Rice exporters, especially of basmati, fear a tough export season this year on account of rising domestic price and some quality-related issues. However, farmers disagree because they say a similar and more pronounced price trend, is also being witnessed in India.
This year, the domestic rice prices have gone up by around 30 per cent. With paddy prices hovering around Rs4,000 per 40kg, the export price works out around $1,200 per ton. That means that world market has to be around $1,350 per ton to keep Pakistani basmati competitive vis-à-vis its Indian competitor. Exporters, however, don’t see the price jumping anyway near to that figure, at least so far.
Exporters say that once the gap between prices of Indian and Pakistani basmati shrinks, many countries starts buying Indian basmati because of psychological preferences for it. The Pakistani basmati only has a chance as long as its prices remain around $150 per ton less than Indian competitor. This year, the gap is closing.
Secondly, the quality issues still dog basmati exports. It is a premier quality product, which costs world buyers some 30 per cent more than other rice varieties. They thus justifiably expect it to be a quality product — free from all kinds of issues that come with cheaper rice, particularly pests.
Pakistan received at least three warnings from the European Union last year for presence of pest (aflatoxin). The quality issues rob Pakistani basmati of consumers’ confidence and place it lower than Indian ones in eating indexation. Pakistan has already put up a pre-shipment inspection regime to avoid such issues.
Apart from these issues exporters fear, the farmers have their own point of view on export prospects. The trend of increasing prices is international, which is also seen in the Indian domestic market. They argue if prices in Pakistan have increased by 30 per cent, they have gone up by 60 per cent in India.
That means there would be no cheaper Indian basmati or other varieties available in international market to compete with Pakistani rice.This should open a window for Pakistani exporters, if they can avail it.
There would no availability issue either. Pakistan, despite losing heavily on basmati in acreage and production, still produces close to two million tonnes of it. With exports at about 900,000 tonnes, availability should not be a problem. Both these factors should help improve basmati exports this year.
The exporters’ fears flow from their marketing failure, which the Rice Exporters Association of Pakistan had hogged for many decades but has not been able to properly market rice in the world market. It has neither been able to develop a brand for itself for retail market nor go beyond ethnic clientele. That is what hurts. Pakistani basmati rice more than anything else.
Both– farmers and exporters – hold, and justifiably so, the government responsible for failure on the research front, which is turning basmati increasingly non-competitive against other new varieties, especially Chinese hybrids. The current variety of basmati seed, which incidentally is close to two decades old, yields only 25 maunds of rice, against 60 to 70 maunds of the Chinese hybrids. Basmati, being a premier variety, brings around 30 per cent additional price. The Chinese varieties give more than 150 per cent more production.
Pakistan needs to invest in research to come up with a new better-yielding basmati variety to keep basmati competitive both in domestic and international markets. During the last two decades, the current variety has not only lost its vigour but has also become susceptible to diseases (rust and pests), putting additional pressure on yield and exports.
But the Reap, on its part, also needs to realise that research is not an exclusively official responsibility. It is, after all, business as well. Such associations, world over, play a supporting role by funding education and training of scientists. The Reap has so far failed to cast itself in any of these roles while it has lost its case of exclusive rights on rice exports.—Ahmad Fraz Khan