The Fruit Juice Council, in a letter to PML-N President and former Prime Minister Mian Muhammad Nawaz Sharif, has urgently requested his intervention to advise the federal government to recommend the abolishment of the 20% Federal Excise Duty (+18% GST) on packaged fruit juices in the forthcoming Federal Budget 2024-25. This tax is not only directly impacting the rural economy of fruit farmers in Pakistan, especially Punjab, but also threatening the USD 100 million export potential till 2028 and the entire value chain comprising pulping units and fruit juice manufacturers.

“We are appealing to PML-N leadership, Mian Muhammad Nawaz Sharif Sahib and Chief Minister Punjab Maryam Nawaz Sahiba, to recommend the abolishment of 20% FED to protect Punjab’s agricultural sector,” said FJC representative Aatekah Mir Khan.

“Fruit farmers in Punjab are struggling due to low demand causing fruit wastage, and pulping units are doomed to shut, as the industry has crashed,” she said. “With the sudden imposition of 20% FED on juices (in addition to 18% GST) in the Annual Budget 2023-24, industry volumes plunged by 41%,” she added.

The Fruit Juice Council, which includes industry players CitroPak, Haleeb, Nestlé, PepsiCo, Popular, Shezan and TetraPak, has been a pillar of the industry, providing safe and healthy fruit-based juices to consumers. The FJC members are fully compliant with federal and provincial food authorities, demonstrating their commitment to quality and safety. With an annual turnover of about PKR 60 billion in 2022 and employing more than 10,000 employees, the FJC is a significant contributor to the economy.

“A myopic approach to revenue collection is akin to killing the local juice, pulping and packaging industry and the associated fruit farmers. Eventually, these farmers will be pushed under the poverty line, increasing the burden on the government,” she said.

While the government may have seen a temporary increase in revenue due to the high taxation regime on juices in FY 2023-24, this trend needs to be revised. The drastic decline in the fruit juice industry’s volumes will lead to a continuous fall in revenue in the coming years. However, by abolishing the FED, the government can expect a steady increase in revenue from Year 2, providing a more stable and long-term financial benefit.

The formal packaged juice industry protects farmers’ livelihoods by procuring fruits. Mangoes, kinnows, and guava are procured mainly from local farmers in Sargodha, Multan, and Rahim Yar Khan for conversion into pulp. In contrast, peaches and apples are procured from Skardu and Hunza, GB, and Swat, KP.

Previously, fruit farmers and the packaged juice industry also appealed to Prime Minister Muhammad Shehbaz Sharif and Finance Minister Muhammad Aurangzeb.