RICE PRICES WITNESSING DOWNWARD TRENDS
June 30 - July 06, 2008
The prices of different varieties of rice witnessed a bit downward trend during June after reaching to a record level high in May this year.
The price of Basmati rice in the current month is ranging Rs 80-95 per kg, which was Rs100-110 per kg in the May 2008 showing a decline. Similarly the price of Irri was recorded at Rs 40 per kg in the current month while last month it was Rs50 per kg, market sources told PAGE.
Main reason of the decline was attributed to the announcement of Minimum Export Price (MEP) made by the government on April 30 this year. The government had announced MEP for different varieties of rice in consultation with the representatives of the Rice Exporters Association of Pakistan (REAP) after studying local and international demand for the commodity. The government announced the MEP price for different varieties. It was $1500 per ton for Super Basmati, US $1300 per ton for Basmati, US $750 per ton for Irri-6 and US $1,000 per ton for Irri-9 (long grain).
The MEP restrictions would not only ensure the availability of the commodity in the local market but super basmati would also be available at Rs 70-80 per kilo, Sella super basmati at Rs 80-855 and broken at Rs 40-45, sources said.
Rice exporters have called for exempting the commodity from the minimum export price on all deals entered with Pakistani suppliers before April 2008.
A spokesman of the Veetee Rice Limited said minimum export price (MEP) of $1500 per metric ton has been imposed on certain varieties of rice to be exported from Pakistan irrespective of the contracts agreed upon before April. This sudden decision has put us in a difficult position. "As of now, we have outstanding contracts which entered with the supplier before April 08. In fact all the contracts have been performed partially and have now come to a stand still. We are now in great difficulty as we are being asked to pay the MEP prices."
It may be mentioned that Veetee Rice is currently one of the biggest sellers and distributors of rice throughout UK, and import high quality rice from various countries including that from Pakistan. "We have the capacity to mill more than 60,000 metric tonnes of rice per year following many years of development and expansion of our capacities." He said over the years Veetee has developed brands with Pakistani basmati rice, and these brands have witnessed a tremendous response from the market and enabled category growth too.
The company usual practice is to purchase large quantities of Brown Super Basmati rice during the months of November, December and January through long term supply contracts which are binding to each party. Further, on the basis of these contracts the company sells its products on a forward basis.
Moreover, the Rice Exporters Association of Pakistan (Reap) has blamed the Utility Stores Corporation of Pakistan (USC) for creating hurdles in smooth supply of rice to people at subsidized rates.
Reap Chairman Muhammad Azhar Akhtar in a letter addressed to Utility Stores Corporation of Pakistan (USC) Managing Director Brigadier Hafeez Ahmed said: "It was agreed that payment will be made within 7 days of the supply and the delay therein costs our members losses on account of financial costs at the rate of 16 percent per annum, which they should be entitled to recover from USC for each day of delayed payment".
He said that the Reap had demanded that the prices should be fixed on two months basis and be renewable accordingly.