SUPPORT PRICE POLICY FOR PADDY CROP
Protecting growers against remunerative prices during post harvest period as market prices tend to crash in years of good harvest
From YOUSAF RAFIQ
SPECIAL CORRESPONDENT, ISLAMABAD
July 12 - 18, 1999
Rice is the third largest crop after wheat and cotton in Pakistan. It occupies about 10 per cent of the total cropped area. Annual rice production, averaging around 4.4 million tons, constitutes 17 per cent of the total production of food grains. Its share in the value added by major crops is 15 per cent. Pakistan has achieved production of 4.72 million tons rice in 1998-99 which is higher by 9 per cent from the last year's 4.33 million tons. The increase in production is attributed to increase in area (4 per cent) as well as better crop husbandry. Pakistan is famous for producing and exporting long-grain aromatic Basmati rice. In addition, it also exports a substantial quantity of rice. Rice exports account for 6 per cent of the foreign exchange earnings from merchandise exports. Annual rice exports averaging around 2 million tons from Pakistan are the 4th largest - constituting 8 per cent of the global exports. Rice production and marketing in the past were subjected to a number of restrictions/policy interventions including the monopoly procurement at the fixed prices and exports by the Rice Export Corporation of Pakistan. The government has fixed support prices of paddy to protect the growers against remunerative prices during the post harvest period as market prices tend to crash in years of good harvest. The Economic Coordination Committee of the Cabinet has approved the new support prices for various varieties of paddy for the forthcoming crop during the year 1999-2000. The decision was taken to cover the cost of production and give a reasonable return to growers. The new support prices for paddy would be Super Basmati Rs 425 and Basmati-385 Rs 350 per 40 kg.
Area and production-wise share of provinces
The shares of Punjab, Sindh, NWFP and Balochistan in rice area are 61, 30, 3 and 6 per cent respectively with their corresponding contribution in overall rice production being 45, 43, 3 and 9 per cent. The shares of basmati, IRRI and 'other' varieties in the overall rice production are 33, 59 and 8 per cent.
Important rice producing districts
Districts which annually produce more than 50 thousand tons of rice are Gujranwala, Sheikhupura, Sialkot, Hafizabad, Okara, Narowal, Mandi Baha-ud-din, Jhang, Kasur and Gujrat from the Punjab; Larkana, Jacobabad, Shikarpur, Badin, Thatta and Dadu from Sindh; and Jafarabad and Nasirabad from Balochistan. These 18 districts produce more than 84 per cent of the total rice production. Sheikhupura, Sialkot and Gujranwala together contribute about 48 per cent of the total Basmati production. About 58 per cent of the IRRI is produced in Larkana, Jacobabad, Shikarpur and Jafarabad.
Area, yield and production
Rice production during the decade ending 1998-99 is estimated to have increased at the rate of 4.1 per cent per annum on account of 1.4 per cent expansion in area and 2.6 per cent improvement in yield. The annual production of basmati, IRRI and 'other' varieties during the same period is estimated to have increased at the rates of 3.9, 4.1, and 4.1 per cent respectively on account of 2.8, 2.3 and 2.8 per cent improvement in yield and 1.1, 1.8 and 1.3 per cent expansion in their area.
Rice production in 1998-99 is reported at 4.67 million tons, 7.8 per cent more than 4.33 million tons harvested in 1997-98. The increase in production is attributable to 4.5 per cent expansion in area and 3.2 per cent improvement in yield. The production of basmati and IRRI has increased while that of 'other' varieties decreased. In the Punjab rice production, reported at 2176 thousand tons, in 1998-99 is up by 11.7 per cent over last year's level. The increase in production has been made possible by 5.9 percent expansion in area and 5.5 per cent rise in yield. In Sindh, rice production estimated at 1930 thousand tons in 1998-99 shows an increase of 4.9 per cent over the harvest in 1997-98. The increase in production has been made possible by 2.7 per cent improvement in yield and 2.1 per cent expansion in area. In the NWFP and Balochistan production of rice in 1998-99 has increased by 2.6 per cent and 4.2 per cent respectively because of expansion in their area by 2.1 per cent and 3.8 per cent.
