periods in Pakistan

Variety Day of full bloom Earliest date for harvest Days to harvest
Sindhri Mid-February Early June 110
Langra Mid-February Early June 110
Doshehri Mid-January Late May 118
Bombay Green Mid-January Mid May 113
Chaunsa Early February Late June 150
Kali Seroli Early February Mid June 135
Bagan pali Mid February Early July 130
Swarnarika Mid March Mid July 122
Neelum Mid February Early September 201

Table 4: Mango Harvest Seasons in Main Mango Producing Countries

Country Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Pakistan ? √ √ √ √ √ ?
Philippines √ √ √ √ √
Mexico √ √ √ √ √ √ √
Madagascar √ √
Malaysia √ √ √ √
Kenya √ √ √
Jamaica √ √
Indonesia √ √
India √ √ √ √
Guatemala √ √ √ √
Egypt √ √ √
Chile √ √ √
Brazil √ √ √
Australia √ √ √
Peru √ √ √ √
Venezuela √ √ √ √

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 Source: Courtesy Trade & Transport Facilitation Project, UNCTAD

Pakistan can extend its mango season as some new varieties of mangoes can ripen as
early as mid-April and late by October. Pakistan could have a better marketing
position on the international market if adequate volumes could be supplied over
extended periods. There are thousands of varieties of mango grown in the world. The
leading varieties grown in various countries are listed in Table 5.

Table 5: Leading Mango Varieties in the World

Countries Varieties
Pakistan Sindhri & Chaunsa
India Alphonso
Mexico Tommy Atkins
Mali Amelie
Kenya Carabao
Philippines Pico
West Indies Julie
South Africa Kent
Source: Courtesy Trade & Transport Facilitation Project, UNCTAD

Sindhri like many mango varieties suffers from anthracnose, a fungal disease that
produces dark sunken spots on fruit, stems, and leaves and stem end root. Both spoil
its cosmetic appeal. Similarly Chaunsa has a problem of soft nose.

1.5 Institutional frameworks

A study of institutional frameworks has become the subject of a separate project. The
mango industry in Pakistan operates in a largely unregulated environment. The Rapid
Export Growth Strategy could provide considerable impetus to developing the mango
industry. The main supporting agency for the mango industry is the PHD&EB, which
is doing an excellent job. Opportunities exist to strengthen institutions such as the
University of Agriculture Faisalabad.

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2. Mango Export Markets and Recent Trends

2.1 Mango Exports: Pakistan

Mango is the 4th most rapidly growing trade after taro, single strength citrus juice and
cassava tapioca. The world trade in mangoes including re-exports grew almost three
times during the past decade. Current mango trade is estimated around 650,000 tons
per annum. The prominent mango exporting counties include Mexico, Brazil,
Pakistan, India, Philippines, Ecuador, Peru, South Africa & Thailand. Similarly, the
prominent mango importing countries include UAE, Saudi Arabia, Malaysia, USA,
UK, Netherlands, United Kingdom, France, Germany and Japan.

Mango is the leading exportable fruit from Pakistan after citrus. The country produces
over one million tons of mangoes of which about 60 to 70 thousand tons are being
exported. Export statistics for the past 5 years are contained in Table 6. Exports during
the past 5 years vary from 5% to 7% of the total production of mangoes in Pakistan.

Table 6: Export of Mango during the past 5 Years (1999/00-2003/04)

Year Export Volume (000 tons) Export value (000 US$)

1999/00 47.602 11,576
2000/01 53.444 17,005
2001/02 47.541 14,036
2002/03 58.844 17,626
2003/04 77.468 23,426

Source: Federal Bureau of Statistics, Government of Pakistan, Islamabad.

Gulf and Saudi Arabia are traditional import markets and thus consume the major
volume. England is the main market in Europe. Germany, France, Norway, Denmark,
Switzerland, Singapore, Malaysia and Hong Kong are other important markets.
Peoples Republic of China and Iran are likely to emerge as future prominent markets.
The regional distribution of mango exports is appended below:

Middle East/Gulf Far East Europe Others

60,761 tons 532 tons 11,440 tons 4,735 tons
(78.4%) (0.7%) (14.8%) (6.1%)

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 Table 7: Projected Mango Exports from Pakistan

Volume Value
Year
(000 tons) (000 US$)
2005/06 100 40
2006/07 110 46
2007/08 125 55
2008/09 150 70
2009/10 200 100

The export projections are based on the following assumptions:

 Compliance to sanitary & phyto-sanitary measures thru GAP
 Provision of physical infrastructure to address quarantine issues, for instance,
CA storage, vapour heat treatment, hot eater dip and irradiation facilities
 Improved shelf life through better varieties, cultural practices and
infrastructure (CA storage, Irradiation)
 Improved logistics (air & sea)
 Improved market access thru FTAs, PTAs, and MOUs etc.
 Market promotion (delegations, expositions, media)

2.2 Mango Exports: The World

Between 500 and 1,000 different varieties of mangos exist throughout the world
according to different estimates – however, only a few are traded internationally.
(Morton, 1987 and Londonfruit, 2000).

In 1999, the entire world mango trade was 576,000 tons. Mexico is the world’s largest
exporter of mangos, accounting for more than 200,000 tons (35% of global mango
exports) in 1999. Brazil and India follow, each having a share of approximately
50,000 tons or 9%, respectively. (FAO Statistics, 2002)
Mexico and other Latin American countries, mainly Brazil, Colombia, Ecuador,
Guatemala, Haiti, Venezuela, and Peru are exporting the majority of their mangos to
North America, especially to the United States of America, but also to the European
Union. In fact, Mexico is the major supplier of the United States of America and
Brazil is the major supplier of Europe (MarketAg, 2002). More than 91% (i.e. more
than 186,000 tons) of all Mexican mango export is shipped to its neighboring country
in the north (Crane et al, 1997: 207)

The total volume of Latin American mango exports in 1999 was approximately
326,000 tons, almost half of all the world’s mango exports. (Calculations based on
FAO Statistics, 2002)

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Major exporters from Africa are South Africa and Côte d’Ivoire. Their most important
markets are France and the Netherlands as well as other countries from Europe. Other
African suppliers include Kenya, Mali, Burkina Faso, Gambia, and Guinea
(MarketAg, 2002). In 1999, total fresh mango exports from the entire African
continent accumulated to more than 31,000 tons. (Calculations based on FAO
Statistics, 2002)

In the Middle East, Israel mostly produces for the European Union and regional
markets. Fresh mango exports from Arabian countries, including Israel were 10,649
tons in 1999. (Calculations based on FAO Statistics, 2002 and MarketAg, 2002)

Asia, the largest producer of mangos, exported close to 144,000 tons of fresh mangos
in 1999. With less than one fourth of world mango exports, Asia is the second most
important mango exporting region after Latin America. However, more than 4,600
tons are re-exports, especially from Hong Kong. (Calculations based on FAO
Statistics, 2002).

