The State Bank of Pakistan has injected a record over Rs 50 billion under Export Refinance Scheme for rice export. According to traders this was the main reason for the price hike of the commodity in the country.
The prices of all varieties of rice have climbed up and are on their unprecedented peak levels as a result of strong financial muscles and big tummies of profiteers and hoarders, rice traders and exporters said.
The traders fear that this move of SBP would help the profiteers and hoarders. The Export Refinance Scheme (EFS), which is meant for value-addition in exports, was allowed for rice by State Bank of Pakistan.
It is further learned that 70 percent of this Export Refinance Facility is being used by top 25 rice exporters.
Traders said that the ERS has now proved a brutal weapon to cause ever highest food inflation rate. This facility is encouraging hoarding of rice which is evident from current price hike.
They demanded that the SBP should immediately suspend pre-shipment export refinance and only post shipment ERS should be allowed for rice as done in case of wheat to normalise the prices. Further, all kinds of essential food items must be excluded from ERS to discourage hoarding and to ensure smooth supply of commodities at affordable prices. "We are a developing country and our per capita income does not allow us to raise prices of our local produces in parity with international prices unless we ensure to increase income of a common man", a leading rice exporter said.
In the aftermath of imprudent policies of the government, poor people of this country are battling with menacing price hike of essential commodities to keep themselves alive. Finding no way out, some have shortened their daily meal size while others are chasing for low priced food items owing to their fixed low income. The huge long waiting queues of people outside state owned utility stores evidently speak about the truth. The prices of wheat flour have not yet cooled down, now prices of rice have traumatised monthly budget of lower and middle class of populace.
The widespread hue and cry has failed to open eyes of sleeping authorities who are solely responsible to curb this situation. The unchecked hoarding and lack of system to regulate the food prices has made country haven for hoarders and black-marketers. It does not make any sense that despite an agricultural country, Pakistan is facing unprecedented price hike in almost all kinds of food items used in kitchen daily.
Pakistan has produced last year record bumper crop of wheat but all benefits have ruined due to ill and hasty policy of export without covering buffer stocks for own domestic consumption. After wheat, rice is the second largest alternative commodity consumed in Pakistan. Non-existence of any regulatory mechanism and huge finances made this staple dearer to the poor masses of the country.
"The historic rise in prices of all varieties of rice surfaced in December 2006, when consumers were forced to pay double price of Rs 52/- per kg of Punjab Super Basmati rice old crop which was available in market at Rs 26 per kg just six month ago (June 2006). Likewise new crop harvested in December 2006 of the same variety has risen from Rs 27/- per kg to Rs 85/- per kg, showing an alarming increase of more than 200 percent. Most surprisingly prices of current crop which has just been harvested in December 2007 have mounted up from Rs 45/- to Rs 62/- per kilo although consumers have not yet started it for cooking owing to high moisture contents and sticky results. It would be only good for cooking after minimum six months. This looming price hike could be a threat to local consumers which may add further anxiety to prevailing food crisis in the country", market analyst said.
During the visit of Dandia Bazaar, Jodia Bazaar's rice wholesale market BR reporter was informed that prices of various varieties of rice had gone up and blamed that this was the result of ongoing hoarding war among big rice exporters who are armed with huge Export Refinance facilities and middlemen who have huge bank credit facilities coupled with untaxed bagged money. Their financial muscles are getting stronger day by day as their profit of last two years sold stocks have doubled now.
This year market prices of Sindh Super were opened at Rs 41/- per kg which was sold on Saturday at Rs 52/- per kg on cash payment. Price of D-98 rice jumped from Rs 38/- to Rs 47/- per kg just within two months. Non-Basmati variety P-386 grown in Punjab showed brisk increase from Rs 27/- to Rs 47/- per kg within this short period although it was reported bumper harvest. Another fine variety of Irri-9 Sindh prices soared up from Rs 23/- to Rs 34/- per kg while the cheapest variety Irri-6 soared from Rs 17/- to Rs 23/- per kg till todate.
Broken rice is the main dietary source of poor masses that are also badly affected by its current exorbitant prices. According to market sources, Basmati rice broken B1, which was previously sold at wholesale price of Rs 18/- per kg, has now increased to Rs 42/- per kg. Ponia broken B2 type increased from Rs 15/- to Rs 38/- per kilo. Rural Sindh where use of rice flour is common to make 'Roti' now has bitterly affected as ridiculous prices of broken rice have raised cost of rice flour too.
At the moment rice market is totally under the clutches of these culprits who are fearlessly trading and feel no hindrance from the government on so called 'Free Market Economy' jingle. "We absolutely failed to understand where does free market economy allow people to trade with untaxed black money and reap huge profit on hoarded stocks without justifying the sources of their purchased stocks", a rice exporter said. "This must be cracked down by concerned authorities especially recently formed Federal Food Committee (FFC) should take notice of it", a rice exporter suggested.
The rice exporters were of the view that the Ministry of Commerce (MINCOM), and Ministry of Agriculture, Food and Livestock (Minfal) and SBP should sit together and realise that banning exports is not a solution to curb price hike but supply of excess amount of subsidised finance is the most dangerous instrument which always goes to be misused and leads to scary price hike. They should evolve a wise healthy export policy and necessary directives to SBP for suspension of pre-shipment Export Refinance scheme to provide even field to all rice exporters and let them stand on their own feet. MINCOM should realise now that incentives up to a certain level promote exports and over dosed incentives only destroy the trade.
They further said that the Ministry of Commerce should also discourage the sale of basmati rice in bulk quantity through tenders as this low price exported lots compete with export of value added basmati rice in that particular country.
They suggested that export of Pakistani branded rice in consumers' packing should be encouraged which fetch premium price of the Pakistani Basmati rice in the international market.
Comments
Comments are closed.