October 27, 2003	Monday	Sha’aban 30, 1424

Circumstances have provided Pakistan an opportunity to take advantage of the recent ban on rice export by India. To understand the advantage of this situation, an overview of our rice production and export is given below:

Rice is one of the most important crops of Pakistan by having a unique position of being both a cash and food crop. It feeds millions of human as well as earns foreign exchange for the country. Callously, on the part of those who have been at the helm of affair from time to time rice never received a fair deal.

As a result, its production and exports have always been subjected to up and down situations.

Annual area and production figures of rice during the last few years are given in Table 1:

It will be seen from the above figures that both area and output of rice, having risen continuously every year, declined by 6.64 per cent and 6.09 per cent respectively during 2000-2001, as against the previous year. Not only did the scarcity of water limit the farmers’ ability to maintain area under cultivation at the previous year’s level, it also adversely impacted the per hectare yield of rice which declined by 1.4 per cent.

Although, the production of rice (at 4.8 million tonnes) was 6.8 per cent less in FY 2000-01 than the previous year, it was considerably higher than the domestic requirements that are estimated at 2.5 million tonnes leaving 2.3 million tonnes as exportable surplus.

Exports: Exports of rice during the last few years are given in Table 2:

The above figures would show that the annual export earnings from rice continued declining year after year during the period under review. Ultimately these dropped by 2.6 per cent to $527 million.

A break-up of export volume of Basmati rice (superior quality rice known for its aroma) and other varieties (like Irri-6 and Irri-9) provides some insights. During FY-01 the share of basmati rice in total export declined from 30 to 20 per cent resulting in a substantial loss of foreign exchange.

Falling international rice price, quality concerns and lack of proper marketing were responsible for the decline in export earnings.

Rice exports to Middle East: Rice exports to Dubai — which over time has turned into a distribution centre for Pakistani rice — accounted for 34.2 per cent and 4.9 per cent of total export volume of basmati and other varieties, respectively.

Keeping in view the size and population of Dubai, this relatively high share provides some credence to market reports that the Indian traders in Dubai are selling Pakistan rice under their own brands at much higher prices.

As such, in Saudi Arabia — a substantial buyer of rice — Pakistan is losing its market share to India due to the non-availability of quality par-boiled rice. During FY-01, basmati exports also declined by 21.8 per cent in terms of volume with a 30.9 per cent fall in value.

Still, on a positive note, the falling earnings from rice exports may be arrested by the factors like

(a) the recent decision by the Philippines government to allow Pakistan firms to take part in rice bidding there,

(b) the permission to private sector companies to certify quality specifications, and grading of rice prior to shipment from Pakistan,

(c) the formation of a quality review committee to inspect the export consignments and

(d) a joint stand with India against the patenting of three qualities of basmati rice by a US rice firm.

Current situation and suggestion: As expected and projected, as a result of appreciable increase in rice exports, Pakistan has earned foreign exchange to the tune of $287.4 million during the first seven months of the current fiscal year according to the statistics released by the Federal Bureau of Statistic (FBS).

It may be recalled that at a time in the past Pakistan had attained the top most position among the world rice exporting countries.

But due to not improving the quality of its rice, ignoring the world market aptitude, slackness in seeking new markets coupled with the increase in production cost, the export of Pakistan rice was adversely affected.

The markets already captured also slipped out of our hands on the allegations of exporting defective rice by some exporters.

Indian traders tactfully export their inferior rice by branding it as of the Pakistani origin and selling the better quality rice under their brand names to earn higher profits at the cost of Pakistan.

In view of the above situation, it is necessary that greater attention should be paid to cultivating new high-quality varieties, decreasing production cost through the adoption of modern technology, and seeking new profitable markets.

Also on the part of the government, it is imperative that it may create better environment by providing more facilities and incentives to rice exporters. This would go a long way in regaining our lost position in the global rice export market. Eventually, this would also impart strength and stability to the overall agrarian economy of Pakistan.