REAP: PAKISTAN RICE EXPORT SCENE
June 18 - 24, 2007
In 1987/88, the government allowed rice export by the private sector. Before this, the Rice Export Corporation of Pakistan was exclusively handling rice exports from Pakistan. In 1988/89, the Rice Exporters Association of Pakistan (REAP) came into existence and started interacting with the Ministry of Commerce and Ministry of Food, Agriculture and Livestock and also the Planning Division of the Government of Pakistan. The government has involved REAP to monitor rice exports from the country and REAP is contributing immensely by giving proposals to the government with the objective of setting up an standard in the variety and research, milling machinery import and local fabrication, marketing strategies and quality control. PAGE got the chance to meet the chairman of REAP, Mr. Abdul Aziz Maniya and talked about the recent rice export situation of Pakistan.
PAGE: What are the main categories of rice and what are the current export targets for the new year?
AAM: We have basic two categories of rice, one is basmati and the other is non-basmati. Last year (July 2005-2006) our exports of basmati was about 900,000 tons and exports of non-basmati was 1.8 million tons. This year because of the shortage of non-basmati, the quantity which has been shipped up till now is far less than what we were expecting. In basmati, we may well cross the last year's target but since the prices of rice are high internationally, hence we are just achieving our target.
PAGE: How competitive is our Pakistani rice?
AAM: We are exporting $1.275 billion worth of rice and there is no surplus left with us to export any more. That means we are very much competitive.
PAGE: What are the problems faced in achieving these export targets?
AAM: There is no such problem; the only problem is that we don't have enough as surplus. We had a meeting with the rice commissioner who is in charge in the ministry of agriculture and we discussed what could be our potential target for the next season. There is a good chance that we may have a better crop next year than this year. One of the main reasons is that the adequate supply of water has been given to the farmers and the next thing is that the government is taking a lot of new measures to increase the yield so we are hopeful that the next crop will be better than this year's crop.
PAGE: It's been seen that the Indian basmati rice gets much better prices than ours, what is the reason for this disparity?
AAM: It's entirely a marketing gimmick. I would never say that the Indian basmati is better than ours. Ages back, basmati was initially cultivated in the portion which is now a part of Pakistan. The only thing in which the Indians are more successful than us is their marketing. Why our marketing is weak is because the rice trade in the private sector is just a baby. India has been in the private sector trade since 1950's where as we are just 15 years old but still we are competing with the Indians. India exports about a million tones and we are not far behind as we export almost 950,000 tons of basmati although the Indian crop is ten times bigger than ours.
PAGE: What would you say about the branding practice in Pakistan rice exports?
AAM: There are many exporters who are concentrating a lot on the branding and they have been very successful. Branding will take time to develop fully in Pakistan as today it is in developing stage. Over a period of time, I am sure that we will match the Indian rice if not bypass them.
PAGE: What is our crop size this year?
AAM: The statistics for 2006-2007 is about 5.4 million tons which is almost 150,000 tons less than the last year's crop. This year we were actually expecting a good crop but at the time of harvest, the wind and the rain fall damaged the crop, so we have a shortage of rice this year.
PAGE: Who are the major buyers of Pakistani rice?
AAM: Pakistan exports to almost more than a hundred countries around the world. The number one buyer of our basmati rice is Iran but not all the quantity goes to Iran directly, it is routed through Dubai. Apart from Iran, the whole of Middle East, a small portion of USA and pretty decent portion of Europe is the buyer of our basmati rice. For the non-basmati rice, our major buyer is Africa as it is cheaply priced rice. We have now developed our rice exports into the East European countries apart from the Far East countries like Indonesia and Philippines.
PAGE: Has the government been helpful in promoting rice exports?