The most important market for India and Pakistan is the United Kingdom. Other
important mango exporters from Asia such as the Philippines, Australia, Taiwan and
Thailand predominantly ship their varieties to regional Asian markets, especially to
Japan, Singapore and Hong Kong. This is mainly due to the fact that consumers in the
Far East have been familiar with mango and mango products for thousands of years
whereas it is still a rather exotic fruit in the western hemisphere. (MarketAg, 2002)

Europe’s fresh mango exports of 64,000 tons are only intra-European re-exports. The
fresh mangos arrive in the harbors of Rotterdam, Hamburg and Antwerp and are then
distributed further among the countries in the Union. (Calculations based on FAO
Statistics, 2002 and MarketAG, 2002)

2.3 Export Market Trends

The trend in marketing agricultural produce is toward fewer and larger processors and
handlers. Farmers, too, are becoming fewer and larger, but their size and power in the
market place remain small in comparison with processor/handlers. Packing house
facilities are operating in many fruit and vegetable markets around the world. Growers
associations or cooperatives negotiate terms of trade with commercial companies.
However, most of the time growers are operating in buyers market because supply of
produce is abundant. Both growers and exporters have to keep pace with the changing
market requirements. The best chance to make a profit for the growers is to meet the
market requirements.

As most of the companies in the food-processing sector are in the small-sized category
and economies of scale are difficult to attain in storage and transportation. This

10
situation favors a service provider to whom these companies can outsource their
storage and transport functions.

The world market is continually making higher demands for presentation, greater shelf
life and uniform grading of fruit but also is requesting for more competitive
commercial conditions including prices to develop consumption.

The leading exporting countries have consolidated their position on the world market
during the last 10 years in spite of the fact that their export volume has increased 3
folds. New players like Ecuador and Ivory Coast appeared on the above list. They
were exporting almost nothing in 1991. Brazil now exports 12 times more volume
than in 1991 and Peru 14 times more while Pakistan has only increased its export
volume 4 times. The growth factor for many of these countries has been to build
efficient packinghouses and a reliable cold chain and to shift from exporting by air to
exporting by reefer containers. Pakistan has been late to follow those trends and to
invest in up-to-date modern packing facilities in order to improve quality and extend
mango shelf life which is absolutely necessary for sea-shipments.

There is generally a large price differential between good, average, and poor quality
mangoes on the domestic as well as the export markets. Customers are becoming
increasingly selective for high quality fruit. Customers are now looking to products
safe to eat and less chemical prone during pre and post-harvest operations.

Due to poor post-harvest handling and inadequate research to study behavior in

controlled reefer atmosphere, Pakistan mangoes have limited shelf life. This result in
mangoes being air lifted but air cargo is expensive and has a limited capacity.

Improvement in sea cargo handling has encouraged export by sea. Therefore, export to
import markets in close proximity like Gulf and Saudi Arabia has almost shifted from
air to sea. Efforts are underway to extend this facility to distant markets as well.
However, so far exports to distant markets including Europe & Far East are preferred
by air. The estimated export distribution by mode of shipment is as follows:

Sectors Air Sea

Reefer Non-Reefer
Middle East 40% 30% 30%
Far East 100% - -
Europe 100% - -
Far East 100% - -

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2.3.1 Consumer Acceptance of Mango in International Markets

a) Size
The world trend today is towards export of mangoes weighing 400/600 grams. In the
export market 350-600g mangoes are marketed but gradually the weight can be
increased to 450/600 gm. Mangoes of 300 g are also exported but fetch a lower price.
Mangoes of more than 650 grams to 2000 grams are also available but their demand is
very small. Pakistan lacks suitable varieties, with Sindhri weighing 300 g and 60% in
that size. Chaunsa is the best 300g. Our two best varieties are going to have tough
competition from Florida red blush mangoes from western hemisphere and African the
United Kingdom and Europe.
Today good quality mangoes within the acceptable sizes are available from new
selections and, with excellent taste and high pulp to seed ratio. In many varieties, the
seed is less than 10% of the pulp as skin with seed does not exceed 20-25%.
Consumers in South-East Asia and South Asia prefer sweeter mangoes but consumers
in Europe like mangoes with less sweetness but still tasty. But South East Asia has its
own mango industry that is undergoing gradual change under influenced consultancy
by Australia.

b) Marketing Aspects
The Europeans get mangoes from many parts of the world like: Pakistan, Peru, India,
Kenya, Mexico, South Africa, Puerto Rico, Venezuela, Jamaica, Ivory Coast, Thailand
and Australia. European prefer mango with red blush. They have a limited knowledge
of mangoes with yellow color even though they may be excellent quality. United
Kingdom imports the greatest number than any other European nation. The Asian and
Indian population living in the UK consumes good quality of the fruit there.

Most developed countries importing mangoes get a regular supply the year round
according to the mango season in the growing area. Since most mango seasons are
rather shot, mostly around 3 months, importers selling mangoes have to organize
supply over the year from several exporting countries. As their customers require a
consistent and regular quality, the task is not easy.

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3. Mango Supply Chain in Pakistan
There are many participants of existing mango supply chain in Pakistan. Domestic
retailers include street hawkers, fruit and vegetable shops, supermarkets, roadside
stalls and food service outlets. Most mangoes in Pakistan are sold by street hawkers,
who purchase their daily requirements from local wholesale markets. Specialist fruit
and vegetable shops are uncommon, but are found in larger cities. Very few
supermarkets operate in Pakistan but multinationals are expected to open in 2-3 years.
Roadside stalls in mango production areas sell fourth or reject grade fruit at low
prices. Food service outlets include better quality hotels, which may include mangoes
in fruit baskets in guests’ rooms, and restaurants that serve mangoes in season.

