Pakistan Agriculture Supplies and Storage Corporation (Passco) is likely to send a proposal to the Ministry of Food, Agriculture and Livestock (Minfal) suggesting to allow the rice millers to purchase paddy from the domestic market as Passco is not in a position to buy the commodity, reliable sources told Business Recorder on Monday.
According to sources, officials of Rice Exporters Association of Pakistan (Reap) and Passco held a meeting here on Monday to find out solutions to the problems being faced by growers and rice exporters due to declining prices of paddy in the domestic market.
"Passco has not got sufficient financial resources to procure one million tons rice and has storage capacity not more than 80,000 tons," sources revealed. Talking to this scribe, Reap Chairman Azhar Malik said that it may also adversely affect the crop sowing in next season as growers were not fetching desired price of their produce due to abundant market supply this year.
"The declining prices of paddy in domestic market are having a bad impact on the international buyers. Currently international rates of Irri varieties are around $740 per tonne while that of Basmati $1,580 per tonne. The paddy price for Basmati is declining in the domestic market by each passing day. So, the international buyers have also doubts about the quality of our rice," he added.
Rice is likely to emerge as major foreign exchange earner for Pakistan in current fiscal year as far as primary commodity exports are concerned. Exports of primary commodities declined from 44 percent of total exports in 1980-81 to 11 percent in 2006-07 and 10 percent in July-March 2007-08.
"This is the only step we can take to save our estimated $5 billion foreign exchange. This timely action will have a dual positive impact on the economy," he said. The export of rice is declining, as banks are not ready to extend cash margin to stock paddy, reason being liquidity crunch.
"We have written a letter to the State Bank of Pakistan (SBP) to issue a directive to the commercial banks to extend the limits of cash margin but not even a single step has been taken in this regard until now," Malik lamented.
Earlier, the government did fix the Minimum Guaranteed Price (MGP) of paddy of Super Basmati at Rs 1500 per 40 kg in spite of the repeated demands of rice growers to set it at Rs 2200 per 40kg. Now it is being sold at Rs 1200 per 40 kg in the domestic market that is much less than the cost of production of the rice growers. "In spite of low water availability, the country has succeeded in getting good rice crop this year but the growers would not get a good return of their produce and would suffer definitely," Malik observed.
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