REAP AND RICE EXPORT

SADAF AURANGZAIB, Senior Correspondent
July 24 - 30, 2006

Agriculture accounts for nearly 23 percent of Pakistan's GDP and employs 42 percent of the country's workforce. Rice is an important food as well as a commercial crop. It is the third biggest export item that occupies about 10 percent of the total cropped area. On an average one-third of its yield is exported every year.

During the fiscal year 2005-06, Pakistan rice exports reached $1.12 billion mark and became the member of $1 billion club.

Out of the total rice exports around 880,000 tonnes of Basmati variety of rice worth around $500 million was exported during the said period while the total export of Irri-6 variety reached up to $620 million.

Rice exporters also played a very important role in value-addition of this commodity during the year and the Basmati rice was exported on an average price of $535 per tone. The highest rate was recorded $590 per tonne from Karachi, while the lowest price remained at $314 per tonne from Quetta. Besides, the rice exporters explored new markets during the fiscal year 2005-06.

The Rice Exporters Association of Pakistan has played a crucial part in signifying the crop prospects and substantiates its efforts by expanding the market in other countries. We met Mr. Haji Abdul Majid (HAM), Chairman REAP, to know the exact situation of rice export and its prospects in the country.

PAGE: First of all, tell us a little bit about the kinds of rice that Pakistan produces and exports and what are your competitors in the international market?

HAM: Well, there is a number of varieties being cultivated in Pakistan, like Shaheen Basmati, Basmati 2000, Super Basmati, Basmati Kernel (6129), Basmati 385, Basmati 370, Basmati 198, PK-386, Superfine Irri-8, Rice KS-282, Rice Irri 9, Rice Irri 6, etc.

Basmati is very popular since 1933. It is grown in Punjab. Best grain quality of Basmati rice is obtained in the Kallar Tract (Sialkot, Sheikupura, Narowal, Gujranwala and Hafizabad) districts of the Punjab province. Keeping in view the international trend we have shifted from long grain to extra long grain of Basmati rice. Most of the categories of basmati rice are approved by the government and have successfully made their mark in the international market. India that is our competitor has stolen our seeds in the war of 1965 and that's how India started cultivating the Basmati rice. In Sindh, the 90% of rice crop is Irri-6 that we are competing with Thailand which is a major rice exporter with ten million tones of rice export. Apart from Thailand, our competitors are Vietnam with 5.5 million tones of export, India between 3.5 - 5.5 million tones, China between 3.5-5.5 million tones depending on the crop size then we have Myanmar with 250,000 tones and Cambodia with around 250,000-800,000 tones of export.

PAGE: What about the Par-boiled rice, for it is quite popular in the international market.

HAM: During Mr. Jamali's era, it was revealed to him that we have a demand of around eight lac tonnes of non-basmati rice just in Saudi Arabia, at that time he sent Rahim Janoo (former chairman REAP) to India where he bought sixteen plants, most of these plants were acquired by Punjab and Sindh but because they were not in the paddy area hence were not used to their fullest. Plants have to be in the paddy area. People have plants in Karachi as no one wants to go and live in interior nonetheless these plants are not viable in Karachi. There are about 2507 small mills in Punjab that could process half a ton each, there are around 1780 mills in Sindh with a much bigger capacity than Punjab. In Karachi we have around more than hundred value added mills which shouldn't be planted here but as no one is willing to go down it all amounts to a much bigger wastage that is around 40%. We almost lack our 40% rice growth in the form of broken rice as it doesn't remain as full grain rice. Researchers are working on the seeds too in Dokri and Kala Shah Kaku but the main problem with the research institutes is also the financing and budget that is so meager that hardly covers the salaries, utilities and rent.

PAGE: Although it's a cash crop?

HAM: Rice is a cash crop where an exporter's money is a working capital for him. From 1992, we never had a carryover stocks of rice although for that we neither need any subsidy or refinance, what we need is our sales tax refund that amounts to 310 million rupees to be given to us as our money is a working capital for us.

PAGE: Which rice variety do you think give Pakistan an edge in the international rice competition?

HAM: Our Basmati rice is the very popular around the world however because of not having a strong lobby in European Union we are losing our market like our Super Basmati got disapproved by EU and India's duplicate basmati got approved. India which has stolen our seeds and started multiplying the seeds, today they reached to have around thirty thousand seeds that could produce five lac tones. Our input cost is higher as the urea and fertilizers in reaching to the farmers cost its double, then we have this problem of water theft and due to lack of proper lining of irrigation water and the theft of water in many areas around 30% of our crop goes on waste.

