Harvest on Hold: 20% FED Burden Draining Pakistan’s Fruit Juice Industry

Pakistan’s fruit farmers and pulp industry are facing a serious challenge as procurement by juice and nectar companies has sharply declined, jeopardizing the entire fruit value chain.

Traditionally, juice manufacturers procured over 100,000 tonnes of fruit annually, often buying surplus or export-grade fruit directly from growers. These advanced contracts provided farmers with stable income and helped reduce wastage.

However, this season, many growers report a noticeable drop in industry engagement.

“Usually, companies approach us well before harvest, but this year the inquiries have been few and far between,” says Mubashar Durrani, a mango grower from Multan.

The core issue behind this downturn is the steep 20% Federal Excise Duty (FED), imposed on top of an 18% GST. Since the FED hike in 2023-24, sales in the formal juice sector have fallen by nearly half, forcing companies to hold inventory and drastically cut back on new fruit purchases.

“With existing stock piling up and weaker sales, we expect a significant reduction in buying mangoes, peaches, and apples this season,” explains representative of a juice brand.

This reduction hits farmers hard. Many are already struggling due to limited exports caused by trade route disruptions. Lower procurement means fruit prices are dropping, squeezing growers’ incomes and threatening future orchard investments.

“If this trend continues, we may have to stop planting new trees—or even uproot existing ones just to salvage some value,” warns Ebadur Rehman, a guava grower from Sheikhupura.

The tax policy has also encouraged the rise of unregulated, cheaper products that avoid taxes and food safety standards, further hurting the formal industry.

“The formal juice sector pays heavy taxes but faces unfair competition from undocumented producers,” says a Fruit Juice Council spokesperson. “This discourages investment and stalls industry growth.”

Globally, many countries offer preferential tax rates for fruit juices. For example, India applies only 12% GST with no excise duty on pure fruit juices, making Pakistan’s combined 38% tax rate exceptionally high.

The formal juice industry has significant export potential, but without a healthy domestic market and supportive policies, that opportunity remains out of reach.

“The government should reduce the FED and support the formal sector, which protects farmers, reduces wastage, and creates jobs,” the spokesperson adds.

Until then, fruit farmers and pulp processors face mounting uncertainty as procurement declines, threatening one of Pakistan’s most promising agricultural value chains.