After the Rs180bn incentive package to the industry for boosting exports last month, the rice exporters have chimed in with demands of their own.

They want the government to withdraw sales tax from their utility bills, and withholding tax from electricity bills, share their cost of brand development abroad, help in rescheduling export loans and come up with an incentive package and mechanism, linking incentives to export increase.

Rice, being the second biggest export commodity, apparently merits this encouragement. Yet it was excluded from the prime minister’s incentive package. The Rice Exporters’ Association of Pakistan (Reap) was told that rice export does not fall in the official category of any industry, and thus has not been covered by the package.

Farmers who have been actively involved in rice trading do not agree with Reap’s point of view. For them, reduction in exports — from over $2bn to $1.4bn last year — has very little to do with the cost of doing business

Reap wants rice processing to be treated as an industry. After paddy husking, machines are used to de-stone the rice, which then goes through two polishing stages, followed by grading, sortexing (patenting) machines and then to packaging area, where fumigation follows before export. These costly and automated processes put the sector in the industrial category.

There are over 500 such factories in the country involved in rice processing. However, Reap needs to look into the factors that have caused a serious decline in rice exports. Farmers who have been actively involved in rice trading do not agree with Reap’s point of view. For them, reduction in exports — from over $2bn to $1.4bn last year — has very little to do with the cost of doing business.

Farmers say that loss of almost 1m tonnes each from Iran and Saudi Arabia was not due to the cost, but because of the lack of crop planning and market strategies.

Since supply was easy and cheap; many of the exporters never tried to venture into branding, where the actual money lies.

It gave a free run to other competitors like India, which now rules retail market and has established brands. That is why 80pc of the Saudi Arabia’s market is now filled with Indian brands, and Pakistan has only 10pc share for it. The Reap is now asking for help in brand development.

However, the farmers and exporters both now agree that Pakistan has a huge potential in rice export that could be tapped with a little bit of an additional effort and investment. One way of helping export is activating the embassies abroad.

All commercial counselors should be told to pull their socks up and locate all possible niche markets in countries of their jurisdiction. Other possible diplomatic efforts can include drawing benefits from free trade agreements that the government has signed with a number of countries.

Encouraging barter trade with countries like Malaysia, from where huge quantity of edible oil is imported, could be another option.

The Indians used this system very effectively with Iran when Pakistan was busy implementing UN sanctions against its neighbour.

As far as branding is concerned, it is a typical case of better late than never and the government may consider giving support on merit.

The government needs to have a sound strategy to boost the rice exports — because about 60pc of the domestic output is exported anyway.

Published in Dawn, Business & Finance weekly, February 13th, 2017