The Finance Ministry has approved Rs 28 billion for procurement of one million tonnes of rice by Pakistan Agriculture Storage and Services Corporation (Passco) from the rice mill owners, well-placed sources told Business Recorder here on Monday. According to the sources, of total amount, Rs 10 billion has already been released by the Finance Ministry to Passco.
The government directed Passco to procure one million tons of rice from the rice mill owners as Passco has storage capacity of not more than 80,000 tons. Rice, a primary commodity, is likely to emerge as a major foreign exchange earner for Pakistan in the current fiscal year. 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.
Meanwhile, Passco has started signing agreements with the rice mill owners across the country. Almost 136 rice mills have agreed to procure rice from the domestic market, out of which 100 are from the Punjab, 30 from Sindh and six from Balochistan.
A senior official of Passco told this scribe that about 49,514 metric tonnes of Basmati paddy and 2,067 metric tonnes of irri-6 has already been procured by the rice mills so far. He said: "The rice mill owners will purchase Basmati paddy at Rs 1,500 per 40 kilograms from the growers. Later, Passco will buy at Rs 3,000 per 40 kilograms from rice mill owners.
"Similarly, the rice mill owners will procure irri-6 from the growers at Rs 700 per 40 kilograms and then Passco will buy the special quality irri-6 at Rs 1,400 per 40 kilograms, while fair average quality of irri-6 will be procured at Rs 1,200 per 40 kilograms from the rice mills," he said.
The declining prices of paddy in the domestic market are having a bad impact on the international buyers. Currently, the international rates of irri varieties are around 740 dollars per tonne, while that of Basmati is 1,580 dollars per tonne. On the other hand, the paddy price for Basmati has started declining in the local market with each passing day, which has led to some doubts about our quality as far as the international buyers are concerned.
The overall situation has become intolerable for the rice exporters, who claim that Passco''s interference with the market is unfair and are of view that the government should not involve the public sector in this trade. Critics of the rice exporters allege that the Passco''s involvement would lower the fantastically massive profits enjoyed by the rice mill owners.