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Imposition of a ban on rice export or levy of export duty will only whip up food inflation in real terms as the main causes of rice price spiral are smugglers and hoarders, a leading rice exporter said.
"Our problems cannot be solved by banning rice exports or imposition of regulatory duties", Shamsul Islam Khan, a rice exporter, said, and added these could be solved by arresting the menace of smuggling and hoarding so that others could not take us for a ride by projecting the wrong picture, he said.
He said that if the government was really serious about halting steep rise in prices of rice and other food items, the hoarding and smuggling were the areas that needed government's attention.
According to him, rice exports contribute huge taxes, provide employment to millions of people, both skilled and unskilled from sowing fields to dock labours at ports and at the same time bring much needed foreign exchange.
"Our exporters of rice have worked for over 20 years, invested billions of rupees in sophisticated machinery, trained manpower, technical and non-technical, and established themselves, when their brands were acknowledged around the globe.
"Even the Indian restaurants around the globe now prefer Pakistani branded basmati rice to their own country's, which is the success of our brand," he added.
He said rice exporters had spent huge amounts of money on brand promotion through massive advertising/marketing campaigns. "To our chagrin, what we witness these days is that Indians are now obtaining our rice through smugglers, stamping their brand on it and are earning huge foreign exchange premium. Our brands of rice will disappear from the shelves of world market, while our produce will be there with Indian brand names, giving the impression to consumers that Indian quality has suddenly improved if a ban is imposed on our exports," he said.
He said: "It cannot be guaranteed that escalated prices will come down even after the imposition of a ban on rice export as the nation has already suffered in the cases of pulses and wheat.
"A ban on export of rice will only encourage smuggling and corruption and smugglers will not stop their criminal activities unless the country's borders are effectively sealed.
He said that the government might generate a few hundred millions of rupees through regulatory duty, and claimed that the export duty was against the norms of World Trade Organisation (WTO) as it would eliminate small rice exporters, who were already facing severe shortage of working capital. Moreover, export duty might create new channels of corruption and smuggling, he said. He suggested steps which according to him, will make prices of all edible commodities affordable to the poor masses:
-- Suspend immediately bank financing on essential edible commodities, which will force hoarders to release goods in markets and sizeable amount of money supply in market would be frozen.
-- Declare crack down on hoarders and if they fail to satisfy reasons, source of money and tax paid to government, confiscate their stocks.
-- Suspend hedge trading (future trading) of rice at National Commodity Exchange (NCEL), which has emerged as the largest buyer of rice in the market, causing demand pressure and increasing price of rice.
-- Introduce market-related export prices for non-basmati rice - inferior type at 900 dollars per ton, superior type at 1,000 dollars per ton, Basmati rice at 1,200 dollars per ton and Super Basmati White at 1,400 dollars per ton and Sella Super Basmati at 1,500 dollars per ton - through all land and sea routes. These prices should be reviewed fortnightly
-- Ban export of semi-milled rice of all varieties and discourage export of break bulk full vessel load.
Encourage processed milled white rice up to maximum 15 percent broken. This will fetch premium price and slow down the pace of FAQ quality, which only earn bad name for the country and low price.

Copyright Business Recorder, 2008

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