The Rice Exporters Association of Pakistan is worried over the future of the country’s rice exports after having lost some major markets to its competitors and having missed annual export targets for the last five years.

Before the situation takes an alarming turn, the association says, the government must intervene to salvage the country’s rice sector, which is the second highest foreign exchange earner after textiles, by providing subsidies and incentives to growers and exporters to enable them regain their competitiveness in the international market where rice prices continue to fall.

The finance minister has disappointed stakeholders in rice business by failing to take appropriate measures to address the issues the sector is facing. The only step he took was to exempt rice mills from minimum taxes for the tax year 2015.

But Basmati Growers Association (BGA) Chairman Hamid Malhi took exception to the budgetary measure, saying the exemption given to rice mills should be applicable to all rice stakeholders. Growers, traders, millers and exporters have all suffered because of the low demand of Pakistani rice in the international market, so all should be facilitated equally, he said.

The highest shipments recorded so far were in 2009-10 when earnings from rice exports stood

at $2.2bn. Since then, the exports have remained more or less stagnant

Similarly, chairman of REAP, Rafique Suleman, in a statement, appealed to the government to provide rice farmers free seeds, free pesticides, free electricity, free water, free dryers and other equipments to help them reduce cost of production. It is strange, he said, that the government was indirectly assisting farmers by supplying gas to the fertiliser industry at subsidised rates rather than giving the growers cash subsidies.

What the exporters need, he argued, is the kind of assistance and facilitation which exporters in Thailand, India and Vietnam — Pakistan’s major rivals — are receiving from their governments. If no similar action is taken, Pakistan will not be able to compete with them and will only be adding to its unsold surplus stock.

The highest shipments recorded so far were in 2009-10 when earnings from exports stood at $2.2bn. Since then, the exports have remained more or less stagnant. During July-March 2014-15, rice export earned $1.53bn. But according to latest Economic Survey, rice recorded highest ever production at 7,005 thousand tonnes, showing a growth of 3.0pc over last year’s production.

However, the increase in production was due to more area brought under cultivation, timely availability of irrigation water and more acreage under high yielding Hybrid rice varieties.

Prices of basmati rice were Rs 4,400 per 40kg in 2013-14, which dropped to Rs3,400 in 2014-15 and then to Rs2,600. The prices fell after India flooded the international market with its basmati rice.

Meanwhile, a senior leader of the Fed­era­tion of Pakistan Chambers of Commerce and Industry (FPCCI) has suggested to the government to set up a Rice Development Board which should tackle the issues of development and promotion of all varieties of rice in the country, especially the basmati rice.

In a letter to the federal ministers for commerce and food security, regional chairman Khawaja Zarar Kaleem said that annual yield of rice declining, mainly because of lack of knowledge among farmers of latest research and development of new rice varieties.

Pakistan’s competitors were able to raise their exports by benefitting from market-oriented or demand-driven research. The creation of the board on the basis of public-private partnership concept, he said, would carry out research on improving productivity of basmati and paddy.

The board having technical experts from the public and private sectors should be headed by a federal secretary as its governor with deputy governors, one each for basmati and paddy sections from the REAP. He appealed to both the ministers to extend their support for this proposal and direct officials of their ministries to co-ordinate with the FPCCI for this purpose.

Another problem the rice sector may face in near future is the threat to existing rice varieties including basmati from hybrid varieties. Basmati is known and loved the world over for its unique taste and aroma. But what makes the hybrid varieties more attractive in commercial terms is the big difference in their yield.

In some cases, hybrid seeds are giving yield of over 200 maunds per acre, against a paltry 70 maunds of traditional varieties. With such a difference in yield, basmati cannot maintain any competitive advantage in the world market.

Pakistan Agriculture Research Council has recently approved seven hybrid varieties of rice for use by farmers. Soon, many farmers will be switching over to hybrid seeds, despite its high cost, and abandon basmati.

Some have already started using them. Meanwhile, Pakistan is engaged in a legal battle with India over basmati’s geographical indication status to prevent its misuse or theft.

Basmati is produced mainly in certain dedicated districts of Punjab on both sides of the border but like other bilateral issues it remains unresolved after decades of debate. Pakistanis, one may argue, cannot abandon basmati even after shifting to hybrid variety for they are a basmati consuming nation.

Published in Dawn, Economic & Business ,July 21st, 2015

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