The prospects of rice coming out of the bad patch of poor productivity and uncompetitive exports remain dim for 2013 and are not bright either for 2014. Historically, Pakistan’s basmati rice has been the most sought-after commodity in the world, more so in Arab countries.

But in recent years, it has begun to lose its lustre as well as its competitive edge. In this decline, however, weather is to be equally blamed.

Last month, Food and Agricultural Organisation (FAO) downgraded its July forecast for Pakistani rice by 0.6 million tonnes to 8.7 million tonnes. In July, it had expected the country to produce 12 per cent more rice than in 2012, or 9.3 million tonnes in 2013. The downward revision of forecast became necessary after torrential rains and floods again lashed the country in August.

The main rice producing regions of Punjab and Sindh, according to the latest issue of FAO’s Rice Market Monitor, were affected by the floods, with the basmati growing areas of Punjab particularly experiencing damages. The revised figure, however, suggests a five per cent increase in production over 2012 figure. Farmers, notes the report, still favour rice over cotton and, contrary to the previous year, adequate water for irrigation being available enabled them to plant rice at appropriate time.

Rice exports have come under severe pressure from high cost of inputs and electricity shortages after touching the peak of 3.5 million tonnes in 2010. This has been more pronounced in the Basmati market, where the country has been consistently out-competed by India. But India’s position is not enviable this year.

According to the latest report of USDA, India’s rice output is likely to decline to 103 million tonnes in 2013-14 owing to crop damage and exports are also expected to be lower at 10 million tonnes.

The likely impact of crop damage has already pushed up domestic rice prices in November. This, says the report, may compel the government to unload rice stock in the local market to check prices ahead of general elections. Although no official assessment of the crop losses is available, market analysts put it at around three million tonnes.

The FAO Monitor notes that ‘affordable prices’ in the non-basmati segment are expected to keep 2013 shipments from Pakistan at three million tones and the outlook for 2014 is seen ‘dampened’ by prospects of intense competition for markets.Next year, Pakistan’s exports would be further constrained if reports of flood-related losses in the basmati producing areas are confirmed. As a result, the FAO anticipates Pakistan to ship 2.9 million tonnes in 2014, which would be three per cent below the current 2013 forecast.

The per acre yield of Basmati rice in Pakistan has declined to 32 maunds from 48 maunds per acre over the last five years, while India has developed seeds that produce over 50 maunds per acre. One maund is equal to about 38 kilogrammes.

Unless Pakistan develops its research and produces better yielding seeds, it will remain out-competed. The Chinese and the Thais and others have also done the same. Pakistan annually produces 6.5 million tonnes of rice but in 2012-2013 the output was six million tonnes. Usually, the production comprises 40 per cent of Basmati (fine) variety and 60 per cent of coarse varieties.

Rice ranks as second amongst the staple foodgrain crops in Pakistan but it is also a major source of foreign exchange earnings. Rice accounts for 2.7 per cent of the value added in agriculture and 0.6 per cent of GDP.

Pakistan’s traditional export markets for rice include United Arab Emirates, Saudi Arabia, Qatar and Iran. The price of basmati rice has increased by 15 per cent due to increase in tariffs of electricity and gas. Besides, the frequent use of diesel-generators also causes an increase in operational cost.

In the last fiscal year exports were 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 declined sharply in the year.

The long grain rice goes to countries like Kenya, Madagascar, Mozambique, Malaysia and China. Some traditional importers of Pakistan’s basmati are now moving towards India because of competitive price and quality.

The FAO report says that in parts of Asia adverse weather has badly affected rice production. Global paddy production in 2013, which was expected to outpace 2012 production, has been revised downward by some five million tonnes to 741.4 million tonnes. One can notice deterioration of prospects particularly in China, Pakistan and the Philippines, which were hit, in recent months, by erratic climatic events, including storms and typhoons.