RICE - ISSUES AND SOLUTIONS

DR. M. RIAZ MANN
Mar 1 - 7, 2010

Globally rice provides 27% of dietary energy supply and it meets 20% of the total dietary protein requirements. In Pakistan, rice is an important food and cash crop, the second largest staple food crop after wheat and is the second major exportable commodity after cotton. It accounts for 5.9 percent of value added in agriculture and 1.3 percent in GDP. Pakistan is well known for production of aromatic rice Basmati and earns reasonable foreign exchange by exporting over three million tons of both aromatic and non-aromatic rice annually.

Every year around 1/3 of the total rice produce is exported and 2/3 is consumed locally. The last year rice export was 2.6 million tons worth US$1.98 billion. In the current year the Quality Review Committee (QRC) reported an export 0.44 million tons of basmati worth US $ 0.380 billion (average price 863 $/ton) and IRRI-6 1.35 million tons US$ 0.525 billion (average price 390/ton). The total export from July 2009 to Dec 2009 stood at 1.79 million tons and fetched US$0.905 billion.

First time highest production of rice of 5.2 million tones was achieved during the year 1999. Due to acute shortage of water and prolonged drought conditions, rice production reduced to 3.8 million tones during 2001. Later on, the production trend has increased up to 5.6 million tones since 2005. During 2008-09, rice was planted approximately on 2.96 million hectares with highest ever 6.95 million tons production. This was achieved due to combined efforts of rice research and development, favourable environmental conditions, high prices of paddy and good economic return to farmers.

Considerable efforts have been done to develop new basmati and non-basmati rice varieties. Unfortunately, in basmati group, new extra long grain varieties could not be popularized among the farming community due to lower yield than the existing Super Basmati. Few more are in pipe line. Among the course group, research work development and commercialization of rice hybrids is underway in the collaboration of public-private partnerships. So far, Coordinated Rice Research Programme has been able to release 21 rice varieties and 20 rice hybrids for general cultivation through National Agricultural Research System (NARS).

Impact of rice research is evident from substantial gains. It has been estimated that additional income from rice was about Rs30 billion during 1999 over base year 1975. Through the cultivation of high yielding and comparatively short duration rice variety Basmati 385, rice growers earned Rs.1.7 billion over the traditional variety of Basmati 370. The magnitude of additional income over Basmati 385 increased to Rs.17.6 billion with the cultivation of an extra long grain and high yielding rice variety Super Basmati.

In Pakistan, per acre rice yield is very low (2.8 t/ha) compared to rest of the rice producing countries of the world due to multifarious factors, such as low yielding rice varieties, water shortage or drought, declining soil fertility, losses caused by insect pests, diseases and weeds and harvest and post harvest losses.

There is a need to grow more rice with less use of land, water and other inputs and that is only possible through varietal development and improvement programmes based on hybridization. The need for hybrid rice is now much realized because the yield potential of semi dwarf varieties of the Green Revolution era has already been achieved.

Rice hybrid varieties have already shown a yield advantage of 15-20% or more than one ton per hectare over the best inbred rice varieties under farmer's field conditions in several countries. Hybrids can perform even better under adverse conditions of drought and salinity. As mentioned earlier that 20 rice hybrids have been approved for general cultivation in Sindh, Balochistan, and coarse rice belts of Southern Punjab. In Sindh area under hybrid rice during 2009-10 was estimated to be 1,16,000 hectares (18% of total area) while, in Punjab, the area is negligible (3-4%). However, the yield potential of rice hybrids during 2009-10 was much reduced (high sterility) due to early planting of hybrids, high temperature and drought spell during the season.

To remain competitive in the global market, sustainable and quality rice production must be the focus of research activities. At present, rice production in Pakistan is threatened by two major factors: low productivity along with high cost of production and natural resource limitations. High prices of inputs, scarcity of labour, and water, poor crop management techniques, susceptible varieties, all contribute to low farm yield. Water resources needed for rice production traditionally are shrinking rapidly. For instance, per capita water availability has been declined from 1350 m3/year in 2001 to as low as 1000 m3/year in 2009. We need to develop resource-efficient technologies, providing better adapted, more productive and high quality rice varieties to farmers. Efficient use of inputs is vital to safely produce additional food from limited resources with minimum impact on the environment. Hence, it is now imperative to enhance rice productivity with less use of water/labour and increase farmers' income in the rice growing areas of Pakistan.

