Historic decline in Basmati exports: rice exporters may also seek subsidy

The exporters of rice in the country may also seek subsidy after sugar exporters as export of rice particularly Basmati faced a historic decline during the past eight months amidst stiff competition with India. According to fresh data available with Business Recorder, export of the best quality Basmati rice was recorded only 328,373 MT during July 2012 to February 2013 against 647,761 MT recorded during the corresponding period of 2011-12 showing a historic decline of over 50 percent. 

In terms of value the exports shrunk to $319.518 million in 8 months against $562.59 million recorded during the same period last year. The exports of Non-Basmati rice also declined to 1,874,503 MT from 1,922,187 MT with the reduction of 47,684 MT during the same period. However export of non-Basmati had not affected as much as the high quality Basmati due to increased supply to non-traditional markets like China, said Taufiq Ahmed Khan, former Vice Chairman of Rice Exporters Association of Pakistan (Reap). 

Pakistan is fast losing major international markets for Basmati only because of the high cost of the commodity in the country. The price has surged due to sudden jump in export and smuggling of rice to Afghanistan and Central Asia which also not contributing to the country in terms of revenue. 

“The Indian presence and share in the international markets of Basmati rice are further gauged in the recently held Gulfood-2013 where exporting companies of the high quality commodity were receiving good response from the international buyers,” he said, adding that the Indian Basmati is cheaper than Pakistani Super Basmati. Besides the Indian phenomena and increased smuggling to Afghanistan, one of the major reasons of price increase was the role of non-traders into rice trade. The loadshedding of electricity, load management of the natural gas, higher rice prices, shifting of Quality Review Committee (QRC) administration to Trade Development Authority (TDAP) from the association, higher discount rates and other domestic issues were the major causes of the decline in rice exports. 

According to sources, rice exporters were also considering demanding subsidy and support from the government to keep Basmati going in the international market as it did in case of sugar. Talking to Business Recorder, Javed Ali Ghouri, Chairman Reap said the loss of major markets for Basmati like Iran, Saudi Arabia, UAE and India was the key reason for the decline in exports of the commodity as buyers from these countries were now moving towards Delhi. The price of Basmati rice has increased by 15 percent due to increase in tariffs of electricity and gas. Besides, the running of mills on diesel-generators also led to an increase in operational cost. Previously, tenders for rice from the Qatar government were awarded to India due to low prices. Oman, Abu Dhabi and Doha had also not placed their import orders to Pakistan. 

He, however, claimed that the demand for Pakistani rice (Basmati) was expected to be increased in coming months following an increase in price of the Indian commodity. Pakistani commodity has started regaining its position this month. He urged the government to take action against those elements that were hoarding Basmati rice to increase the price of the commodity in an artificial manner in the local markets. 

Copyright Business Recorder, 2013

Muhammad Ramzan Rafique
Muhammad Ramzan Rafique

I am from a small town Chichawatni, Sahiwal, Punjab , Pakistan, studied from University of Agriculture Faisalabad, on my mission to explore world I am in Denmark these days..

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