LAHORE: Complaining of the limited export finance facility available with commercial banks, the rice traders fear lack of funds may render them uncompetitive in the world market and thus hamper the efforts to achieve $5bn rice export target.
The exporters claim that the commercial banks are not increasing their export finance facility (EFS) under which loans are offered at three per cent markup, though they have more foreign orders and have exported almost double the quantity of rice in the first quarter of the ongoing financial year than during the same period last year.
To meet the foreign demand, they say, they have to secure loans at 16pc markup which may render push them out of competition in the international market and hinder the rice export potential.
“Unavailability of finance at a time when paddy procurement season is in full swing will severely hurt rice exports and making it difficult to achieve the export target of $5bn against $2bn gained last year,” says Rice Exporters Association of Pakistan (REAP) Chairman Shahjahan Malik.
Pointing out that the textile sector is given priority in the disbursement of funds under the EFS though this sector also enjoys subsidies on gas and power, Mr Malik says they have raised the EFS issue in a recent meeting with PM’s Adviser for Commerce, Industry and Production Abdul Razak Dawood.
“Mr Dawood assured us arranging a meeting with the State Bank governor soon to sort out the problem.”
Former REAP chairman Samiullah Naeem claims the rice exporters have put on hold their procurement of paddy at least for the time being as they cannot afford loan facility at whopping 16pc interest rate.
“We don’t have such a big profit margin to afford this high rate for taking credit for our export consignments,” he says, fearing the farmers will ultimately suffer because of procurement moratorium if the exporters are not provided with the EFS facility as per their export potential.
He cautions rice exports would dip 30pc instead of going up in case the EFS entitlement is not given as per requirement.
Published in Dawn, November 6th, 2019
