ISLAMABAD: With the commodity crisis deepening, officials have warned of a looming rice industry crisis owing to shortage of funds.

Analysts say that government’s failure to rollover loans of growers, millers and exporters could magnify the problem of disposal of paddy crop.

The new paddy crop is due in early November next, but the industry is facing an acute shortage of funds.

Also read: Depressed price of new rice crop

An official document available with Dawn shows that the country’s stock of rice piled up to more than 500,000 metric tonnes due to substantial decline in prices of rice.

The report says funds dried up in the rice industry owing to highest-ever unsold stock.

To pacify concerns of the rice industry, Prime Minister Nawaz Sharif announced that loans of rice industry will be rolled-over until June 2016 to avoid default on loans. But the decision has not yet been implemented.

A rice miller from Shaikhupura told Dawn that in some areas paddy has already arrived in the market at lowest ever price. Rice millers are the main buyers of paddy.

“If millers are deprived of capital by the banks, price of the paddy will further depress to the detriment of farmers,” he said.

Rice Millers association has identified bank loans worth of Rs100 billion, payment of which expired on June 30. As many as 3,000 rice millers, and thousands of growers and exporters are sharing the outstanding bank loans.

On the loan issue, a meeting was also convened by State Bank of Pakistan on Sept 4 in Lahore, which was attended by representatives of all banks.

The banks agreed to facilitate borrowers by allowing them roll-over facility and the release of their pledged/hypothecated stock within the existing regulations as its quality deteriorates rapidly.

Millers informed this scribe that despite commitments banks did not notify branches as per policy decision and they continue to pressure rice millers to repay loans.

Replying to Dawn’s query, SBP’s Chief Spokesperson Abid Qamar said that banks restructure/reschedule outstanding loans of their borrowers as per internal policies approved by their board of directors, within the regulations of State Bank of Pakistan.

He said some cases might have merit issues and banks might be reluctant to rollover.

“This was also emphasised by bankers during the above meeting that only borrowers having genuine difficulties may be accommodated,” he added.

As a result of this crisis and multiple other reasons, Pakistan’s export of $2 billion worth of rice is also at stake. India has already captured Pakistan’s export market through cheaper prices.

To boost exports, businessmen have suggested to the government to export the stock of 500,000 metric tonnes of super basmati rice through Passco or private sector. It was also suggested that the government should offer 20 per cent rebate on the invoice value of piled up rice stock in the country.

Pakistan’s rice exports witnessed around 8pc decline during the first two months of this fiscal year from a year ago. The decline is in terms of both value and quality of basmati and non-basmati rice.

Published in Dawn, October 9th, 2015

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