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Rice: Problems & prospects

Value-addition and brand marketing needed to hit one billion dollar export

By AMANULLAH BASHAR
Sep 25 - Oct 01, 2000

Basmati rice exclusively produced in Punjab, discernible from other varieties produced all over the world due to its exotic taste and peculiar aroma, which gives Pakistan a prominent place in the export market.

Pakistan, having an edge over other rice producers due to this special variety of super Basmati rice, can optimise its export earnings through value addition in the rice sector.

This was stated by Qaiser Ahmed Sheikh, one of the top rice exporters in Pakistan, who won the FPCCI trophy for his export performance last year. Qaiser Ahmed Shaikh, an elect member of the National Assembly and the former president Karachi Chamber of Commerce and Industry, feels that Pakistan could not achieve the real value of this precious crop due to lack of processing and international quality standards. However, the rice sector is heading towards the target as a number of processing plants have already gone into operation while more processing plants are in the offing. Achieving a billion dollar export target may not be out of reach provided the sector penetrates the export market, equipped with modern processing equipments and professionally aggressive marketing approach. So far we are exporting loose rice in bulk, instead of branded small packs of 2-5-10 kgs which almost double the export value.

Foreign investment

He feels that foreign investment in rice export sector can bring speedy and outstanding results. Taking lead from this approach his company has signed a joint venture agreement with Bernas of Malysia for setting up a processing plant with an estimated project cost of Rs200 million at SITE Industrial area, Karachi. This german plant has a processing capacity of 44000 tonnes meeting all processing requirements for grading and polishing in accordance with international specifications. Final touches are being given to this project which will go into production by the end of the year. Initially, a local brand of super Basmati rice will be introduced which would ultimately be made an international brand in the second phase, Qaiser observed. He said that Bernas with their international repute in the market has greatly helped making a place in the world market and we are successfully exporting rice to Indonesia for the last 2-3 years. Our bids scored in Indonesia over other competitors from China, Thai land and Burma etc. He said that Iran which was a major buyer of Pakistani rice had stopped buying from Pakistan some three years back. They had a complaint of sub-standard and mixed supply of rice from Pakistan. Qaiser-Noman and Bernas and some other exporters achieved a major break-through by winning their confidence and have been able to resume supply of Irri-92 to Iran this year. Hopefully, our credibility and quality of product would help recapturing Irani market.

Regarding increase in support price recently announced by the government, Qaiser welcomed the step. He said that growers are the spinal cord of our agriculture economy and need encouragement to ensure a good rice crop in the years to come. Since the increase in support price is in rupee term it may not affect the exporters in a big way while the step would give confidence to the growers which is of course a good sign. While calculating the effects of rupee-dollar parity, he recalled that parity was Rs51.90 a dollar a year back which is now around Rs58 indicating a devalutuion of 10-12 per cent. Last year the price of Basmati was Rs 350 (6.74 dollar) per maund which is now Rs385(6.63) which the price in dollar term is almost same as last year, hence the export sector may not affect due to increase in support price.

Regarding the pre-shipment inspection, he said it is necessary to ensure quality of rice to be exported. A few exporters out of 600 had made some objections against pre-shipment inspection which carry no significance. He expressed the hope that intervention by Passco in rice purchase may also help stablizing local prices and induce good feelings among the growers.

Support price

Under the new policy, the government has recently increased the support price of paddy, raised the credit line to the rice millers and involved Pakistan Agriculture Storage and Supplies Corporation (Passco) in buying rice from the growers. The government has asked Passco to start procurement of rice from Oct.15. Accordingly, Passco will procure a total of 1.5 million tonnes of rice from Punjab, Sindh and Balochistan. The break down of rice procurement from different provinces, one million tonne will be lifted from Punjab which includes 400,000 tonnes of Basmati-385 while remaining amount of rice will be procured from Sindh and Balochistan. Under this policy, procurement centres would be set up in14 districts of the country. A fund of Rs1 billion has already been allocated to Passco for rice procurement.

According to a report the total cost of the paddy procurement operation would be nearly Rs1.218 billion in addition to Rs65.95 million as incidential charges. The districts from where procurement centres are to be set up include Lahore, Kasur, Sheikhupura, Tehsil Jaranwala, Hafizabad, Okara, Sahiwal, Burewala, Bhawalnagar, Toba Tek Singh, Sargodha, Gujranwala, Narowal, Mandi Bhauddin and district Gujrat in Punjab, Larkana in Sindh and District Allah Yar in Balochistan.

Under this new policy, Passco would buy rice from the growers. According to official version, the rice crisis were artificial.

The paddy price for different varieties of per 40 kg bag has been fixed as follows: Super Basmati price increased to Rs.460 from last year Rs.425, Basmati-385 increased to Rs.3 85 from Rs.350, Irri 6 increased to Rs205 and the prices of KS 282 TR 82, TR 83. TR 92 were increased to Rs220 from the previous Rs200.

The price of Basmati 386 was fixed at Rs240 despite the fact that the government had discouraged the growers to gow this quality. The price of Basmati 386 was fixed to protect the interest of 11 per cent growers. The third major decision was increasing credit line to the rice millers to avoid resource constraints for buying rice. He said that banks were working out the details of credit line. Passco would help farmers in marketing the coarse variety. He said that traders and exporters would buy rice from the Passco.

Price of Pakistani rice in the international market had increased to $ 509 per tonne from the last years $460 per tonne as the buyers had started vasluing Pakistani rice. The pre-shipment inspection of all varieties of rice to ensure quality of the exporting rice.

It may be recalled that Chief Executive Gen. Pervez Musharraf had directed the ministries to chalk out an action plan to resolve rice growers problems immediately to avoid any threat to future rice crop.

A representative body of the rice growers had called on commerce minister Razak Dawood to apprise him about the crisis-like situation, which was developing fast in the paddy growing areas due to slow movement of rice stocks.

The growers from rice growing areas expressed anguish and resentment on the government policies for lifting of rice stocks. The farmers were demanding same treatment what the government has given to the cotton growers.

General Pervez Musharraf also met the rice growers and millers in Islamabad to discuss problems regarding slow exports and piling up of inventory from old crop. Problems were cropped up due to lack of demand of local rice from the major foreign buyers, resulting in pile up of stocks from the old crop.

Price

Traders feel that dwindling export demand could hurt the local market. Stocks from old crop are still around while the new crop is about to come into market. Supplies from the new crop have already started trickling in and arrivals were expected to peak in November.

Accoding to some dealers, a stock of 75,000 tonnes of IRRI and more than 200,000 tonnes of Basmati grade rice was already available with the mills and trade houses. They expressed apprehensions that Basmati ordinary grade could suffer due to a slow demand in the traditional Middle Eastern markets.

Another reason for low demand of rice is a better crop of rice in rice consuming countries in Asia this year..