April 23, 2008	Wednesday	Rabi-us-Sani 16, 1429

ISLAMABAD, April 22: With the flour crisis worsening by the day, the economic wizards of the coalition government are working on modalities for creating strategic reserves of rice for at least one year to avert food riots, Dawn has learnt.

This concept of strategic reserves emerged in the face of stiff opposition from the rice exporters, who appear ready to fight tooth and nail any government ban on export of rice or attempt to fix a minimum export price for rice.

Well-placed sources told Dawn on Tuesday that several meetings on the issue had already been held with the rice exporters’ representatives to work out the details of the quantity, quality and price of the rice for the strategic reserves.

The issues will be discussed in length to determine parameters with all rice stakeholders before announcing any policy, the sources said and added the issue of imposing ban on rice export has been dropped for the time being.

According to the sources, in one of the meetings headed by Commerce Minister Shahid Khaqan Abbasi, the rice exporters also demanded the financing facility from the State Bank of Pakistan (SBP) in building strategic reserves. The SBP governor assured to come up with some programme in the next few days, the sources added.

Basmati Growers Association president Hamid Malhi told Dawn after the meeting that most of the exporters pleaded for unhindered export of rice, particularly basmati to earn foreign exchange for the country.

He said that the government intervention in rice export trade was not required, which, he said, would deteriorate the market.

“We don’t want any subsidy from the government though the prices of inputs -- diesel, DAP, urea -- has already witnessed substantial increase,” Mr Malhi said.

He said that the new rice crop will be coming into the market in September and ruled out the impression of any shortage of rice in the market.

Asked about the persistent rise in rice prices in the market, he said it was due to higher than expected increase in the price in international market due to slump in rice production of main producers, including Australia.

He said that annual production of basmati stood at around 2.5 million tons. In case the 500,000 tons was reserved for the domestic consumption, the rest should be made available for export.

He said that the export value of the 2 million tons of basmati could easily be in the range of $3 billion. On this quantum of export the export tax will easily generate around Rs3 billion for the national kitty.

He suggested that this amount could be used for subsidising the purchasing power of the poor consumers. However, he warned that in case of any intervention the next year rice production might fall, which may lead to import of the commodity.

To a question, he said that basmati growers have no concerns about the fixation of minimum export price. He said pure basmati is fetching $1,200 to 1,400 per ton these days. He said India is the only competitors but they are not in the market.

He said that more than seven million households depend on rice cultivation and a similar number would be from labour. He said that imposition of ban on rice would encourage smuggling.