INTERVIEW WITH REAP CHAIRMAN H.A. MAJID

Pakistan poised to hit record rice export of $1.2billion

By AMANULLAH BASHAR
Feb 06 - 12, 2006

Rice, a major cash crop of Pakistan, is well poised to make it a record year in the history of Pakistan by hitting $1.2 billion mark in rice exports on the back of aggressive marketing approach by the private sector and of course availability of export surplus due to better crop last year. About 4.215 million acres land has been brought under paddy cultivation as against the target of 4.27 million acres.

Pakistani basmati and coarse rice is currently being exported to 123 countries and 2.7 million MT rice was exported in 2004-05, which is about 50 percent of the total rice production of the country.

H.A. Majid, Chairman Rice Exporters Association of Pakistan (REAP), told PAGE in an interview that rice exports could do even better if the exporters were supported by new varieties of rice especially in the Irri segments.

"Contrary to the new varieties of rice being developed in India, we are stuck up with Irri-6 seed for the last 20 years. Substantial support by Research and Development is of vital importance to survive in the highly competitive and choosy international market," Majid remarked.

India has developed new varieties Pusa and Rusa of long grain Basmati segment with 7.2 and 7.2 mm, respectively. Indians have already got registered and approved the newly developed varieties in EU market. These two new varieties are being supplied by the Indian exporters at higher prices.

As far as Pakistan's rice export during the fist six months of current fiscal year was concerned, it rose by nearly 20 %. Last year the total exports of rice was estimated at $933 million of which 1.3 million tons was Irri-6.

Around 0.85 million MT rice of about $200 million worth was exported during July-December, which included 0.5 million MT of Irri and 0.35 million MT of Basmati rice, while in the same period last year Pakistan had exported rice worth nearly $170 million.

Pakistan's rice exports tremendously increased in the first six months of the current fiscal year (July-December), with 100 % rise in Irri-6 and 12 % increase in Basmati.

During this period, Pakistan exported 0.845 million MT rice, worth $350 million, to different countries, against 0.557 million MT exported in the corresponding period of last year. Of total rice exports, the country exported 0.5 million MT Irri-6, worth $150 million, against 0.25 million MT of same variety exported in the first six months of 2004-05. Pakistan had a bumper rice crop this season, with total availability of 1.6 million MT of Irri-6 rice and 1 million MT Basmati rice for export, and it is expected that the country would achieve this year's rice export target of $1.2 billion.

RESEARCH INSTITUTES

In Pakistan research institutes in Thatta, Tando Jam, Dokri, Kalashah Kako and other places are being run under the public sector but they are practically lying idle and did not produce results to cater to the international market. Majid was of the view that these research institutes should be privatized to make them result oriented. The REAP Chairman feels that his association could produce much better results at its own research center it desires to develop over a piece of 500 acres of land near Northern Bypass adjacent to Karachi.

He suggested that REAP can run these institutes more effectively by providing them professional guidelines in accordance with the need of the market. The Export Promotion Bureau (EPB) is the custodian of huge funds contributed by the exporters under Export Development Fund (EDF). These funds could be productively utilized for research and development of new varieties of seeds for rice and other major crops in Pakistan.

Coming back on export front, Majid observed that Pakistani exporters did pretty well last year by attracting new bulk buyers, especially Iran, which imported around 250,000 tons of Basmati and Irri-6 varieties. "For the current year, we have huge orders from Iran but unfortunately we could not export during January due to eruption of some LC problems." The problem seems to have stemmed from some outside political pulls which is resulting in payment complexities. The REAP is however in contact with the central bank to resolve the issue. Currently, we have 30,000-40,000 tons orders from Iran. The export will resume as soon as the problem is sorted out.

Pakistan has an ample scope for boosting its rice export on the back of a bumper crop this year which is likely to be estimated around 5 million tons. Of the total produce, the domestic consumption of rice in Pakistan is around half of the crop which leaves a considerable surplus for exports. He pointed out that Parboil (Joshi) was another variety of rice which has a huge market, "but so far we are lacking in that segment". Recently some 16 plants for Parboil have been installed in Punjab.

He, however, pointed out that there is a need for coordination between REAP and EPB while evolving a marketing strategy and constituting trade delegations for marketing purposes.

Another problem faced by the rice exporters is the timely refund of freight subsidy and sales tax refunds. Actually, the stuck up funds cause serious liquidity crunch which ultimately affect export performance especially when the mark-up export refinancing took a quantum leap during last year. Pakistani rice exporters are waiting to get sales tax refunds amounting to Rs 216 million from 2003 onwards, stuck up on yearly basis.

The stuck up money hampers rice exporters in multiplying cost of financing additions due to shortfall in working capital, Majid remarked.

He mentioned that admissible freight subsidy also ran into millions.

Pakistan's rice export during the first six months of current fiscal year rose by nearly 20 %. A MoM breakdown of exports indicates that 0.85 million MT of rice worth about $200 million was exported during July-December, which included 0.5 million MT of Irri and 0.35 million MT of Basmati rice, while in the same period last year Pakistan had exported rice worth nearly $170 million.