Historically, Pakistan has been the world’s leading supplier of Basmati rice. But in recent years, its competitive edge has been eroded because of decline in productivity and international prices.

The per acre yield of Basmati rice has declined to 32 from 48 maunds per acre over the past five years, while India has developed seeds that produce over 50 maunds per acre.

The Asian Development Bank proposes to spend $1 million on technical assistance needed to add value to ongoing activities of public and private sector stakeholders, that would lead to a significant increase in the yields of Basmati rice. The strategy is to develop Basmati value chain in Punjab and raise productivity per acre by developing new high yielding varieties. By 2017, the project is expected to cover over two million hectares.

One of the major bottlenecks in the Basmati value chain is farm production. Other issues are high production costs and declining yield of current Basmati varieties which are making its cultivation a less profitable for farmers, resulting in shifting of some farmers to non-Basmati varieties for better yields.

Pakistan is considered far less developed in agriculture as compared to other regional countries such as China, Thailand and Malaysia.

According to Economic Survey 2012-13, rice accounts for 2.7 per cent of the value added in agriculture and 0.6 per cent of GDP. Rice sowing area is estimated at 2.31 million hectares, 10.1 per cent less than previous year’s area of 2.57 million hectares. Production of the crop is estimated at 5.54 million tonnes, against the target of 6.9 million tonnes which shows a weak performance of 19.7 per cent, and its comparison with previous year’s production which was 6.16 million tonnes shows a decrease of 10 per cent. The production declined due to a decrease in area and effects of monsoon rains; the late receding of water in rice fields prolonged the sowing.

In 2012-2013 Pakistan produced six million tonnes of rice while usually it produces around 6.5 million tonnes per annum, which includes 1.5 million tonnes of highly aromatic, premium quality super Basmati and rest consists of varieties of long grain rice such as Irri-6. Of this, a modest quantity is locally consumed, since rice comes second after wheat as a staple food grain. The country is the fourth largest exporter of rice after India, Vietnam and Thailand and captures a significant segment of almost 15 per cent of the global rice trade.

In the fiscal year 2012-13, exports of rice stood at about 3.5 million tonnes, five per cent less than the previous year’s 3.7 million tonnes. The decline was mainly due to 35 per cent reduction in the export of Basmati rice which stood at about 630,035 tonnes compared to 968,942 tonnes exported in the previous fiscal year. Exports to major traditional buyers of Basmati rice such as the UAE, Oman, Saudi Arabia, Qatar, Iran declined sharply in the year, while they considerably increased to the UK, the US, Malaysia and Spain. The long grain rice goes to countries like Kenya, Madagascar, Mozambique, Malaysia and China which is a recently developed market.

The traditional importers of Pakistan’s Basmati are now moving towards India because of competitive price and quality. The price of Basmati rice has increased by 15 per cent due to increase in tariffs of electricity and gas. Besides, the running of mills on diesel-generators also led to an increase in operational cost. Pakistan is expected to produce about 6.2 million tonnes of rice in 2013-14, nearly 20 per cent lower than the official target of 6.9 million tonnes. The rice industry representatives have opposed lobbying by India to get support for subsidies on rice exports ahead of the next World Trade Organisation meeting later this year as it could harm the rice sector in Pakistan and several other smaller countries in the region.

India earned about $6.2 billion from rice exports in the fiscal year 2012-13 (April – March), up by about 26 per cent from around $4.9 billion in the previous fiscal year. In terms of value, Iran and Saudi Arabia accounted for around 19 per cent and 12 per cent respectively of India’s rice exports in the last year. It has made significant increases in rice exports to Africa, Middle East, Nepal, Singapore and the UK. In value terms, Saudi Arabia was the largest destination for Indian rice, which accounted for about $678.5 million, up by about 10 per cent from the previous fiscal year, followed by UAE ($343 million) and Nigeria ($307 million).

India is likely to be the top rice exporter once again in 2013-14, with around 28 per cent of the global rice trade share. Since 2011, when it lifted its ban on non-Basmati rice exports, its rice export pace has been intensifying. It is expected to export about 11 million tonnes of rice in 2013-14 which may include about 3.5 million tonnes of Basmati rice, higher by about five per cent from around 10.4 million tonnes exported in the previous year. According to the US Department of Agriculture, India’s rice production is expected to reach a record 108 million tonnes in 2013-14.

Vietnam remains the cheapest rice destination. The Vietnamese dong declined by about one per cent in July, making its quotes more competitive globally. The country is expected to export about 7.5 million tonnes of rice in 2013, down from a previous projection of eight million tonnes. It exported about 4.28 million tonnes rice during Jan-July 2013, almost 10 per cent less from the exports in the same period last year. Ashfak Bokhari