HARNESSING RICE POTENTIAL

SHABBIR H.KAZMI
Mar 16 - 22, 2009

Pakistan is among some of the largest rice producing countries and has been producing huge exportable surplus year on year. One of the unique varieties produced in Pakistan, Basmati has global liking but India is reaping the benefit. The real potential could never be exploited only because the successive governments failed in projecting Pakistan as an independent producer and supplier in the global markets.

Pakistan ranks tenth in rice production and fourth largest exporter of rice in the world. Rice is the third largest crop of Pakistan after cotton and wheat. However, it does fall in the category of major food crop because Pakistanis refer wheat over rice in their daily diet. Pakistan is likely to get over 6 million tons of rice this year, out of which only 2 million tons would be consumed locally and remaining 4 million tons rice has to be exported.

Pakistan's rice export during July-December 2008 period was close to US$1.2 billion. It is heartening to note that for the first time Pakistan has crossed one billion dollar mark and become the third largest exporter of rice after Thailand and Vietnam. During the full year, total export of rice is likely to touch US$ 2.3 billion. The expectation of higher export proceeds is because export of Basmati rice has not commenced as yet.

Pakistani rice, particularly Basmati, is considered of the best quality around the world. Pakistan Basmati has attained an edge over other countries and also attained comparative advantage in countries where a large number of people belonging subcontinent have settled. Saudi Arabia, once a big market for Pakistani rice, is being intruded by India. Similarly, in the South African market India is striving very hard to gain control. It is a little disappointing that Indian rice despite being inferior in quality is gradually replacing Pakistani rice.

According to some rice exporters, Pakistan exports rice in bulk and hardly any effort is made to sell it in retail packing. Indian traders took full advantage of the situation, importing rice in bulk and selling it as an Indian brand. They were even successful in getting Basmati branded as Indian, although some exporters are sending branded rice but have to face sever competition from India.

Not all the buyers love Basmati, there are customers who prefer specification and price. There is a big market for broken rice however incorrect declaration of broken percentage offends the buyers. While export of rice was under the public sector less attention was paid to specification, packaging, and even to shipment. The result was that a large portion in the vessels is often declared unfit for human consumption. Another factor deteriorating quality of shipment has been improper fumigation. Exposure to moister during sea journey multiplies insects and pests in geometrical progression. Therefore, there is an urgent need to examine the whole chain from cultivation to crop management and from packaging to selection of vessels.

Two factors affecting rice production in the country are availability of water and application of appropriate dosage of fertilizers. While efforts are being made at various levels, lack of coordination does not allow achieving desirable targets. On top of this, growers often do not get appropriate price of their produce. If there is bumper crop in a year it is always followed by lower production, mainly because growers do not get good price when production is higher.

RICE EXPORT

Local prices of rice are dependent on a number of factors ranging from supply to global prices and from government intervention to credit facilities. Despite government's commitment of following market based policies, it is bound to intervene in procurement of wheat, rice, and cotton. This year Pakistan is likely to get bumper crop of rice mainly because of price being very high in 2008, encouraging farmers to bring more area under cultivation.

With commodities prices reducing to half rice prices are likely to take nosedive in domestic market. Pre-empting supply glut, the government has to play the important role of intervener. However, there is a cost of intervention, which government has to bear for avoiding any shortfall in the subsequent year.

Regrettably, the government is so deeply involved in politics that it hardly gets time to look at deteriorating economy. Although, most of the legislators are feudal lords they often fail in advising right solution to the government. In fact, they are divided into wheat growers, sugarcane growers, cotton growers and rice growers. Therefore, every group tries to maximize its gain, even at the cost of others.

OUTLOOK

The common objective of the government and rice exporters should be to take the best advantage of this yearís bumper crop. However, it seems that ultimate sufferers would be the farmers. Apparently, the slowdown in purchases by the government sponsored entities is due to various groups having vested interest, groups who want prices to be dirt-cheap, so that they can make a fortune. These people completely forget that price is not the only decisive factor. Any attempt to sell at lower price in the global market would backfire.

In international rice trade India has emerged out the biggest competitor of Pakistan. Therefore, both the GoP and the rice exporters should keep a watch on Indian strategy. India is heavily subsidising rice farmers but making up for final loss by earning foreign exchange.

Pakistan's share in the Middle East market is falling because of unscrupulous exporters, inconsistent production policies, and aggressive Indian marketing strategies. The Indians are increasing their rice production by leaps and bound. The government needs to take a holistic and long-term view of importance of rice in agriculture and export earnings.