Rice export to Iran: Reap fears Pakistan may not take advantage

The Rice Exporters Association of Pakistan has feared that Pakistan may not take advantage of opening of rice export to Iran from October 2015 because of energy crisis and lack of the Research and Development which has turned Pakistan regionally uncompetitive.

In a speech at press conference on Saturday REAP Chairman Rafique Suleman also called for devising a comprehensive mechanism and appropriate currency transfer arrangements by the State Bank of Pakistan to take full benefit of reopening of rice trade with Iran. “Iran is the one of the largest rice importer of the world, which imports around 11 percent of the world rice worth $2.5 billion. He said that the demand for rice in Iran has doubled during 2012-13 and in the last five years, import of rice grew more than 35 percent. Hence, there exists a huge opportunity for the exporters of Pakistani rice. Pakistan, once, was the largest exporter of rice to Iran, before imposition of sanctions on Iran, which it has lost to India and now almost 90 percent of rice is coming to Iran from India though import from Pakistan is more economical,” he said.

He also said, “Pakistan rice export has been stagnant for the past many years, both in quantitative and value terms and is hovering around 4 million tonnes in quantity and $2 billion in worth because of devastating energy crisis and inconsistent and discouraging export policies of the government. India has entered the global rice market with a huge surplus and a 20-percent devaluation of its rupee, giving it almost unbeatable comparative advantage against Pakistani exporters. The State Bank of Pakistan also honoured sanctions against Iran, resulting in drastic drop in basmati exports to it. But the exporters still maintained their share and were able to achieve the mark.”

Giving the latest data of rice export, he said, “Pakistan’s rice exports posted a sharp decline of 27 percent during the first month of this fiscal year mainly due to declining price trend in the world market.

The country exported rice amounting to $91 million in July 2015, compared to $125 million in July 2014, depicting a decline of 27.24 percent. Major drop has been witnessed in the export of Basmati Rice, which registered a 30 percent decline to $34 million exports during the period while non-Basmati exports stood at $57 million in July 2015, down by 25 percent. The government will have to announce freight subsidy of at least $200 per ton on rice export to make it globally competitive, the chairman proposed.” He urged the government to refund mark-up amount of 2013-14 and 2014-15 loans of rice exporters, besides withdrawing withholding tax of this period, suggesting a slash in this tax to 0.25 per cent for fiscal year 2015-16 and suggested to extend export refinance period to 360 days from 80 days to facilitate the rice exporters.



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