Domestic chains are fragmented & involve numerous stakeholders. Most chain
activities are controlled by commission agents, who provide finance to the contractors
and determine the scheduling and flow of fruit from the contractor to the wholesale
market.

The major export destinations for Pakistan mangoes are the Middle East, the U.K. and
Europe. The majority of exports are consumed by expatriate Pakistanis and other
Asian communities living abroad. In export markets, Pakistani mangoes have a
reputation as low priced, of low post-harvest quality, yet with inherently good eating
properties.

3.1 Pakistan’s Domestic Market for Mangoes

Among Pakistan’s estimated population of 162 million (July 2005) there is a wide
discrepancy in income levels, with around 35% of the population said to be living
below the poverty line.

Locally produced mangoes are the main fruit eaten between June and September.
There is little infrastructure, little knowledge about handling of mangoes and very
limited cool storage. The majority of mangoes are therefore retailed in poor quality
and with a short shelf life.

3.1.1 Types of Retailers and Related Problems

Street vendors/hawkers
Street vendors are by far the major source of fruit and vegetables for households in
Pakistan. Street vendors purchase product daily from wholesale markets and have little
storage space and no cool room facilities. Sale of fruit and vegetables is from mobile
carts or street stands mostly shaded by umbrellas or tarpaulins. The lack of facilities
and storage space means that fruit and vegetables must be purchased daily and sold by

13
the end of the day. At the start of the day the price of mangoes starts high at around
30Rp/kg and as the day progresses fruit is discounted, perhaps selling for as little as
5Rp/kg by the end of the day.

As there is little differentiation of mangoes at wholesale according to quality, street

vendors will purchase at a price and then re-grade according to customer requirements.
Street vendors who service higher income areas try to purchase better quality mangoes
if they are available.

Fruit and vegetable shops

There are very few fruit and vegetable shops, mainly in larger cities. Again purchase is
determined by what is available in the market. Storage area, while still minimal,
allows for purchase of larger quantities. Some are air-conditioned which allows some
cooling for fruit and vegetables.

Roadside stalls
Fourth or reject grade mangoes are sold by roadside stalls usually close to or
associated with mango orchards. These mangoes are mainly brought by local people
who are prepared to take the lowest quality mangoes at the lowest price.

Food service
It is common practice for better quality hotels to provide mangoes as part of fruit
baskets in guests’ rooms. Most restaurants serve fresh mangoes in season.

Supermarket chains
Major retail chains such as Metro and Makro are looking to enter the Pakistan market
within the next two years. The implications for the mango industry will be the
necessity to provide a product to quality specifications set down by the supermarkets.

There will also be a need for product traceability and HACCP to ensure mangoes meet
food safety standards. Other multinational companies (South African) are also looking
to source Pakistan mangoes for supply to multi national supermarkets. This would also
require quality standard, food safety and traceability adherence. Additionally, as
Pakistan phases out tariffs on imported fruit in next few years, local exporters see this
as an opportunity to diversify their business to include fruit imports – Philippines
mangoes are already imported.

Specialty fruit and vegetable retailers

In competition with supermarket chains, some fruit and vegetable entrepreneurs are
looking to set up high quality fruit and vegetable retail stores in wealthier
socioeconomic areas. These stores will also require high quality, safe produce,
whether imported or produced locally.

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3.1.2 Mango Processing

Currently approximately 3 per cent of mangoes are processed into value added
products such as pulp for use in drinks and ice cream, canned mangoes and dried
mangoes. Three processors were visited, producing 1 000 to 5 000 tones of pulp
annually. Pulp was held in 200-250 liter drums in cold storage. One processor had an
aseptic UHT line producing 250 liter bag-in-drum mango pulps to export standards.
The same processor was developing a canned mango slice product for the domestic
market.

Mangoes are generally purchased from the wholesale market at normal wholesale
prices. No quality standards are communicated to potential suppliers; mangoes are
purchased mature green and ripened using calcium carbide on the processor’s
premises. Fruit is then graded for processing. Bruised, rotten or un-ripened fruit are
removed. After processing, skins are discarded and seeds supplied to the nursery
industry.

Although its inherent quality is suitable and supply is available, very little processed
mango is exported from Pakistan, mainly due to competition from a more organized
mango industry in India.

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3.2 The Pakistan’s Export Market for Mangoes

3.2.1 Overview
Pakistan currently exports 7 to 10 per cent of its total crop, in 2004 equating to 77 400
tones with a total value of USD23.4M. This had grown from 47 600 tones in 2000
with a total value of USD11.6M (Fig 1).

Whilst volumes have grown over the past five seasons the returns per kilogram have
not, remaining relatively static at around USD0.30 per kg, giving Pakistan mangoes
the lowest return per kilogram of any major mango exporter in the world (Table 3.1).

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Exports are heavily focused on Middle East markets, particularly Dubai, Saudi Arabia
and Oman, largely due to Pakistan’s close proximity. As the supplier of some 63
percent of total exports to the region, Pakistan plays a dominant role.

It is interesting to note (Table 3.2) that Pakistan mangoes are receiving very low prices
in two major markets that are generally considered higher priced markets, the EU and
the Middle East. This not only emphasizes the impact of Pakistan’s present low
quality production and marketing systems, but also the potential returns from
improving these systems.

3.2.2 Export Market characteristics

Europe
The UK is by far the largest importer of Pakistan mangoes in the EU, and almost all of
the business is conducted between Pakistani exporters and family importers in the UK.
None of the exporters interviewed indicated that they were conducting business with
any of the three main importers in the UK: Minor Wear & Willis, Utopia or

17
Weelmore. To access major supermarket chains in the UK, exporters would have to
work with one of these companies. Pakistan mangoes are therefore being sent to
wholesale markets servicing expatriate Pakistanis and Indians in the UK. This is
considered a very price sensitive segment of the UK market and on arrival fruit moves
very quickly through the chain due to its short self life. None of the exporters
interviewed were able to discuss claims or quality outturns in the UK market.