Efforts were made by the scientists of PARC in collaboration with provincial research organizations to develop Resource Conservation Technologies (RCT) like direct dry seeding (aerobic rice), bed planting of rice, alternate wetting and drying (AWD), etc. Rice is, traditionally, grown through transplanting of 30-35 days old seedlings, established somewhere else, in a well puddled and flooded field. In view of the current limitations of increasing labour costs and shortage of water, direct seeding remains the only alternative option for sustainable rice production in Pakistan. A change in cultivation methods could have a substantial influence on the environment. Therefore, a change from transplanting to direct seeding should be carried out with a focus on the sustainable use of water. In dry seeding, non-germinated seeds are sown beneath the soil surface, using a normal Rabi drill. In case, when direct seeding is done at optimum soil moisture, then first irrigation can be delayed up to 10 days. Dry seeding is advantageous when the water supply is limited, particularly in the areas with limited canal water and where the underground water is brackish. Alternate wetting and drying irrigation regime is another option to save water up to 33%.

Efforts were also made to improve the nutrient status and health of soils through inclusion of legumes in the rice-based cropping system, balanced use of fertilizer, use of organic fertilizers (green manuring, crop residues farmyard manure, etc) and use of gypsum. To improve the N use efficiency, emphasis is given on site-specific nutrient management (SSNM) and use of leaf colour chart (LCC) is being popularized among the farmers for the application of nitrogenous fertilizers. Developed and demonstrated cost-effective method of Zinc application in rice. This technique saves Rs.500 per hectare. The estimated benefit of this technique at national level is about rupees one billion annually.

With the mechanization in the harvest and post-harvest operations in rice and wheat crops the problem of crop residues is becoming very serious. Farmers generally burn the crop residues, which is a big loss of nutrients and causes environmental pollution. Efforts are underway for the proper management of crop residues mainly through the use of suitable machinery. Traditional method of harvest and post-harvest especially in Sindh causes substantial quantitative and qualitative losses. These operations are being mechanized to minimize these losses and improve rice quality.

MARKET HICCUPS

During the rice crop season 2008-09, a bumper rice production of around seven million tons was achieved due to expansion in nontraditional rice area. The estimated rice production for the year 2009-10 was 6.68 million tons as compared to last year's 6.95 million tons. During the current year the estimated domestic requirement of rice is 2.5 million tons and the surplus is 4.18 million tons. The last yearís carryover was 1.8 million tons. The total surplus thus comes to 5.9 million tons. Due to last years (2008) surplus of paddy and coming up of new crop (2009), paddy growers did not get the intervention prices of Rs.1250 per 40 kg for Super Basmati and Rs.600 per 40 kg for IRRI-6 as fixed by the government during the rice crop season 2009-10. This not only delayed the harvesting of paddy crop in both the Sindh and Punjab provinces, but also delayed the sowing wheat crop for a month or so.

PASSCO was asked to purchase 400,000 tons paddy (200,000 tons each of Basmati and the IRRI). Farmers harvested quickly during the first fortnight of November, creating glut and price crash in the market. PASSCO procured 4% of total yield and left farmers on the mercy of traders to purchase the rest of 96% crop.

In Punjab, the dominant rice variety grown is Super Basmati. Early in the November, farmers were forced to sell their produce to local rice traders and millers at very low price starting from Rs. 600-750 per 40 kg. Later on, PASSCO intervened in stabilizing the prices which ranged from Rs.1100 to Rs.1200 per 40 kg. Similarly, in the absence of PASSCO purchase centers in Sindh, the growers faced a risk of huge financial losses as the paddy price was very low. Farmers have to sell IRRI-6 at Rs.500 to Rs.525 per 40 kg against the support price of Rs.600. Later on, the IRRI-6 market price recovered and fetched the price of Rs. 600 per 40 kg. In Balochistan, 107 tons of paddy was available and could be procured as the price of IRRI-6 was improving and it was above the government intervention price of Rs. 600 per 40 kg. The absence or delay in procurement depressed the paddy producing farmers. PASSCO intervention was limited and on an average the farmers received Rs. 825 per 40 kg from the local market for basmati. PASSCO has another limitations that it doest not have enough storage facility. Nor has it set up the require number of procurement centers. With the result that it has failed in making direct rice purchases from them, leaving room for middleman to buy large stock of paddy at lower than support price.

