Not only has an artificial and exorbitant increase in prices of rice led to the imposition of a cap or limited the amount of money that can be charged for each kilogram of rice by the UAE, it has resulted in a decline of exports, putting Pakistani exporters in a difficult situation, according to leading traders of this commodity.
They said that prices of all varieties of Pakistani rice have become unaffordable in major international markets. Irri-6 25 percent broken, the cheapest variety of Pakistan's coarse rice, mainly exported to African countries, has now crossed the level of $295 per ton thus surrendering the market to Thai origin rice.
Local rice exporters pointed out that many rice importers in UAE have ceased placing new orders to their suppliers from Pakistan owing to high prices of non-basmati rice in general and Basmati in particular. As a result, exports of Pakistan's Basmati in particular and other rice in general have decreased considerably.
The UAE is one of the major traditional markets of Pakistani Basmati rice. It imported 231,056 tons, for $117,216,964, during 2005-06, while from July 2006 to May 2007 about 205,913 tons, worth $125,890,697, Basmati was exported to UAE.
As a result of sudden price increase in Pakistan's local market, export cost prices of Basmati rice have soared considerably, which is badly affecting sales in established Pakistani Basmati markets.
This price hike and costly imports of Basmati into UAE also affected this important market and forced the importers to raise their prices. The vigilance monitoring of local authorities alerted their high-ups to come into action and their local Municipality (Baldiya) issued directives to fix ceiling prices in UAE market up to maximum level of UAE Dhs.115 per 39 kg bag which is far below the prevailing market price of Super Basmati rice in Pakistan at present.
This fixation of price ceiling has created panic among leading importers of Pak Super Basmati who have stopped placing further orders to their counterparts in Pakistan. This restriction of ceiling price is only on Pakistani Super Basmati rice largely being sold under 'Sinnara' brand, while such restriction has not been imposed on Indian Basmati.
According to market sources, Indian Basmati brands wholesale prices are for 'Tilda' 20 kg bag at UAE Dhs. 220 to 240, 'India Gate' 20 kg at Dhs.200, 'Kohinoor' 20 kg at Dhs.180.
This important issue was brought to the notice of Rice Exporters Association of Pakistan (REAP) and relevant ministries in March 2007 but no tangible solution has been evolved yet. This price restriction is harming rice exports from Pakistan due to high prices here in Pakistan.
Shrewd importers have started playing with quality with the connivance of their suppliers, thus ruining the perception of Pakistani Basmati rice in consumers' mind at the one hand and providing chance to anti-lobby to speak ill against Pakistan Basmati, on the other. The tragic side of the story is that neither the government of Pakistan nor the Reap is prepared to cope with the situation.
One of the leading exporters to UAE told Business Recorder that he was incurring huge financial losses owing to this price restriction as he has no option except to sell below cost just to keep alive the brand in the UAE market which has maximum market share.
Another leading rice exporter to UAE said that this ceiling price is a conspiracy against Pakistan Super Basmati rice which was dominating UAE market and decision has been imposed only on Pakistan origin while Indians are selling their brands at higher prices without any restriction. On the other hand, Indian government and the Indian rice exporters both are active in the UAE to defame Pakistani Basmati rice.
They are offering free testing of Pakistani blended rice - exported from Pakistan on the name of pure basmati rice on the directives of the UAE importers - just to influence on UAE government to ban the import of Pakistani Basmati rice in the UAE so that they could enjoy free market hold.
"This is another dilemma of price hike being faced by us", he said, and demanded that the Government of Pakistan should crackdown hoarders and speculators who have artificially increased prices in the domestic market which now creating problems for them in export sales.
"Our new crop of Basmati is 6 months away and if this price hike persists, we apprehend that we may lose important market share of Basmati owing to our higher local cost and resultantly steep decline in rice exports are expected in near future," another leading rice exporter said.
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