Significant exports are also being directed to continental Europe, for example to the
Rungis markets in Paris. This market is very discerning about quality and is
conservative about new or unfamiliar products (e.g. it is unfamiliar with soft yellow
mango varieties) and can discount heavily under these circumstances. It was not
possible to identify which consumer segment is purchasing Pakistan mangoes in
continental EU. There was no evidence that major EU supermarket chains were
carrying Pakistan mangoes.

Middle East
The Middle East, particularly Dubai, has become a dumping ground for Pakistan
mangoes. The sheer volumes and poor quality, particularly from open container
shipments, drives the whole market down to a point where it is very difficult for
exporters with better quality product to achieve profitable margins. The vast majority
of Pakistan mangoes entering the Middle East appear to be consumed by expatriate
workers through the wholesale market system. Like the UK, this is a price sensitive
market, accustomed to poor quality fruit at cheap prices. Only one exporter
interviewed was supplying Spinneys supermarkets and Carrefour in Dubai and was
prepared to produce to a quality standard. Future growth of the supermarket sector in
the Middle East, combined with the ban on open container shipments, could see
increased demand for higher quality mangoes in this market.

Singapore
Whilst this is not a large market for Pakistan mangoes it is a good indicator of their
performance in other markets. Almost all of the fruit is received by air, with variable
outturns. Carton collapse, shrinkage and disease breakdown appear to be the major
problems. Three trial shipments were sent by sea in 2005 and the importer was pleased
with two of them. Supermarkets are very cautious about receiving Pakistan mangoes
by sea. There appears to be widespread appreciation of the sweetness and flavor of
Pakistan mangoes in Singapore, counterbalanced by widespread agreement that
quality is not often up to standard. Mangoes are sold through wet markets as well as
supermarkets, and both importers and retailers agree that if quality were improved,
there is significant potential to expand this market.

Emerging Markets
There is considerable optimism about new and emerging markets, particularly China
and Iran, which are both accessible by land. Both of these markets require fruit fly
disinfestations and suitable facilities are currently available with three Karachi

18
exporters. However, there are significant knowledge gaps as to how to apply
treatments such as hot water treatment. Eastern Europe and the ex-Soviet states are
also seen as emerging markets.

3.2.3 Modes of Transport for Export Market

The majority of mango exports from Pakistan are sent via Karachi, either by air or sea
(Table 3.3). All exports to Europe and the eastern Asian markets are by air although in
2005 three trial container shipments were sent to Singapore by sea with mixed results
(P. Koh, Freshmart Singapore, pers comm). Airlines operating freight services out of
Pakistan are PIA, Emirates and Singapore Airlines.

Sea shipments use standard 40 foot refrigerated containers, dry containers or open
containers (with sides but no roof). Vessels range from large container ships owned by
global shippers such as Maersk, to locally owned small barges. Significant changes to
the Dubai trade are being made after the 2006 season when open containers will no
longer be allowed. This may mean that open containers are diverted through ports
such as Oman.

It is believed that in the near future, exports to China, ex-soviet states and Eastern
Europe will be possible via road over the Himalayas. Trade with Iran has just opened
up with promising results from road shipment.

Transport issues
 There is limited Air space out of Pakistan during the mango season, as all
airfreight currently goes on passenger planes, and there are no dedicated cargo
flights for mangoes (consistent with experiences in other counties where the cost
of dedicated cargo flights is generally too high for mangoes). Short notice given
to exporters regarding air space availability means that they are forced to source
from nearby Karachi and Sindh markets.

 There is limited suitable lifting equipment for air pallets at Karachi Airport.

19
 Many exporters complained about the limited cool storage capacity at Karachi
airport and that loads were often left sitting on the Tarmac when ambient
temperatures could exceed 400C.

 Karachi Port is not particularly efficient and delays are common for both arrivals
and departures. Maersk indicated there were sometimes difficulties in locating
enough containers in Karachi to meet peak demands, but they believed that this
was being adequately addressed.
 Many of the small vessels sending fruit to the Middle East are slow, inefficient
and barely seaworthy, but continue to be used due to cost.
 Open containers offer no protection or temperature control.
 Many exporters have no cooling facilities and rely on reefers for cooling.
 There is limited knowledge about storage and shipping conditions and
temperatures.
 Insurance for Pakistan mango sea shipments is not available.

3.2.4 Packaging for Exports and Related Problems

Most of the exports to the Middle East are in the locally made, roughly nailed wooden
crates which are designed to hold about 10kg, but are overloaded to 13-15kg as it is
believed that this minimizes the chance of fruit moving in the crate during transport.

Fiberboard cartons are used for other export markets and some Middle Eastern
markets, their sizes ranging from 1.5kg gift packs to 9kg bulk boxes. Each exporter
appears to have a preferred packaging system (see Plate 3.1). Some were importing
cartons from the UAE. No waxed or water resistant cartons were mentioned or
observed. Design of cartons for adequate airflow was poor and carton strength was
mostly inadequate.

Issues with packaging

 Lack of consistency among exporters.
 Exports to the Middle East were mostly in rough wooden crates.
 Carton design strength and airflow is inadequate for sea freight.

20
 No moisture resistant cartons appear to be available.
 Carton collapse is a common complaint along the export supply chain.

3.2.5 The export cool chain

Currently there is no effective cool chain between the farm and the exporter, with fruit
arriving at exporters’ premises at ambient temperature. Only one exporter visited had a
forced air cooling system, a few had conventional cool rooms, some relied on reefers
for cooling, others used open containers and had no interest in cooling fruit.

Most exporters were not cooling fruit shipped by air. Maersk indicated they are able to
organize refrigerated transport to pick up fruit from growing regions if consolidation
cool rooms were available in those locations.

Issues with the cool chain

 Little cool chain infrastructure pre-shipment.
 Limited knowledge and understanding of mango cool storage requirements.
 Consignments sent at inappropriate temperatures.

As noted above, Pakistan has a reputation for poor quality cheap mangoes, particularly
in the Middle East and the UK (Plate 3.2). In other markets such as Singapore they are
considered to deliver fruit of inconsistent quality and short shelf life. However there is
wide consensus that Pakistan varieties do have excellent eating quality.

