KARACHI, May 24: The Union of Small and Medium Enterprises (Unisame) has demanded the government to take urgent measures for checking rampant smuggling of rice (about 100,000 tons a month) to Iran, which has sent local prices higher by 75pc owing to shortage of the commodity.

It observed that an increase of Rs2 and Rs0.70 per kg in pulses and wheat flour prices had forced policy-makers to ban their export, but a jump of Rs20 per kg in rates of Super basmati rice had failed to trigger any government action to stop its smuggling.

Unisame president Zulfikar Thaver in a statement released on Thursday said that over 100 rice processing units, operating between Lahore and Wazirabad, were the source of supply to smugglers who were lifting their daily production of 10 tons per unit by paying higher price.

He said that smugglers were also causing serious damage to regular rice exporters as they could not quote prices in the world market because of higher prices in the domestic market. “Many exporters have already lost their traditional markets and if the government do not take any action to check smuggling, the rice export trade will suffer major setback,” he warned.

Mr Thaver urged the rice processors not to ignore their traditional and regular buyers and should also give priority to Iranian buyers in order to promote trade through official channels.

Meanwhile, Rice Exporters Association of Pakistan (REAP) on Thursday warned that banning of rice export would be damaging for the country.

In a statement issued here, REAP chairman Abdul Aziz Maniya suggested to the government not to take any decision in haste as was done in the case of wheat and pulses. “Such decisions shake foreign buyers’ confidence and force them to explore new and permanent source of supply”.

He said that the reason behind price hike was the worldwide shortage of rice crop and Pakistan had been fairly lucky to harvest good rice crop this season. He said that in India there was 25 per cent shortage of basmati. Mr Maniya said that shortage in domestic market was owing to rampant smuggling and the government should take corrective measures to check this menace.

He further said that it took Pakistani exporters a long time to establish themselves in the world market and if any wrong decision of banning rice exports was taken it would damage image of the country.