Indian government decision to ban export of non-basmati rice and duty-free import into the country has adversely affected world rice market as prices of rice have soared in many rice exporting countries.
In Pakistan, rice was already in the grip of hoarders and speculators who had raised the prices of all varieties of rice drastically in the country to reach all time high record levels although Pakistan's coarse rice prices are not favourable for Indian importers and traders.
"India is not our traditional rice buyer, and if our government does not come forward to ban export of rice to India, our Basmati exports would be in jeopardy as its rising prices are bitterly damaging owing to increased speculative activities," said Shamsul Islam Khan, a rice exporter and member of Managing Committee of Reap.
Indian traders are looking for Basmati and other similar varieties to fulfil their commitments with foreign buyers and earn premium on re-export of Pak Basmati with their label. This will lead to catastrophe to Pak established overseas markets and brands as Indian parity against $1 is equal to Indian Rs 40 only and this will surely help them to wipe out Pakistani brands from international market.
Their rising domestic cost of Basmati rice is helping Pakistan to penetrate those markets where Indian rice exporters were dominating. This is a 'double-edged sword' and exports to India will increase prices here and boost Indian Basmati export.
At present, Super Basmati rice new crop, harvested in November 2007, is available at Rs 63,000 per ton, and its export price is calculated at $1200 per ton after adding reprocessing and other charges, while Indian Basmati prices are between IRs 65,000 to Rs 70,000 per ton and currently they are offering at $1800 to $2000 per ton.
Owing to extreme height of Indian Basmati rice prices made it unaffordable to consumers of ethnic markets and importers from these countries are now diverting to Pakistan to cater their markets" Shams said.
"The repercussions of rice export to Indian would be more serious as our local consumers who mainly consume Basmati and are already paying double price of the commodity would suffer badly. As a result of exorbitant increase in prices, Pakistan may also lose its traditional rice markets and deprived huge premium of foreign exchange. Our government should take this matter seriously and not allow rice exporters entering into contracts with Indian importers," he said.
It may be noted that India is the second largest rice producing country and has ample stockpile--about 20 million tons--but as an effort to check rise in rice prices and slow down overseas sales, India has also scrapped all kinds of tax incentives to rice exporters besides ban on non-basmati.
It is worthwhile to note that India produces 90 million tons rice annually and its exports are 4 million tons per annum which include 1 million tons Basmati rice. Indian government announced ban in bit to curb rising food prices when rice price soared from IRs 12 to IRs 16 per kilo while Pak domestic prices have touched sky high levels.
The governments of major rice producing and exporting countries like China, India, Vietnam, Cambodia, Philippines and Egypt have put restrictions on export and are taking strict action against hoarders to curb rising rice prices and inflation.
"We urge our newly elected government not to allow rice export to India and evolve a fresh strategy to combat rising rice prices in the country by squeezing rice financing and discourage sale of bulk vessel export of rice and tender sales.
If the rising prices of rice are not curbed in domestic market it may lead to major food crisis and challenge to new government like wheat flour crises. The World Food Program (WFP) has warned governments of poor countries of riots on rising food prices. The recent protest against price hike in Egypt and Haiti are alarming sign for our economic managers."