LOW SUPPORT PRICE IRKS RICE GROWERS
May 31 - June 6, 2010
Pakistan being an agro-based economy has abundance of all agricultural products including food items while rice is the third largest crop after wheat and cotton.
Rice is grown in over 10 per cent of the total cropped area. Rice is highly valued cash crop and is also major export item. It accounts for 6.7 per cent in value added in agriculture and 1.6 per cent in GDP. Pakistan grows enough high quality rice to meet both domestic demand and allow for exports of around one million ton per annum.
Different varieties of rice are grown in Pakistan for example Super Basmati, Basmati PK-385, Irri-6, Irri-9 and KS-282 etc. Pakistan is primarily known for its aromatic rice (Super Basmati/Basmati PK-385). Two varieties of rice dominate the market: Basmati, which is mainly grown in Punjab and Irri, which is mainly grown in Punjab and Sindh. Basmati accounts for 2 per cent of exports and is of a higher quality than Irri. In 1987-88, the government allowed rice export also by the private sector. Before this, the Rice Export Corporation of Pakistan (RECP) was exclusively handling rice export of Pakistan.
Rice is unique among cereal grain in that the entire polished grain is eaten while other cereals are usually processed before they reach the consumer. Interests and priorities of different sectors of rice industry are different. Farmers are interested in early maturity and high yield that would give them high returns in the form of good produce and provide enough time for sowing subsequent crops including wheat. Miller's interest is high head rice recovery. Traders prefer attractive physical appearance (shape and size), whiteness and uniform grain size. This circle is a cause of concern among the stakeholders. The government needs to play the role of facilitator to help rice exporters to fetch maximum rice export.
For consumers, quality encompasses a complete range of visual, sensory and palatability criteria that include impressive appearance of raw as well as cooked rice texture in terms of stickiness/flakiness and appealing aroma.
Rice exporters told Page the private sector rice traders comprise mainly of rice dealers, sellers and growers. Their main concerns were the varieties approved for growth in the Punjab and their respective support prices prior to harvest in September through December. After rice exports were allowed to the private sector, a new body of people emerged in the shape of rice exporters. The rice exporters had no solid platform from which to interact with the government. They had a new and different set of problems that were related with marketing of rice globally correcting systematic deficiencies that emanated from a monopoly procurement system with politically inspired support prices followed by politically priced overseas sales of bulk quantities at low prices and mainly in bulk sized packing.
In 1988-89, the Rice Exporters Association of Pakistan came into existence and started interacting with the Ministry of Commerce and Ministry of Food, Agriculture and Livestock and also the Planning Division. In 1992 realising the absence on any national rice standards, REAP played a pivotal role in establishing the Pakistan Rice Standards with the Pakistan Standards Institution for the first time in the history of Pakistan.
According to him, REAP also played host to the Arabian Gulf Co-operative Council government buyers from Kuwait, Oman, UAE, Bahrain, Qatar and Saudi Arabia in 1992 and for the first time since private sector was once again allowed rice exports, made sale of over 36,000 tonnes from private sector. In 1996-97, REAP once again performed its responsibility by negotiating with the Europe Commission along side Pakistan's Ambassador at Belgium and obtaining an abatement in import duties of 250 ECU/ton our Super and/or Kernel Basmati Brown rice.
Since then Pakistan has captured 60,000 tons out of a total market size of about 120,000 tons replacing India as the only source of Basmati in this market. Starting from scratch in 1988-89, REAP members managed to export over 2,000,000 tonnes of rice from Pakistan in 1997-98 while REAP had already winded up its operation, the spokesman said.
According to him, the private sector has completely taken over the role, supporting the farmer by aggressively exporting his product. From time to time, numbers of proposals were made to the Government for the elimination of serious problems such as variety and research, milling machinery import and local fabrication, marketing problems, and quality control.
In spite of adverse geopolitical conditions REAP has exceeded rice export target for this financial year. REAP is playing a positive role in ensuring that rice crop continues its contribution in the revenue earning which is lifeblood of national economic development, he said.
The REAP spokesman said that Pakistan may ship a record 4.1 million metric tons by the end of next month, as much as 37 per cent more than last year. "We have exported 3.5 million tons of rice and hope to export another 500,000 to 600,000 tons by the end of June," he said, adding the country will earn $2.25 billion from the exports compared with $2.02 billion in the 12 months to June 2009.
Pakistan is looking to increase exports to help expand its economy, which grew at the slowest pace in eight years in the year to last June. The increased shipments may exacerbate a drop in global prices and boost competition with Vietnam and Thailand, the world's two biggest exporters.
It may be recalled that Pakistan sets a target for rice output at 6.4 million tonnes this year, compared with 6.9 million tonnes last year.