Issues with outturns

 Carton collapse.
 Short shelf life and breakdown from disease.
 Dehydration and shrivelling.
 Physical damage (bruising, crushed fruit, nail damage).
 Sap burn.
 Contamination, for example by calcium carbide residues.
 Inconsistent sizing and wide variation within the same carton.
 Pulp temperature on arrival - both extremely high and low.

21
 Inconsistent ripening.
 Overripe fruit.

3.2.6 Exporters

There is very little regulation and no accreditation of mango exporters in Pakistan.

Consequently there are many exporters undertaking various roles in the system from
specialist exporter, to exporter and commission agent, to exporter and importer, to
exporter commission agent and contractor. Apart from the general requirement to
register as a business (Sales Tax Number and National Tax Number), and the specific
requirements of destinations that require certified dis-infestation treatments, there
appear to be no other impediments to exporting.

The Pakistan government has a policy of substantially increasing export earnings and
has announced a five-pillar development strategy. Mango exporters could benefit
under this strategy by gaining preferential access to newly negotiated markets (Iran
was such a case in 2005 and China is a current example), and by benefiting from
government investment in infrastructure and capacity building
(www.commerce.gov.pk ).

Issues with exporters

 Limited knowledge of appropriate use of existing infrastructure, graders, hot
water treatment and cool rooms in relation to mangoes.
 Most exports are on consignment.
 General poor knowledge of product outturn and performance.
 No consistency of packaging among exporters.
 Limited knowledge of export market requirements.

3.2.7 Export Marketing Problems at Different Tiers

For Pakistan to be able to export to the international markets the following issues need
to be addressed:

At Wholesale Level:
 Blemishes on mango are main quality problems experienced by the wholesale-
trade (importers or agents) and or a major factor in reducing sales.
 Size preference is for medium to large sized mangoes
 Storage temperatures used by operators for unripe fruit are inconsistent.
 Temperature below 120C will cause chilling injury to many mango varieties
raised in Pakistan. Some varieties from other origin can stay at low
temperature.
 Ripe fruit un-properly refrigerated can be damaged in short run.
 Operators complain regarding over packing, lack of pre cooling and fungal
disease control.

22
  Mango is considered as a specialty item by wholesalers. A lot of them are
eager to market tropical fruits and particularly mangoes but their knowledge of
these fruits is still too limited.

At Retail Level:
 In developed countries the retailers are grouped in 3 categories: Supermarket
chains (like Tesco, Sainsbury, Carrefour, Ahold, and Wal-Mart etc), fruiters,
and street vendors.
 Supermarkets in developed countries have a market share of more than 65%.
 They don’t like to run into quality problems. The suppliers are required to
deliver good, regular and consistent quality produce and to pay attention to its
shelf life.
 Chain stores avoid mangoes for sale, unless they are sure of the quality based
on a long tem reliable experience with source of supply.
 Supermarkets prefer medium to large sized mangoes. The 5000 g size is
preferred over the 350 g, although variety like Julie at 225 g with excellent
taste is also consumed.
 Supermarkets prefer to store ripe fruit at 130C.
 All prefer mangoes packed in open top fibred board cartons rather than
polystyrene boxes.
 Mangoes are refrigerated by retailers (supermarkets and food shops) over night
too often without consideration for degree of ripening and temperature
requirement.
 Suppliers are regular but quality mangoes are not always available throughout
the year.
 There is little promotional material with retailers and only occasionally leaflets
are available through the wholesales.

At Consumers’ Level:
 Buyers for the street vendors are mostly from developing nations, familiar with
mango quality. They pick up mangoes that are slightly fermented and not fully-
developed color, but sold at low rates.
 At the food shops the income groups segment exhibits a shift to a better
income group. They avoid fruit with blemishes.
 At supermarkets, higher income groups are the buyers. Good looking fruits are
available at these supermarkets & buyers prefer yellow skin with a red blush.
 Mango sale at supermarkets is lower as compared to the food stores & fruiters.
 Consumers have a problem in distinguishing between different varieties of
mangoes or their taste.
 Familiar brand attract more buyers.
 Price wise mangoes are costly as they arrive by air. This deters buyers from
buying them when quality is not excellent.
 Tropical fruit consumption, mango is the most important, is increasing because
they now are available at affordable prices.

23
4 Components and Barriers in
. Mango Supply Chains in Pakistan
In this section, the roles of the various participants in the supply chain are described
and analysed in terms of their impact on fruit quality. Then three types of supply
chains are analysed in detail, from the point of view of four sub-systems: product,
value creation, information, and governance.

4.1 Participants, Roles, Functions, and Effects on Quality

4.1.1. Growers
Pakistan mango growers operate that range in size from less than two hectares to over
400 hectares. It was suggested that growers fall into three groups: small growers
(greatest in number) manage up to 20 hectares, medium sized growers manage 20 to
40 hectares and large growers (smallest in number) manage more than 100 hectares.
The same source suggested that 20 per cent of the growers produce 80 per cent of total
production. As noted above, mango growers in Pakistan do not usually harvest their
own crops, relying instead on contractors.

Grower practices and activities that can affect mango quality

 No tree pruning causing skin damage/rub from branches; increased disease

inoculums and post-harvest rot development; and difficulty of harvest leading to
bruising during harvesting.
 Poor pest and disease management practices leading to damage from insects
(thrips and fruit fly) and disease in the fruit (bacterial spot and post-harvest rot
development).
 Poor fertilizer and irrigation practices leading to poor fruit development and fruit
unsuitable for long term storage.

4.1.2. Contractors
The role of contractors is to ‘buy’ the crop and manage it (irrigation and pest
management) after fruit set, harvest the crop and pack it, from which point it will be
delivered to commission agents. Contractors buy crops by estimating the yield once
fruit has set and negotiating with the grower on a price per maund (40kg) for each
variety. Contractors are guided, financed and given information by commission agents
to whom they are effectively financially bound. One contractor can manage up to 400

24
hectares, but the average medium sized contractor manages 20 to 40 hectares.
Contractors employ about one laborer per hectare and larger contractors employ field
supervisors at a rate of about one supervisor per 20-30 laborers.