PAGE: The problem of water shortage during Rabi and Kharif seasons, which most of the time makes it hard to meet the local demand how is it affecting our exports and what is the solution for that?

HAM: Well, it is affecting our exports as we are not using our irrigation lines to its fullest, there is no check on the water theft etc. There are many reasons and government should need to look at each of the matters seriously.

PAGE: Do we have the same rice quality for our local consumption as of our exports?

HAM: Well in Punjab and Sindh, there is a consumption of around 1.5 million tonnes of Irri-6 coarse rice where it is also consumed as bread, however, in big cities people consume more of the Basmati rice that is around 1 million tonnes.

PAGE: Many a times we heard that certain government imposed ban on importing our rice like the Mexican government because of the simple reason that our rice carry a fungus called "Kapra beetle", why can't such measures be taken to take care of all such things?

HAM: As I said that we don't have a strong lobby in EU. In 1990, when ex-chairman RECP, Mr. M.M. Usmani visited Brazil, at that time there came an allegation that the rice from Pakistan, India, Thailand, Vietnam all carry "Kapra Beetle", later Thailand and Vietnam won their cases in the Dispute Settlement Body of the World Trade Organization, however Pakistan is still on the negotiating tables with them.

This is purely a matter concerning the plant protection department and Ministry of food, agriculture, livestock; they should try to make it clear.

PAGE: What are the major problems that our rice exports are facing at the moment?

HAM: We have a major problem of not having ware houses; few months before I was visiting Quetta and the border area, there I saw that the gunny bags of rice stocks are all thrown in the open air on soil and on the other side of the border Iran has built a warehouse for keeping the supply flow from Pakistan.

In my tenure in REAP, I tried to open our rice market and went to Philippines, Iran and Iraq and with the help of few friends remained capable of opening the market at those places.

What we want from the government is to not to change the policy quite frequently and allow all the capital machinery for duty free and sales tax free. Government earns a very little through these taxes however if we would be able to get the machineries free of tax, we would be able to produce more value added that would also give ample revenue to the government. We ask the government to fix their tax on each of the industry and then gauge their progress so that they could judge and deal with the problem beforehand.

PAGE: Do you think that because of the high taxing, Pakistani rice prices are also soaring in international market?

HAM: Yes, the government should keep one policy. There are 68% farmers who are bigger farmers, we can ask them to do the corporate farming, we can let the machine come in free for them and can ask them to not to sow in less than 25000, 10,000, or 5000 acres area. Small farmers should sow in their lands together with each other so that no land should go on wastage.

Today 20% of our cultivable land is not in use. Those people who saw the seeds, they should put up the mills and make value added on their own.

PAGE: What do you say that the water problem is much bigger is Sindh or in Punjab?

HAM: In both the places wastage of water and theft is a big problem. Another problem is that because of the lack of common knowledge that one should not farm or sow the seeds at the same place for two to three times because otherwise the grains length and strength and the yield got affected but we don't have any substitute or replacement for that. Other than that if we have the water problem, why can't we think of growing those items which need less of water and yield more fruit like coconut, chilli etc. Our planning commission and ministry of finance should think highly about all these matters.

PAGE: What are our export destinations?

HAM: For Basmati we are fetching fairly high prices from Saudi Arabia that buys more than half a million ton. In Europe we send brown basmati, we also send that to America and Canada. In Far East countries we are in competition with Thailand which is exporting fragrant rice there which is quite popular in china because it can easily handle through chop sticks because of gluten. Iran and Iraq are also buying from us. Then we are exporting Irri-6 to West Africa which is mostly French speaking, then we also export to US Federation including Poland.

PAGE: What is QRC, how does it work under REAP?

HAM: Well, QRC is Quality Rice Control, it is managed by REAP and it functioned under EPB law, the Director General EPB is the Director General of QRC too. Under QRC we are collecting revenue and with the permission of EPB using it in the desired areas. The basic purpose of QRC is to ensure the quality of rice exported to different buyers of the world that it meets the specifications of the buyers and they have the satisfactory product. QRC basically check all the varieties of Basmati that is exported (as Basmati is the premium quality and many varieties like PK-386, Irri-9 could easily be mixed with it).

PAGE: What are the prospects of our rice exports in coming years?

HAM: Our export prospects are very good provided the government should take care of the irrigation problem, should bring farm machinery to do the corporate farming and ask farmers not to waste the land through individual farming. The government should give enough budgets to carry on with the research because unless our seeds got improved, irrigation and taxation are improved, we would not be able to reach the maximum limits of our exports. The rate with which our population is growing and our consumption is increasing, it is essential to look into these matters thoroughly and prudently.