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Steep fall in Basmati exports

January 13, 2013

Exports of Basmati rice are falling as production is down, local consumption is up and prices are higher than last year. All this is happening at a time when competition with India has become tougher and its exporters have captured  large parts of Pakistan’s traditional markets.

According to the Chairman of Rice Exporters Association of Pakistan (REAP) Mr Jawed Ali Ghori, exports of Basmati fell more than fifty per cent in July-December 2012 to about 240,000 tonnes from 507,000 tonnes in the same period of 2011.

Pakistan Bureau of Statistics is yet to release the latest official data but July-November 2012 figures of exports of Basmati show a 44 per cent steep fall in terms of volume and about 30 per cent drop in terms of value to $230 million.

Rice exporters say that Basmati paddy is currently selling around Rs2100 per 40kg against Rs1800 per 40kg last year.

Similarly, new milled Basmati rice is available at Rs3700 per 40kg, up from Rs3200 per 40kg. Old Basmati grains are priced around Rs4200 per 40kg against Rs3500 per 40kg.

Growers say Basmati paddy prices are up because of lower production and higher cost of inputs including electricity, fertiliser and pesticides, etc. And millers also cite higher cost of energy, increased labour wages and pricier paddy as key factors that have pushed up prices.

An official of Basmati Growers Association told Dawn that the combined output of Super and Kainaat varieties this year is estimated somewhere around 1.5-2.0 million tonnes. Final figures would be available after some time as harvesting has just concluded in the areas where Basmati was sown a bit later than usual due to shortage of water.

“Super and Kainaat varieties are in short supply because many of our traditional Basmati growers had opted for (the rice grains known as) PK386 that are harvested in a shorter period and offer better yields,” a Basmati grower in Punjab told Dawn over telephone. He said production of other varieties of Basmati like PK370, PK198, PK385 and Kernel have already been on the decline for past few years.

Against 30-35 maunds per acre of Super and Kainaat, growers normally get as much as 50 maunds per acre of PK386. And whereas traditional Basmati varieties are harvested in around five months, PK386 crop matures within three-and-a-half months to four months.

Growers whose paddy sowing was delayed had no other option but to go for the variety that could be harvested in a shorter period and they could get enough time to prepare soil for wheat and other Rabi crop sowings. Besides, a shorter span of a lower grade paddy also means reduced cost of production which compensates the price difference between it and a higher grade variety.

A former chairman of Rice Exporters Association of Pakistan (REAP) Haji Abdul Majid told Dawn that Indian Basmati was selling around $1100 per tonne whereas for our exporters selling super variety at less than $1250 per tonne is not feasible. Many foreign buyers have switched over to Indian Basmati because of this huge price difference. Pakistani Basmati is costlier chiefly due to a gradual decline in production (up to 27 per cent in three years ended in 2012), ever-increasing local consumption and higher cost of production and milling, according to Basmati Growers Association..

A couple of other exporters including former REAP Chairman Javed Islam Agha said export price of Kainaat variety of Basmati had gone up as high as $1350 per tonne against $1200 per tonne price of the comparable Indian Basmati which is non-aromatic but whose consumption in the UAE and Iran has been on the rise.

“Actually Indian exporters have made aggressive and smart marketing moves and they have convinced our traditional buyers like the UAE and Iran that their 1121 Basmati variety is as good as our Kainaat. Maybe the buyers can still see the better quality of our rice but because of the price difference many of them have welcomed Indian rice,” Agha told Dawn.

That domestic consumption of Basmati rice has been on the increase is evident from the popularity of branded Basmati varieties in consumer packs of 5kg and 10kg not only at big super stores but also at retail outlets across Karachi and other major cities.

And larger local consumption of rice in Pakistan is in line with a global trend, according to the latest report of Food and Agriculture Organisation.

Haji Majid said one of the reasons for decline in Basmati exports was that Iran was not buying Pakistani Basmati this year. “Most Iranian buyers have switched over to Indian exporters who have sold around one million tonnes of Basmati there. In this marketing year (November 2012-October 2013) India is eyeing to export 3.5 million tonnes of Basmati in addition to seven million tonnes of coarse rice.”

Rice dealers say on January 3 India has withdrawn mandatory testing and analysis of samples of export consignments at designated laboratories to check their actual variety. This will help boost its exports.

Rice growers including Chairman of Basmati Growers Association Mr Hamid Malhi say rice exports could get a shot in the arm if our exporters adopt latest market techniques and explore new foreign markets. But exporters think something else is needed. According to REAP Chairman Javed Ali Ghori, there is a need to introduce new varieties of Basmati because seeds of Super Basmati have lost their strength and this variety is gradually losing its per acre yield year after year.

Exporters point out that whereas Pakistan has not introduced any new variety of Basmati after 1996, India has developed its famous long-grain 1120, CSR-30 and PUSA varieties which give a huge yield of up to 60 maunds per acre.

A declining trend in exports of Basmati had set in immediately after fiscal year 2008-09 when exports had touched a record 1.2 million tonnes of aromatic rice.

In FY2011-12 exports of Basmati fell to 900,000 tonnes and even the most optimistic exporters say that this fiscal year’s exports would remain close to the last year’s levels.

But many of them including the current REAP chairman say Pakistan should now make a move to get PK386 commercially registered in buyers’ countries as one of the Basmati varieties as it fulfils almost all attributes of its traditional Basmati including long grain and aroma.—Mohiuddin Aazim