Contractor practices and activities that can affect mango quality

 Poor tree management practices up to harvest.
 Poor harvesting techniques – fruit is often dropped from the tree by either cutting
or hitting with a pole, causing severe bruising.
 Trees are once-over harvested, ensuring that a portion of fruit will be immature.
 After harvest fruit is often placed in piles until removed from the orchard. This
can cause bruising, heating (accelerating ripening), disease infection (Aspergillus)
and sap burn.
 Little or no de-sapping is practised, resulting in major sap burn.
 Poor grading and packing – this is usually carried out in the field or sometimes in
open sheds with earth floors. Fruit is sorted in piles then usually packed in
roughly nailed wooden crates lined with newspaper.
 Wooden crates are packed until they bulge and the lid is nailed on (called ‘belly’
packing). Damage occurs from bruising and punctures by nails in the crates.
 No cool chain practices are adopted as no facilities are available, causing short
shelf life as mangoes are harvested at up to 50oC air temperature.

4.1.3. Commission agents and wholesalers

Commission agents are the linchpin in the supply chain. They finance the operations
of the contractors, and through them, the operations of growers, especially smaller
growers. A small grower is paid in advance for his crop at fruit set. He lives off this
advance until next season, but many run out of cash before the next season starts. At
this point the commission agent again finances them in advance for the purchase of
crop inputs, effectively binding them to the agent for another season. One large
commission agent reported that he had outlaid more than USD6 million to growers
before each season’s harvest begins. Rates charged by commission agents for their
services were reported as ranging from 6 to 10 per cent, although the total margin
captured by them was reported as between 20 and 30 per cent. Commission agents
control the product and the information in the supply chain more than any other
participant. Commission agents usually operate from wholesale markets, where their
product is auctioned to wholesalers, who may then sort and re-grade fruit before
selling it (in the wholesale market) to buyers, especially street vendors.

Commission agent practices and activities that can affect mango quality
 Commission agents are the powerbrokers in the chains, requiring growers to over-
pack crates which should weigh 10kg, but typically weigh 12-15kg.
 They also request overloading of trucks so they minimize the cost of transport and
market levies (charged on a per truck basis).

25
4.1.4. Retailers
Domestic retail is dominated by street vendors who compete on price, have no
capacity to cool store fruit and manage their daily-acquired inventory by price
discounting. Specialist higher quality retail outlets are very rare, but the arrival of
multinational supermarkets in Pakistan in the near future is expected to introduce new
standards to domestic fruit retailing. Retailers try to maintain fruit quality by
purchasing only one day’s supply at a time, keeping fruit shaded and re-grading fruit
to customer requirements. The last fruit to be sold each day may achieve prices as low
as Rs5-10/kg.

4.1.5. Exporters
Less than 10 per cent of total production is exported and almost none of the crop is
grown specifically for export. Most fruit for export is sourced from commission
agents, and most is graded and packed by hand with no other post-harvest treatment.
Many exporters are also commission agents and many commission agents are also
exporters. Most exports are of low value product to Middle Eastern markets, notably
Dubai. Many importers are Pakistanis living abroad.

Exporter practices and activities that can affect mango quality include:
 Poorly developed knowledge and implementation of post-harvest practices such
as heat treatment, disease control and storage
 Poor inventory management because of poorly developed market information
systems
 Limited knowledge of markets and their individual requirements.

4.1.6. Domestic transporters

Domestic transporters play an important role in getting fruit from farm to agent, and
agent to destination market. Commission agents order and control transport, most of
which is on high-sided body trucks with a nominal load capacity of around 7 tones.
Overloading by up to 100 per cent is a feature of the system, supposedly to reduce
transport costs per unit, and market levies which are on a per truck basis.

Transport practices and activities that can affect mango quality

 Overloading of trucks – often pack 1,000 crates on a truck instead of 500 (truck
capacity) causing crushing of lower crates.
 Long times taken for loading and unloading – takes around two hours and one and
a half hours respectively, leading to shorter shelf life.
 60% of roads in Pakistan (particularly in rural areas) are unsealed and in poor
repair. Trucks have basic suspension systems leading to impact injury of fruit.
 Loads are un-refrigerated and often uncovered, leading to shorter shelf life as top
layer boxes easily overheat.
 Export transport issues are discussed in section 3.2.2.

4.1.7. Processors

26
There is a minor but growing processing industry producing mango pulp and value-
added products such as mango drinks and ice cream. The quality of processing
systems investigated varied from basic unfiltered puree kept in drums in cold storage
to aseptically packaged, bag-in-drum, UHT treated, super-filtered pulp. No data are
available on the mango processing industry in Pakistan, but it seems that less than 3
per cent of the crop is processed annually.

4.1.8. Importers (Foreign Markets)

Many importers are Pakistanis living abroad, and most exports are of cheap low
quality fruit targeted at local expatriate Pakistani communities. Importers in
Singapore indicated that they would pay higher prices for better quality fruit from
Pakistan because of its inherent attractiveness (size and sweetness) to local Chinese
and Malay consumers.

4.1.9. Consumers
Mangoes are a very important fruit to domestic consumers, who were reported as
being discerning about quality, aware of varietal differences, yet very price sensitive.
Expatriate consumers in export markets such as the Middle East and the UK are likely
to behave similarly to domestic consumers. If the industry were able to produce
reliable supplies of higher quality mangoes, there may be opportunities to target
European and other Asian consumers.

4.1.10. Government Agencies

The mango industry is supported by activities of the Pakistan Horticulture
Development and Export Board (PHDEB), a government agency set up in recognition
that there was no “single ministry or institution responsible for development at all
levels of the horticulture value chain” (PHDEB). As tariffs on imports are phased out
by the WTO, export market development activities of the PHDEB will take on added
significance. The Pakistan government has a policy to invest in infrastructure such as
better roads and port facilities.

4.2 Representative Supply Chains

4.2.1 The domestic retail supply chain

As with most horticultural products, there are numerous generic supply chains
associated with the marketing of Pakistan’s mangoes. The most important of these in
terms of volume is the supply chain that delivers to the mass domestic market for
mangoes serviced by the street vendors and small retailers throughout the country
(Figure). The values (Rs/kg) in this figure show the typical values of the fruit as it
moves along this chain. Note that these are gross values, out of which each participant
pays their operating costs. Wholesale and retail values in Figure 4.1 are from
secondary sources, i.e. not verified by the participants themselves.

