To reduce the balance of trade gap to some extent, government has allowed the Rice Exporters Association of Pakistan (Reap) to export two million tons rice, sources told Business Recorder here on Wednesday. The trade deficit in 2007-08 has increased to $16.8 billion while the fiscal deficit rose to $8.5 billion.
Similarly, balance of payments gap is likely to be around 7.5 percent of GDP. However, current account deficit is expected to be around 5.0 percent of GDP as against 4.4 percent last year. "The decision to export rice has been taken keeping in view the widening trade deficit that has increased the need of foreign exchange," sources said.
Rice is highly valued cash crop and is also major export item. It accounts for 6.7 percent in value addition in agriculture and 1.6 percent in GDP. "The government was about to ban the rice export because it was being felt that the country might face rice shortage in domestic market like wheat if export of the commodity is allowed," sources added.
On the other hand, rice growers were not in favour of ban on export of the commodity. "In international market, the rice prices are rapidly increasing and the growers are hopeful of getting more profit," sources disclosed. "It is crop sowing time and the government has to satisfy the growers to make them increase area under the cultivation," they said.
The government has introduced minimum export prices (MEP) for all varieties of rice to protect domestic supplies and contain prices at the time of shortage. The MEP for super basmati has been fixed at $1,500 per ton, basmati medium grade at $1,300, Irri-6 at $750 and non-basmati at $100 per ton.
Similarly, the government has decided to build a strategic reserve of 300,000 tons rice to meet any shortage and the exporters have agreed to provide 200,000 tons of rice at subsidised rates to utility stores for the next six months. The stores will be selling basmati broken at Rs 43 per kg and super basmati at Rs 73 per kg.
The overall production of rice recorded in 2007-08 is 5.5 million tons against the local consumption of 2.5 million tons. Total rice export in July-December 2007 was 1.075 million metric tons worth $517.127 million while last year in the same period it was 1.486 million metric tons worth $516.779 million. Although the exportable quantity of rice declined but it brought higher amount due to higher prices of the commodity in the international market, sources said.
Usually only 6-7 percent of world rice production is traded internationally whereas 3 billion people world-wide rely on rice as staple food. Asian farmers produce about 90 percent of the total global production with two countries, China and India, growing more than half the total crop. Rice prices have tripled over the past years as stocks are disappearing and major exports curb to keep domestic prices under control.
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