Research Analyst, PAGE
Nov 1 - 7, 2010
Rice is Pakistan's third biggest crop, after wheat and cotton and contributes around 1.6 per cent to the GDP. Rice accounts for 6.4 per cent of value-added in agriculture and 1.4 per cent in GDP. Pakistan grows high quality rice to meet both the domestic demand and exports. It is grown over 10 per cent of the total cropped area in the country.
Different varieties of rice are grown in Pakistan: Super Basmati, Basmati PK-385, Irri-6, Irri-9, and KS-282 etc. Two varieties of rice dominate the market: Basmati, and Irri, which are mainly grown in Punjab and Sindh. Basmati accounts for two per cent of exports and is of a higher quality than Irri.
Rice Exporters Association of Pakistan (Reap) has been successful in its sort take off period in improving the rice trade by development of rice milling machinery locally and by importing latest technology and equipments from Japan, England, Europe, USA and Asia to minimise losses.
Rice exports maintained its first position during April 2010. In this month, it fetched Rs15,882.54 million as against Rs21,619.74 million in March 2010 and Rs12,731.23 million in April 2009 showing a decrease of 26.54 per cent over March 2010 while higher by 24.75 per cent over April 2009.
EXPORTS OF RICE TO MAJOR COUNTRIES
JULY - APRIL 2010
JULY - APRIL 2009
UAE 316,142 18,851.55 257,555 19,800.37 Iran 206,573 10,840.82 303,082 24,166.30 Kenya 281,698 8,921.65 139,248 4,381.98 Afghanistan 193,514 8,407.25 280,160 15,851.86 Saudi Arabia 148,488 8,291.43 120,947 8,658.93 Philippines 177,741 6,908.20 6630 396.90 Sri Lanka 151,834 5,614.37 6845 469.16 Others 1,947,623 84,006.68 1087484 56,662.07
During July-April 2010 its exports amounted to Rs151,841.95 million as against Rs130,387.57 million during the corresponding period of last year showing an increase of 16.45 per cent. UAE was the leading buyer of rice during July-April 2010 with its share of 12.42 per cent in the total exports. Other major buyers were Iran (7.14 per cent), Kenya (5.88 per cent), Afghanistan (5.54 per cent), Saudi Arabia (5.46 per cent), Philippines (4.55 per cent), and Sri Lanka (3.70 per cent). These seven countries accounted for 44.67 per cent of total exports of rice during this period. Unit price of rice basmati for April 2010 was Rs70,127.87 per tonne as against Rs69,275.67 in April 2009 showing a rise of 1.23 per cent. Average unit price of this variety for July-April 2010 was Rs70,109.78 per tonne as against Rs91,020.04 for the same period of last year showing a fall of 22.97 per cent. Unit price of rice "Other Varieties" increased to Rs34,374.87 per tonne in April 2010 from Rs31,283.96 in April 2009 showing a rise of 9.88 per cent. The average unit price of rice "Other Varieties" for July-April 2010 at Rs35,803.08 per tonne was lower by 14.69 per cent compared to average unit price of Rs41,970.78 per tonne for the same period of last year.
Rice was the second largest crop affected by floods. The damage to the rice crop is estimated at about Rs56.3 billion and it is expected that the rice production would decline by 29 per cent to 4.352 million tonnes as against the target of 6.176 million tonnes. The floods have mainly affected Irri-6 paddy growing areas. Rice paddy was sown on 2.64 million hectares and damaged area is 0.708 million hectares or 1.7 million acres.
Rice exporters estimate that production of non-basmati rice will fall short by 15 to 20 per cent from the previous estimate. Low-income groups mostly use Irri-6, Irri-9 and 386 varieties. Rice occupies 2.6 million hectares that is 10.9 per cent of the total cultivated area with production of 5.1 million tonnes of milled rice.
According to the World Bank, flood damaged crops worth one billion dollar. However, this figure will surely increase after final estimates of the losses to essential cash crops like rice, cotton, tobacco and sugarcane might exceed to $3 billion. A US Department of Agriculture report also indicated that rice production in Pakistan would be about 4.4 million tonnes for the 2010-11 and the rice export is estimated at 2.3 million tonnes.
It was expected that non-basmati rice production would be about 4.5 million tonnes in the current year but due to floods in various parts of Sindh, where much of this kind of rice is grown, the expected loss is 800,000 tonnes.
Basmati rice is grown in Punjab and most of the areas have not been affected significantly by the floods. Because of supply constraints, the price of basmati rice has increased by Rs10 to Rs70 per kg in wholesale markets while rates of non-basmati rice have risen by Rs5 per kg. The price hike was due to the Indian government's ban on export of non-basmati rice, while the prices have increased as intermediary is holding back stocks. The basmati rice price in Karachi wholesale market rose to Rs1,900 on September 2010.
Despite a shortfall of about 1.5 million tonnes in rice production due to devastating floods, Pakistan will be able to export rice worth two billion dollar during 2010-2011. Moreover, Pakistan has about 0.8 million tons of milled rice worth $800 millions as a carryover of the previous crop. The demand of Pakistan's superior quality basmati rice is picking up in the international market at a rate of $1050 to $1100 per ton.