PROSPECTS OF RISE IN RICE EXPORTS
TARIQ AHMED SAEEDI
Aug 29 - Sep 11, 2011
Rice exports from Pakistan are expected to reach 4.6 million tons and fetch $2.5 billion in the current fiscal 2011/12. The target was mutually agreed in a meeting attended by the government officials and representatives from the private rice exporters association.
The country managed to export 3.7 million tons rice and earn $2.02 billion during the last fiscal year despite the rampaging floods in summer 2010 that destroyed 1.5 million tons of rice crop, brought down exports straight to 3.7 million tons from 4.6 million tons a year ago.
The floods that engulf the agriculture fields proved also blessing for upcoming crops such as rice. A bumper rice production of seven million tons is expected this year. "We are expecting a bumper crop of seven million tons by the end of September 2011 due to last year floods," Internews reported chairman rice exporters association of Pakistan (REAP).
After meeting local annual demand of 2.3 million tons, the country would have more than four million tons in stock from the current production for exports. Added with an estimated carryover stock of over one million tons, exports volume come to roughly five million tons.
The expectations about growth in exports are realistic in view of the track record of growing rice exports from the country during last few years barring last year that saw floods ruining agriculture fields.
However, the world's fifth largest rice exporter, Pakistan is not the only contender in the international rice market where reincarnated Indian exporters as well as rice exporting bellwethers Vietnam and Thailand are poised to give their rivals tough time in acquiring market share.
India has lifted ban on rice exports since 2008 and is planning to export one million tons mainly to Bangladesh, the biggest rice importer in South Asia, which had set import target at 900,000 tons for the year through June to control rise in prices of rice in local market. According to Reuters, Indian rice stocks stood at 27.8 million tons on May far more than the target of 12.2 million tons due to bumper crops.
Although Pakistani exporters ruled out the impact of India's comeback on Pakistan's share, south east Asian seafarers will definitely put forth vigorous competition in traditional and non-traditional markets they have explored or are eyeing for.
Basmati and non-basmati exports from Pakistan are destined mainly to Middle East, Iran, EU, USA, and Bangladesh. But, now rice exporters are also eying on South Africa, Indonesia, etc.
Analysts said Pakistan is trying to tap those markets that are strongholds of Thais and Vietnamese. Top rice exporter Thailand is expected to export 10 million tons. It produced 31.8 million tons paddy last year that was equal to 19 million tons milled rice available for local consumption and exports. Similarly, Vietnam is expected to export 7.3 million tons this year.
Indonesia imports rice under the agreements with Thailand and Vietnam whose exporters are bound to ensure the supplies even during emergencies.
Notably, Philippines, the world's largest rice buyer, also buys rice under diplomatic agreements. Of late, it extended the validity of an agreement with Vietnam of rice supplies to 2013. Meanwhile, it is also gradually cutting imports and said to slash it further to 500,000 tons as its local outturn is likely to touch 19 million tons. Media reports said the country would expect to be self-sufficient in rice by 2013.
On the other hand, Indonesia will import rice on concessionary accord it had reached with the duo rice exporting juggernauts. The Muslim nation can buy up to two million tons under the agreement. The country is also on the path to self-sufficiency, simultaneously pushing up output by five per cent and cutting consumption by 1.5 per cent a year. With the relentless discipline, the country is expected to enjoy surplus in next five to 10 years.
United Nations food and agriculture organization has predicted that global rice production would scale up to 480 million tons in 2011, up three per cent as compared to previous year because of the improved climatic conditions. That production level would be sufficient to meet the global projected demand of 460 million tons, according to International Rice Research Institute (IRRI).
International price of rice is showing a declining trend. For example, rate of five per cent broken rice is revolving around $505 to $510 per ton indicating six percent decrease from the end of 2010.
However, Manila-based IRRI anticipated stable price of rice in 2011-12. "Overall it looks like the harvest will be good and prices should be stable," IRRI economist Samarendu Mohanty told Reuters.
The present global rice inventory is 25 million tons more than the level recorded two years ago when rice price skyrocketed to all-time high of $1080 a ton in April 2008 on fear of shortage of supplies. "So if you take into account that we have a comfortable amount of stocks and assume that we produce a good amount of rice, then prices should stay low," he said. Mohanty also rejected the likelihood of rebound of prices to 2008's level at the prospect of good production.
Pakistani rice exporters fear that dampening business environment might frustrate the export plan. Disturbed law and order situation is their main concern. Worsening security situation disturbs the smooth functioning of economic activities. For instance, rice shipments from rice mills to the ports need secured and time-bound logistics within the country.
How in the wake of the cutthroat competition and other important issues, the exporters will emerge successful in increasing rice exports back to its previous level or above that remains to be seen.
Advisably, the government should come into action fast to strike diplomatic deals with the rice importing countries much like the other exporting economies of Thailand, Vietnam, India, etc. to cash in on the prospective bumper crop this year.