The average international price of basmati rice is US$864 per ton during last four month (Sep-Dec), while farmers on average received US$434 per ton. This gap of US $430 per ton or Rs1600 per 40 kg instead of Rs 825 per 40 kg of paddy needs to be minimized in the farmerís interest. It is an established fact that most of the benefit of a higher support price goes to cash rich middlemen and the growers have no option but to sell their produce at lower price because they do not have cash for raising the next crop.

ISSUES IN RICE EXPORT

More than 40% of total rice production is exported annually to various countries including Europe. Rice exporters exceeded US$ 2 billion in the fiscal year 2009 (despite a fall in international prices) against US$1.8 billion a year ago. Exporters hope to meet the export target of US$ 2.5 billion for FY 2010. The average price of Basmati hovered around US$1500-US$1550 per ton in financial year 2008 but fell dramatically in fiscal year 2009. The average price of various varieties of Basmati ranged between US$1000-1250 per tons in fiscal year 2009. Export earnings of Basmati underwent a 48 per cent decline along with 26 percent fall in export volumes whereas export value of non-Basmati rice fell eight percent despite an increase of 26 percent in exports volume.

The FAO also reported that export price of rice from all exporting countries including Pakistan began sliding from June 2008 after peaking in May. According to REAP, volume of rice exports have picked up.

In the first five months of this fiscal year ending November 2009, rice export failed to maintain the growth trend of the last year. Lower global prices and somewhat complacent attitude of both the government and the private sector reduced rice export earnings by 31 percent. Lately, Pakistan started selling rice in retail packing to some nontraditional markets like South Africa, Africa, Singapore and Dubai. Exports in the second half of the year are expected to grow also because the government is trying to sell Basmati rice to the United Arab Emirates, Saudi Arabia and Iran.

Exporters have their problem to share. They received 19 complaints from EU and now every alternate shipment might come under strict scrutiny from quality standards this year.

Rice exporters can grow faster if geographical indication of Basmati is established. Unlike India that has registered GI of Basmati in its name, Pakistan has yet to do it. In Pakistan presently geographical indications like Basmati rice could be protected under the first schedule of the Trade Marks Ordinance 2001, as Collective Marks by members of a registered association of growers/producers etc. However, draft of a standalone law for the protection of geographical indications is under consideration of the government (IPO Pakistan) pending promulgation. It is an outcome of extensive consultations with stakeholders within the GOP as well as with private sector and legislative process needs to be initiated by IPO for its early promulgation. This law will provide protection to geographical indications products in more adequate way then what has been provided as under the trademark law.

Basically, the government and the private sector need to join hands and identify the obstacles in developing rice export sector in the medium term. It is also important for growth of rice exports to take rice growers into confidence in decision making and ensure that they get a fair price of their produce. Despite an increase in the support price of rice, small farmers were forced to sell their crop at lower rates because they don't have the storage facility and lack access to institutional loans for raising crop.

RECOMMENDATIONS

- Rice Export Association of Pakistan (REAP) has to bring export orders in October and November instead of December and January.

- Basmati rice should be procured only from the designated 14 districts which fall in 'Kalar' area.

- Capacity building of PASSCO must intervene in the market for paddy procurement on regular basis.

- Provincial governments must play their role in the procurement of paddy.

- Rice is not a staple food commodity. Therefore, its intervention price not the support price is announced to stabilize the paddy prices. In case of intervention price, the objective is to regulate the market in case of need. It is aimed to intervene to the minimal level in order to cushion the market during the peak harvest time. A major export commodity, the domestic price of rice paddy is determined by the world market. In view of experience of last two years plan of actions should be:

- The policy of paddy procurement for 2009-10 is a better option over the purchase of head rice retrieved from the paddy by the mills under agreement with PASSCO during 2008-09. Its effective implementation may be ensured at any cost.

- The realistic intervention price should be announced in view of the domestic and world production, stocks, and international prices.

- There should be timely announcement of intervention price so that the logistic and financial arrangements are made in time for timely operation by PASSCO.

- The operation of procurement should physically start from 1st October in Sindh and from 15th November in Punjab.

- Poor farmers suffered with low paddy price and the local consumers still buy good quality basmati rice at unaffordable price. The real beneficiaries are the middlemen. There is a need to develop mechanism to watch the interest of the both sufferers.

- The government should intervene to the minimal level and let the market forces play its role.

The author of this article is Coordinator Rice Program NARC, Islamabad.