Targets v/s achievements
Rice production from 1998-99 crop, estimated at 4,671 thousand tons, has exceeded the target of 4,394 thousand tons by 6.3 per cent. Excess production has been entirely due to 13.2 per cent over expansion in area as the yield lagged behind the target by 6.1 per cent. Basmati, IRRI and 'other' varieties exceeded their respective production targets by 6.6, 0.2, and 70.7 per cent solely because of 9.4, 8.3 and 77.2 per cent excess achievements in their area since their yield fell short by 2.6, 7.5 and 3.7 per cent respectively. Non-achievement of yield targets is a matter of serious concern. Realizing production targets through enlargement in area has its limits and cannot be relied upon indefinitely. Therefore, it is imperative to fix realistic yield and production targets and make all out efforts to disseminate the production technology and provide timely input supplies to increase rice yield.
Prices in domestic markets
Monthly average wholesale prices of Basmati paddy during 1998-99 harvest season, in important markets of the Punjab, ranged between Rs 330 and Rs 417 per 40 kgs as against the support price of Rs 330. In case of IRRI-6 paddy, average wholesale market prices during the harvest seasons in Punjab ranged between Rs 241 and Rs 276 per 40 kgs and in Sindh between Rs 205 and Rs 261 against the support price of Rs 175 per 40 kgs. In the beginning of the season prices were higher due to large scale buying of rice from the market by the exporters in view of better export prospects which triggered higher prices for paddy. But prices declined during December-January in line with trend in the international market. Large size of the crop, initially not known, may have also eased the prices later. Average price of basmati that stood at Rs 393 per 40 kgs in October decreased to Rs 371 in November, Rs 356 in December but slightly increased to Rs 359 in January. Similarly IRRI paddy prices in Sindh which stood at Rs 253 per 40 kgs in October decreased to Rs 215 in December but increased to Rs 221 in January.
Domestic production, stocks and export
The rice production during 1998-99 has been reported at 4,671 thousand tons. Consumption requirements are estimated at 2,368 thousand tons for a mid year population of 139.3 million as on January 1, 1999 at the rate of 17 kgs per capita per annum. After deducting 6 per cent allowance for seed, feed and wastage i.e. 280 thousand tons and consumption requirement of 2,368 thousand tons, as mentioned above, the exportable surplus for 1998-99 works out to 2,023 thousand tons. By the end of February, 1999, 1104 thousand tons rice had been exported.
World supply, demand and stocks
World production of rice for 1998-99 is projected at 373 million tons, which is 3.6 per cent less than the production of 387 million tons in 1997-98. Adding the opening stocks of 60 million tons, total supplies during 1998-99 would be 433 million tons i.e. 10 million tons less than that of previous year. The global consumption for 1998-99 is projected at 382 million tons, exceeding the projected production by about 9 million tons. Accordingly, the closing stocks would be that much lower than the opening stocks of 60 million tons. For 1998-99, the international trade in rice is projected at 21 million tons i.e. 6 million tons less than that of previous year.
Thailand is one of the largest exporters of milled rice and prices of Thai white rice reflect the trends in the international market. FOB prices of 100 per cent second grade Thai white rice have fluctuated between US $282 to US $308 per ton during 1994-95 to 1997-98. During 1998-99 (Jul-Feb) the prices of Thai white rice averaged at US $335 per ton. Prices of 15 per cent and 35 per cent broken Thai white rice averaging US $260 and 244 per ton respectively during 1994-95 increased next year to US $336 and US $305 per ton. Since then prices have been continuously declining and averaged at US $283 and US $235 per ton during the 1998-99 (Jul-Feb). The international prices may increase further as the world consumption in 1998-99 is forecast to exceed the production.