No other country could pirate the natural gift

Feb 16 - 22, 2004



Pakistan is known as the largest and the only producer of aromatic basmati rice which is relished the world over for their taste and flavor. India also produces basmati rice but much lesser than what it is being cropped in Pakistan.

It is an irony that instead of taking advantage of this natural gift by earning a good name for the country, Pakistan was still campaigning for its share in the international market.

Recently, the European Commission has raised the issue of fraud in supply of rice from Pakistan besides suspecting origin of the commodity. There had been a number of complaints from the European Union member states challenging the "origin" of the rice. EC Headquarter had earlier pass a regulation to exclude Pakistani Basmati and Kernel rice from abatement list which means withdrawal of exemption of duty at the rate of 250 Euro per ton. This exemption from duty gives an edge to Pakistani exporters over competing rice exporters.

Some senior officials from Ministry of Commerce including its Secretary Kamal Afsar had visited about 8 EU countries to defend the case. They succeeded to convince the EC for continuation of the duty exemption.

The relief has been given on the assurances that DNA tests on the samples will be extended to the EC for the genuine origin of the rice. The EC's amended regulation has given the relief for those import contracts which had been signed by December 31, 2003.

The European Commission (EC) has given temporary relief on Pakistani super basmati and kernel rice for a period of three months and once again including it in the abatement list.

Although Pakistan exports basmati and kernel rice to EU member states worth $50 to $60 million, yet this market is extremely important for Pakistan in view of future expansion of the European Union market with the inclusion of 10 more East European countries in the club of EU.

It may be mentioned that Mexico also produces basmati rice which only resembles to Pakistani rice in length and shape but as far as beauty of aroma and taste was concern, the Mexican rice has no match to the Pakistani rice because it carries neither aroma nor taste. In order to overcome this shortcoming the Mexican farmers use perfume spray to make it acceptable in the market.

There was a bumper rice crop in Pakistan this year which means Pakistan was in a position to export more rice this year. At one time, rice was the second largest export earner after textile and had reached to the level of $700 million a year. However, Pakistan lost a good market of its rice in Iran which was one of the major buyers of Pakistani rice. Some exporters, instead of honoring the export commitment had allegedly comprised on the quality of rice by mixing broken rice and other material in the consignments. After a long time, Iran has once again started buying rice which is a good sign for the rice exports.



Some Far Eastern countries including Malaysia, Indonesia, Sri Lanka etc. also offer a great market for Pakistani rice, however that market is less attractive due to absence of frequent shipping facilities in that region.

Doubt on the origin is however surprising especially no other country produces basmati rice. There were reports that our competitor India which produces a little quality of basmati takes advantage of its aggressive marketing tactics as well as of its known rice brands in the international market. It is said that some of the Indian traders based at Hong Kong and Dubai were selling Pakistani rice under the label of Indian brands.

Generally, rice is exported in lose form which is yet another way of taking advantage by the brand sellers of other countries. Now some of the exporters have introduced brands and started exporting in small packs of 2-5-10-15-20 kg packs. It is a good sign and hopefully the Export Promotion Bureau will provide them full support especially in the newly discovered markets in the African, East European and Central Asian States.

As far as the EU market was concerned, there were strong indications that under Article 28, the EU was going to review its Agriculture Policy in September this year which may help in resolving the issue once for all.

The European Commission on December 23, 2003 excluded Pakistani carnal and super basmati rice from the abatement list resulting in the imposition of import duty at the rate of 250 euro per ton. This put rice exporter from Pakistan in a difficult situation as they could not complete in the European market against rice imports from other countries.

There seems to be a word of caution in the change of European stance in some cases towards Pakistan exporters. Imposition of anti-dumping duty on Pakistan bed wears was another example.

European Union had offered tremendous support to Pakistan trade by extending significant incentives including market accessibility, duty exemption and other incentives which greatly help Pakistan to promote its exports to that region. These concessions were given to Pakistan as recognition of its services in fighting against international terrorism, especially after 9/11 incidents in the United States. EU is very important for Pakistan and it is expected that our business community would take special care to keep the pace of trade relations between Pakistan and the European Union.