27
This chain is characterized by a production base dominated by small and medium
sized farmers who make up 90 per cent of the mango growers and whose product is
sold in the wholesale markets of Lahore, Islamabad, Multan and Karachi. These
growers rely on contractors to harvest, sort and pack fruit on the farm and arrange
transport to wholesale markets. Commission agents are responsible for conducting the
sale of the fruit to wholesalers via an auction system. The chain’s activities are
controlled by the Commission Agents who provide finance to the contractors and
determine the scheduling of the flow of fruit from the contractor to the wholesale
market.

Typical domestic mango supply chain through street vendors

While interviews were conducted with growers, contractors and commission agents to
clarify their individual roles in the chain and to identify their real or perceived
impediments to the efficient operation of their supply chain, it was not possible to
conduct similar interviews with representatives of street vendors and small retailers in
the time available.

The major barrier in this supply chain

 The product subsystem: the poor quality of the product that reaches the final
consumer is the result of poor production systems coupled with inadequate
harvest and post-harvest handling, storage and transport systems.
 The communication subsystem: the absence of effective information flows within
the chain inhibits any feedback from the market apart from average price
information which is available for the major wholesale markets.
 The value subsystem: there is a wide variation in the prices quoted at the farm,
market and retail level. There is no apparent system that rewards quality, mainly
because there are no systems in place to monitor or control quality.
 Figure above is indicative only, showing average prices quoted during interviews
by the researchers.

28
 The governance subsystem: the dominant role of the commission agents may
result in vested interests preserving the status quo.

4.2.2 The Domestic Processed Product Supply Chain

Processing of mangoes is limited and focused on the production on mango pulp for
use in manufacturing drinks and ice cream. In general, processors source their raw
material through the wholesale markets where the prices paid for processing mangoes
were the same as for fruit destined for the retail market. It seems not to be possible for
processors to forward order fruit of a particular quality delivered to a particular supply
schedule. The values (Rs/kg) in this figure show the value stream of the fruit as it
moves along the chain. Note that these are gross values, out of which each participant
pays their operating costs. The processor return of Rs33/kg is the value of pulp, which
at a 60% recovery rate of pulp from fruit, represents a fruit equivalent value of
Rs20/kg.

Typical domestic mango pulp processing supply chain

The major impediments in this supply chain

 The product subsystem: the processors reported difficulty in sourcing product that
meets their specifications of quality (mature but unripened) or quantity via the
wholesale markets.
 The communication subsystem: there was very little effective flow of information
within the chain.
 The value subsystem: there appeared to be little understanding on the part of the
processors of their market or what they needed to do to develop it; the processors
claimed that demand for their product exceeded supply yet their plant utilization
rates appeared to be very low (20-25 per cent of capacity).

29
 The governance subsystem: the dependence on the wholesale markets to source
product was a weakness because of the relative unimportance of the processors to
commission agents.

4.2.3 The Export Supply Chain

The major export destinations for Pakistani mangoes are the Middle East, the UK and
Europe, and smaller quantities are going to markets such as Singapore. Most exports
are consumed by expatriate Pakistanis and others from south Asian communities
living abroad. Figures 4.3 and 4.4 show typical supply chains for mangoes air
freighted to the UK, and sea freighted to Singapore, respectively. The average value of
the product as it passes from one chain member to the next is shown in Rs/kg.

Approximately 80 per cent of mangoes for export are sourced from commission agents
in wholesale markets, with the remainder directly purchased from the larger farms
through their agents. The values (Rs/kg) in figures 4.3 and 4.4 show the value of the
fruit as it moves along the chain. Note that these are gross values, out of which each
participant pays their operating costs. All values were verified by participants. In the
UK, importer and wholesaler functions are often combined in the one firm.

Typical Pakistan -UK export supply chain for air freighted mangoes

30
 Typical Pakistan - Singapore export supply chain for sea freighted mangoes
The major impediments in export supply chains

 The product subsystem: there was no effective quality management or trace

back system available for product sourced from the wholesale markets.
 There is a lack of knowledge concerning appropriate documentation, handling,
storage, and transport systems.
 The communication subsystem: there was little evidence of effective
information flows within the chain; there was an absence of market research &
intelligence activities for existing or potential export markets.
 The value subsystem: while the inherently superior eating quality of Pakistani
mangoes was widely recognized, market development and profitability were
reported as being undermined by perception of low product quality, short shelf
life, and inconsistent & unreliable supplies.
 The governance subsystem: there was a perception that many exporters were
not interested in developing long term marketing partnerships with importers.

31
5 Proposed Commercial Linkages among
. Participants of the Mango Supply Chain
The analysis of supply chain components and impediments in the previous section
demonstrated that there is considerable potential to improve the performance of
Pakistani mango supply chains. This section builds on that analysis by examining each
level of the supply chain from grower to retailer, and each sub-system of the supply
chain, to identify a range of approaches to improving supply chain performance. The
purpose of this stage of the scoping study is to inform the content and execution of a
research and development program whose aim is to improve the low competitiveness
of Pakistan’s mango supply chains.

In discussing these options, an assumption is made that the best practice models of
supply chain management in horticultural industries, most of which reflect business
strategies of western developed economies, can help to improve the Pakistani mango
industry. It is acknowledged that being able to accommodate the distinct cultural,
economic and social settings of Pakistan will be a critical factor in determining what
value can be gained from adapting traditional supply chain management models to this
country’s specific situation.

Options to build better supply chain linkages may be identified for each type of
participant in the chain and for each sub-system of the chain.

5.1 Improvement Options for

Mango Supply Chain Participants

Growers
The analysis of impediments has shown that all growers, whether large or small, need
better access to information, specific skills training and more incentive to take
responsibility for the quality of mangoes they produce. Growers are relatively
disempowered in the supply chain and would benefit from two different types of
alliances.
Firstly, alliances among growers could provide a platform for learning and skills
development, achieving efficiencies in sourcing inputs and aggregating production
into larger lots. Secondly, better linkages with other supply chain participants such as
contractors, agents and exporters would provide a vehicle for feedback that is essential
to improving their performance.