AAM: There are times when the government has been very helpful. We tried to convince many countries to lift the ban on Pakistani rice and we took the help of the government to resolve this issue. We can't do anything without the support of the government so normally we do work hand in hand. However we still need a lot of support on the part of government and we have sent our proposals to the government as to how we can further our rice exports. In the last budget, the sales tax on the utility bills for rice exporters was exempted but that's a drop in the ocean. Sales tax was waived but there wasn't any continuous supply of electricity so we need to develop our infrastructure immensely in order to keep the factories running. We had a huge loss of productivity because of the non availability of the electricity. Also we need our government to educate our farmers, to have an awareness program with the farmers as to how to harvest, how to dry the product and how to take care of that product. The government is working but not with the pace which we desire.
PAGE: There has been a talk about a lack of research in the crop development. How serious is this?
AAM: What we need now are the new seeds so that we can obtain new varieties of rice. The seed which we have for the non-basmati is more than thirty years old so the strength of that rice has weakened to a greater extent. The government said that they are trying to clean the breed of that particular variety of rice but still we need more varieties of rice. We need those varieties which have higher yield per acre. Once you have rice with higher yield per acre that means you will be having more production, more production means more exports and finally it brings more foreign exchange for the country.
PAGE: What are the main areas where you think research development is necessary?
AAM: Most of the research is needed in the farming sector. We have advised the government to hire consultants from the developed countries like Australia and Canada where the rice grain was not cultivated previously but later with the help of research they started growing rice on their own and now they are growing it for the last fifteen years. We should get such sort of expertise in order to increase our productivity.
PAGE: We have witnessed huge price increases this year? Why? How has this affected export?
AAM: There are few major factors which have increased the prices of rice. One is that the world rice production is 6% short, the population of the world has not decreased, it has increased so production is not enough to meet this demand. Secondly, there is a 25% shortage of Indian basmati rice this year and basmati is grown only in India and Pakistan, now if India is exporting around a million tons and Pakistan is exporting around 950,000 tons then together it is two million tons of basmati going to the world market. If India is short by 25% that means that the world is not going to get 250-300 million tons so automatically the shift comes to Pakistani basmati rice. The third and the fourth points which have been raised in the newspapers are that a lot of rice is going through our borders to the neighboring countries and that rice is being hoarding by people. When the crop is harvested, in the next one and a half month, it has to go into the stores and for going it to the stores, somebody has to finance and buy this product. In our case the government finances the product that's why people are keeping it in stocks, if the government wouldn't finance the product through banks, where are the people going to keep these 5.4 million tons?
PAGE: What is the international perception of Pakistani rice?
AAM: The non-basmati rice is simple long grain rice which is grown in Pakistan, India, Thailand and Vietnam. These are the major rice producing countries for non basmati rice and there is an international market for it. If Thai rice is $300, Vietnam is $295 then Pakistani rice would be around $250-$295. Basmati however is mainly produced in India and Pakistan. As the demand and taste is changing around the world and people are aware of new taste and varieties hence the product which was previously going into the Europe for the ethnic market are now tasted by their locals also.
PAGE: Are Pakistani and Indian Basmati rice the same in taste and odor?
AAM: Well, in the Middle East, there is a clear perception and they know what is Indian Basmati and what is Pakistani Basmati. However, in Europe they think basmati is basmati. But at many places there is a perception that basmati is just an Indian product and it is grown just in India and this perception is basically developed through the marketing strategies of India. We have asked the government to use different channels to promote 'Pakistani Basmati' around the world. But in marketing we can't deny that India has an edge over us in promoting their product.
PAGE: What is the current export potential of par-boiled rice? Do the exports have increase in this category?
AAM: Par-boiled rice is basically pre-boiled rice. In Pakistan, few of the exporters are working on this category and trying to put up plants. There is a specific demand for par-boiled rice. Some countries like Saudi Arabia have moved to par-boiled rice consumption as it is easier to cook than basmati.
PAGE: What are the current threats and challenges to export growth and how can these be tackled?
AAM: The basic threat is that if our production is not increased, we might lose some of our market so we are trying to have a better yielding product. Another threat is that some of our exporters are not taking care of the products and they are exporting and blending other varieties with basmati, hence we have a threat of losing our name and reputation. On the non-basmati side, we need new varieties of cheaper rice.. Non-basmati will basically work on a price factor. How these prices can be managed, I guess we need to work on our crops for that.