Pakistan has been deprived of a huge amount of $500 million from its basmati rice export alone in the July-February period of FY08, as the country got low unit price of this commodity against the average unit prices of basmati varieties earned by India, rice exporters said.
The losses of premium from export of coarse rice varieties were besides this, they added. The average unit price of Pakistani super basmati rice came to $855 per ton up to end of February 2008 against the price of Indian basmati rice of $1400 per ton during this period, they said.
Rice exporters told Business Recorder that for shipments effected during July 2007 to February 23, 2008, super basmati fetched average unit price of $855 per ton, Super Basmati Sela (Parboiled) rice could only fetch $680 per ton. The average price achieved for Basmati 385 was $716 per ton during the same period.
The huge difference in export prices could not open the eyes of sleeping concerned quarters although Quality Review Committee (QRC) Inspection Cell reports have been regularly sent to Director General Trade Development Authority of Pakistan (TDAP), Director (Rice) TDAP, Chairman and Vice Chairman of Rice Exporters Association of Pakistan (REAP).
On the other hand, Indian rice exporters remained the sole beneficiary of present rice market scenario and fetched premium prices wisely. According to details, at the movement Indians are exporting 'Sharbati' steamed rice at $950 per ton, 'Pusa' rice at $1100 per ton and newly developed extra long grain non-basmati variety 1121 Sela (Parboiled) at $1500 per ton, while 1121 white rice at $1700 per ton. Indian traditional Basmati rice at $1800 to $2000 per ton depending on brand and packing. The average unit price of Indian Basmati rice was $1400 per ton till end February 2008.
It is worthwhile to note that Indian rice exporters are not being supported by any kind of rebate or subsidy by their government but they have established their rice industry on strong footing by adopting wise strategy both at domestic and international markets.
Contrary to this, Pakistan's rice exporters, enjoying huge amounts of export refinance facilities, coupled with rebate on export packing materials, are hardly getting the cost. The rapidly increasing inflow of bank financing and export refinancing are bitterly increasing the domestic prices and making miserable lives of local consumers.
"There is no solution to arrest the alarming food inflation unless government withdraws bank financing to essential food commodities and export refinance from rice, as financing facilities are boosting speculation and hoarding powers of traders, importers and exporters," rice exporters said.
It was the Export Refinance Scheme of State Bank of Pakistan (SBP) that undermined the value of unit price of Pakistan's grain in the international market as exporters sell this precious staple more desperately to meet their export targets and enter into forward sale contracts to secure their annual export sales, one rice exporter said.
Export Refinance Scheme of State Bank of Pakistan (SBP) is one of the incentives which was originally designed for value-addition in exports but could not play significant role. Rather it has now started showing adverse impact on fetching higher export prices. Further, this facility is also meant for those commodities facing stiff competition abroad and financing at subsidised rate of interest enables that product viable for export.
Though Pakistani rice has never faced such stiff competition in selling abroad but has become the second largest export sector after textile, enjoying SBP Export Refinance facility of more than Rs 50 billion. The beneficiary club of ERS includes highly influential and well connected rice exporters that induced government to allow Export Refinance Facilities to rice.
These few bigwigs in rice export sector enjoy 70 percent of Export Refinance cake offered to rice sector. They are making hasty and long-term sales on much lower prices than that of prevailing domestic prices in order to meet their export performance mandatory against availed ERF facilities.
Incentives to exporters have always been odd tools of all governments to boost exports and fetch higher unit value. In spite of spending huge amount to various sectors, Pakistan's exports could not perform quantum leap and remained stagnant during past many years.
These incentives were aimed to strengthen export-oriented industries and trade but have gone into the pockets of bigwigs, resulting in increased inflation and growing trade deficit, increasing burden on the economy. Basmati, a fine textured long grain aromatic variety of rice, is considered as white gold commodity which is exclusively grown in Pakistan and India.
Both countries enjoy monopoly of producing Basmati due to special climatic and soil conditions, which always fetch premium price as compared to other rice varieties grown on the world. In current scenario of international market, Basmati prices have become almost double in major Basmati rice importing countries during last two years but Pakistani rice exporters have failed to reap true benefits and merely begged the cost owing to their desperate and long term sale of this indigenous staple.
There are many countries on the globe that earn huge premium through value addition despite of fact they do not produce or manufacture those goods at their home but their exports are incredible. Hong Kong, Singapore and UAE are good examples of this prudent practice. This award goes to their government's good governance and healthy policies without spending a single penny on incentives.
Major rice producing and exporting countries are reaping full benefits of current international prices by earning higher export prices while Pakistan has failed to fetch export prices in line with its domestic rice prices owing to lack of wise export strategy.
The Ministry of Commerce and State Bank of Pakistan had allowed export refinance to rice exporters after their pledge of value-addition but rice exporters remained busy in selling commodity at much lower prices as compared to other competitors in the region during past ten years.
Rice Exporters Association of Pakistan (REAP) despite fullest support from government could not change the perception of No 2 quality supplier. The increase in average unit price of Pakistani rice during past years was only windfall benefit of globally increased prices.
The final countdown has begun, if the economic managers do not wake up now, rapidly accelerating food prices may lead looming catastrophe as rising fuel cost may not damage as much as higher food prices will deeply wound lives of the poor masses, exporters said.
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