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RICE EXPORTS KEEP DECLINING BUT EFFORT ON WAY TO BRING PRECIOUS CROP BACK TO GLORY
10/30/2017

PAKISTAN & GULF ECONOMIST (30/10/2017)

RICE EXPORTS KEEP DECLINING BUT EFFORT ON WAY TO BRING PRECIOUS CROP BACK TO GLORY

Pakistan’s rice exports witnessed a decline of around 14 percent during the last fiscal year due to lack of research and non-availability of new seeds. Few years back, rice was the second largest foreign exchange earning commodity with $2 billion exports, however, now it ranks fifth as the rice trade is facing severe crisis and exports continue to decline. Exporters said that future of rice exports is depending on the upcoming crop. If crop will be better and achieve higher yield than some increase is expected in exports otherwise current fiscal year will remain very challenging for rice trade.

According to exports statistics, Pakistan’s overall rice exports posted a 13.63 percent decline during the last fiscal year 2017. Pakistan rice exports stood at $1.607 billion in July-June of fiscal year 2017 compared to $1.86 billion in same period of fiscal year 2016, depicting a decline of $253 million. In term of quantity, rice exports posted a 17.13 percent decline in July-June of 2017 compared to the same period of last fiscal year. Pakistan exported some 3.519 million tons rice (basmati and non-basmati rice) during the last fiscal year against the 4.246 million tons a year earlier.

During the period under review, basmati rice exports fell 3 percent, while non-basmati rice exports declined sharply by 17 percent. Present government’s policies had directly hurt the rice exports as Pakistani rice was costly in international market due to high input costs, overvalued currency and excessive taxes on rice sector. During the last fiscal year, Pakistan’s rice crop achieved a low yield due to lack of research and unavailability of new or quality seeds. Rice crop size was less than expectation and broken quantity was over 40 percent as against standard ratio of 25 percent during the last season. High input costs had made Pakistan basmati rice completely uncompetitive in the world market particularly with the Indian basmati rice.

PAKISTAN’S RICE POPULARITY IN SAUDI ARABIA

Government had not fulfilled its commitment while rebate that was granted to other exports, was not given to the rice sector. According to the Consulate General of Pakistan, Jeddah, Pakistan has appreciated the initiative taken by the rice exporters of Pakistan, and hoped that these efforts would support our efforts to increase the exports of rice to Saudi Arabia. Saudi Arabia imports over $1 billion worth of rice every year, which is a great opportunity for Rice Exporters Association of Pakistan (REAP) to further increase the export of rice. The joint chamber of both the countries is playing a very vital role in promoting trade in all the sectors between the two brotherly countries. There is tremendous scope for the export of Pakistani basmati rice to Saudi Arabia, because of its supreme quality, unique aroma and taste. This is the reason why Pakistani basmati rice is very popular worldwide including Saudi Arabia.

IRAQ AND URUGUAY BUSINESS

Rice Exporters Association of Pakistan (REAP) has been making frank efforts to promote Pakistani rice which has resulted in exponential increase in the popularity of Pakistani rice across the globe. Iraq’s state grains buyer purchased a total of around 60,000 tonnes of rice in an international tender. Some 30,000 tonnes will be sourced from Pakistan and 30,000 tonnes from Uruguay.

Pakistani rice had been offered at the lowest price in the tender although the country has not been offered in Iraq’s purchase inquiries recently. The Pakistani purchase is made under the additional condition that a sample must be submitted to Iraq’s state grain board before contracting. The rice from Uruguay was purchased $580.50 a tonne c&f free out.

Volumes in Iraq’s tenders are nominal and the country can buy more than requested in the tender. Iraq made no purchase in its previous international tender to buy rice which closed on July 30. The country has been struggling to import grain for its food subsidy program after introducing new payment and quality terms that left trading houses unwilling to participate in its international tenders. Iraq is expected to produce about 250,000 tonnes of rice this year, suggesting the country will face a shortfall of about 1 million tonnes, which will need to be covered by imports.

EXPORT TO SRI LANKA
Pakistan agreed to export 25,000 tonnes of rice on an urgent basis to Sri Lanka which aims to meet its domestic shortfall due to drought. An official statement issued after the meeting said Sri Lanka had requested to procure 300,000 tonnes rice from Pakistan on government-to-government basis.

This year a high-level Sri Lankan delegation led by Secretary, Ministry of Commerce and Industry, Sri Lanka, Chinthaka S. Lokuhetti called on Secretary Commerce, Pakistan. Mohammad Younus Dhaga to discuss the possibility of procurement of 300,000 MT rice from Pakistan to meet the domestic shortfall because of drought in Sri Lanka. Mr Dhaga informed the Sri Lankan delegation that Pakistan will initially provide at least 25,000 tonnes. “We cannot meet the whole demand in one go due to the end of season,” Mr Dhaga commented. For the remaining quantities, the trading arms of two countries – Trading Corporation of Pakistan (TCP) and Cooperative Wholesale Establishment (CWE) in Sri Lanka – will discuss procurement schedule and price in Sept/Oct on the advent of new crop. The two sides also discussed about signing a memorandum of understanding between TCP and CWE for supply of other commodities including sugar.

OTHER LUCRATIVE MARKETS

Iran is emerging an important and lucrative basmati market for Pakistani exporters and Pakistan can export 0.5 million tons basmati to Iran. REAP has urged the government to take immediate steps to increase the production of rice by introducing the farmers new hybrid seeds, so that farmers can achieve higher yield.

In the coming months, rice will remain talk of trade negotiations involving Asia’s biggest rice producers and consumers. In recent bilateral deals between the European Union on one hand and Japan, and Canada on the other, can delay or derail trade agreements.

Rice is no small matter to most Asian nations. Some countries may be tempted to exclude the sector from trade talks in order to push them forward, the global rice market will continue to be plagued by the volatility and inefficiency that come with excessive subsidies if steps are not taken to moderate them.

Chinese scientists are ready to help Pakistan in increasing rice production. A senior official of the Punjab Agriculture Department suggested promoting hybrid rice varieties to increase per acre yield of paddy. Hybrid varieties will decrease the cost of production of the rice crop and ultimately increase exports.

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