The decision of the Economic Co-ordination Committee (ECC) of the Cabinet to allow export of rice by state-owned Pakistan Agriculture Storage and Services Corporation (Passco) and Trading Corporation of Pakistan (TCP) will imperil $2 billion earning of rice export industry, traders said.
They said that the nation was not yet forgotten the ugly face of defunct Rice Export Corporation of Pakistan (RECP) and its massive corruption-led severe losses to the national exchequer, which ultimately caused its closure. They criticised the step and said that after allowing export of rice by state owned Trading Corporation of Pakistan (TCP) on October 27, 2009, now the ECC has also allowed Pakistan Agriculture Storage and Supplies Corporation (Passco) to export rice to any country of the world.
After the decision of ECC, now Passco will for the first time in its history experience export markets abroad after its domestic operations. These two public sector organisations have been authorised to export rice and they will directly compete with private sector rice exporters.
According to details, the Ministry of Food and Agriculture (Minfa) forwarded a summary for the approval of ECC of the Cabinet on January 6, 2010 seeking approval of the Cabinet to allow Passco to export rice to Middle East, Iran, Europe or any other market on government to government basis. Minfa got approval of $900 per ton as minimum base price for Super Basmati rice 5 percent broken limit and also export through qualified agents/brokers local as well as international. The summary was duly supported by the Ministry of Industries and Production, Planning and Development Division of Planning Commission, Finance Division and Ministry of Commerce.
Sources said that Passco and TCP had procured rice on government directives to procure one million tons paddy (0.5 million tons from Punjab and aggregate 0.5 million tons from Sindh and Balochistan) to support paddy growers. Since both organisations did not have any basic technical infrastructure and expertise, Passco procured 435,832 tons milled rice from rice millers on set intervention prices of Super Basmati paddy at Rs 1500 per 40kg, which was converted into Rs 3000 per 40kg (Rs75 per kg) for milled Super Basmati rice and Irri-6 at Rs 700 per 40kg which was converted into Rs 1400 per 40kg (Rs 35 per kg) for milled Irri-6 rice, on the basis of 50 percent retrieval of rice, mutually agreed by millers and Passco.
TCP bought 25,000 tons Super Basmati rice through tenders at Rs 87 and Rs 75.90 per kg and 1,500 tons Irri-6 rice at Rs 32.90 per kg. Sources said that the TCP is trying to export its held stocks since last year and had issued its first tender on October 9, 2009, but failed to receive any bid till its tender closing date of November 24, 2009. Subsequently, tender was re-issued on December 18, 2009 to export 25,000 tons of Super Basmati rice which is to be opened on January 21, 2010.
Now after approval of ECC, Passco would be the second state owned entity to export rice besides private sector. The rice exporters said that it is disastrous, as over $2 billion earning for rice export industry. "It will have adverse impact on our future export earnings which is already showing about 50 percent decline in terms of value due to decrease in rice prices globally", Shumsul Islam Khan, a rice exporter said.
These two public sector organisations are neither equipped with basic technical infrastructure nor expertise; both have suffered huge losses in their domestic operations due to lack of experience, he added.
According to him, rice exporters are already under burden of huge losses due to past two years' worst scenario of uncertainty. "Our rice exports just begun to grow again and mainly were of coarse rice varieties, whereas Basmati rice orders will start gearing up from March-April and onward but intrusive role of public sector in Basmati exports will surely disturb us", he said. He said that the Rice Exporters Association of Pakistan (Reap) will surely come up with strong opposition to this decision.
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