Contractors
The performance of contractors was rated as low in terms of its impact on product
quality. Their operations are guided and financed by commission agents, to the extent

32
that contractors may have little power to voluntarily change their present practices. It
is clear that improving the commercial linkages between contractors and other chain
members would require the support and encouragement of commission agents. Group
meetings and one-on-one interviews with commission agents and contractors in
Multan, Karachi and Hyderabad identified a need to improve the performance of
contractors. Activities such as training programs, the registration of contractors and
the formation of a contractor reference panel to determine training needs were
suggested and supported by commission agents as well as contractors. These activities
would be a first step in improving the linkages between contractors and mango supply
chains because their aim would be to create more value in the chain by improving fruit
quality.

Commission agents
Commission agents hold most of the power in the supply chain, and any chain
improvement strategy would depend on their support and involvement. Interviews
with agents identified some who would be willing to become involved in projects that
address the issues of low fruit quality and high losses in the supply chain. Working
with them to improve overall supply chain performance would involve addressing the
amount of power they have in present chains as well as the share of value they capture
(see section 5.3.2 below). This will be a significant challenge.

Processors
Three specialist processors were interviewed, between them producing 1 000 to 5 000
tones of mango pulp per year. Two of them expressed concern that processors were
seen as a dumping ground for lowest quality fruit when in fact their requirement was
for sound, fully mature mangoes. A third interviewee had integrated their processing
operations with a large scale commission agent/export business and was able to access
an adequate supply of fruit for processing.

Improving commercial linkages with processors will involve education of suppliers

about processors’ needs and their ability to pay for fruit that meets those needs.

Exporters
Exporters expressed a wide range of concerns over fruit quality and the performance
of the supply chain. Some of their practices, for example shipping mangoes at 4
degrees C, and hot water dipping for less than 5 minutes expecting to control fruit fly,
had no scientific basis. A very wide range of practices was in use, each exporter doing
what they thought to be ‘the right things’.

Not surprisingly, exporters were eager to learn how to extend mango shelf life and
how to access new markets. Most expressed support for supply chain building projects
that involved all participants and some said that they would be prepared to share any
value created by such projects with other chain participants. There is a clear need for
technical information to improve exporters’ practices.

33
5.2 Improvement Options for
Mango Supply Chain Sub-systems

Modern supply chain management involves the management of four sub-systems

within the supply chain with the aim of improving the competitiveness of the firms
with the chain by improving the competitiveness of the chain as a whole.
Competitiveness may be seen as an emergent property of the supply chain as a
complex, dynamic system. Thus the interactions among the sub-systems are as
important in determining competitiveness as the features of the sub-systems
themselves. The four sub-systems revolve around product quality, value creation and
appropriation, information, and governance.

5.2.1 Product Quality Systems

Improving product quality and reducing quality-related losses in the chain has been
identified as the highest order priority. Achieving such an improvement will require a
multi-faceted strategy focused on the determinants of product quality at each stage of
the chain from grower to retailer. A critical element will be the resolution of a range of
pre-harvest crop management issues that affect fruit yield and quality. This is the
subject of a separate scoping study (SRA HORT/2005/154) whose results integrate
with those of this study.

It will be impossible to improve commercial linkages in the chain without improving

fruit quality. Results of this scoping study clearly indicate that fruit quality
improvement must be the starting point before issues of value creation, information
management and governance can be tackled. It is anticipated that achieving ‘early
wins’ in improving fruit quality will be possible, and that these will provide strong
motivation for involvement in subsequent activities by supply chain members, and
may help to ease tensions that exist among growers, contractors and commission
agents in relation to tree and crop management.

5.2.2 Value Creation and Appropriation

In general, Pakistani mango supply chains are very low on value creation, and this
value is appropriated unevenly (see supply chain maps above). Low value results from
low fruit quality and low ability to pay on most domestic markets, underdevelopment
of higher value export markets, and relatively low value added by the processing
sector. The asymmetric appropriation of value is a reflection of the asymmetry of
power in the supply chain, i.e. relatively powerful positions taken by commission
agents and exporters.

34
Options to improve the value stream need to ensure that value is coupled with quality,
with a view to creating more value and sharing it more equitably. An equitable share
of value provides the motivation for members of the supply chain to remain committed
to making the changes necessary to improve overall performance.

5.2.3 Information Systems

Results show that information flow mirrors value appropriation. Wherever critical
information is able to be withheld from other members of a chain, value is
appropriated that might otherwise flow to those other parts of the chain. Options for
improving information systems vary from industry-wide approaches, to specific
strategies for individual chains.

5.2.4 Governance

Coupled with asymmetric value appropriation and information flows, there is a

distinct concentration of power in almost every type of supply chain examined in this
study. Based on preliminary evidence, this power is generally used to ensure the
continuation of the present system. That is, those with the most power continue to use
it to ensure that they appropriate as much of the value created as possible, aided by
their ability to manage information flows. Somewhat ironically, this also explains why
information about the need to improve fruit quality does not flow to where it is can be
acted upon, in the process reducing the overall value created by the chain.

5.3 Possible Approaches

Approaches to improving supply chain linkages and performance can be applied at the
industry-wide level, at the level of participants in one part of the chain such as
growers, contractors, transport operators, etc., or at the level of a specific chain with a
specific market in mind. Activities that improve performance include training,
research, demonstrations and capacity building for supporting agencies such as
universities, extension services, promotion boards and commercial providers. The
overall benefits from any approach to supply chain improvement can be rated as a
function of the payoff from that approach combined with the degree of difficulty of
executing the approach.

Table given below summarizes the expected benefits from 12 possible approaches to
supply chain improvement. The rating in each cell is a combination of the degree of
difficulty of that approach and its expected payoff, as identified in Figure 5.1. The
number in each cell is used to identify that approach in Figure given on the next page.

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 Expected benefits from approaches to supply chain improvement

The results of this analysis show that:

a) A combination of approaches applied in a combination of ways is most likely
to provide the greatest overall benefit.
b) A high value attaches to approaches that are specific to particular supply
chains.
c) There are significant benefits from industry-wide approaches to Research, and
Capacity building among supporting agencies.

Fig: Payoff and degree of difficulty of twelve approaches to supply chain

improvements

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Jedele. et. al. 2003. An Analysis of the World Market for Mangos and its Importance for
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