As the next season of rice crop planting is not far off, rice growers, traders and millers are in a state of gloom for, the present stock of exportable superior quality rice worth $2.5 billion is lying unsold and no one in the government is in mood to do anything to retrieve the agriculture economy from collapse.
Representatives of growers and millers told Business Recorder that instead of self-reliance and exploiting the indigenous resources for capital formation, the government has found an easy way out to get loans from the International Monetary Fund and other financial institutions such as the World Bank, the Asian Development Bank, etc.
Painting a very dismal picture of the countrys second major foreign exchange fetching cash crop - rice, President Basmati Growers Association Hamid Malhi said that rice production during 2008 season was 6.5 million tons for the first time in history. The harvested crop in Sindh was mostly damaged due to the unexpected rains in early December 2008. The rice crop in Punjab remained safe and the 3.0 million tons of production along with last years stocks today pose a big challenge for the whole stakeholder chain, he added.
He said the government inducted Passco to procure 0.5 million tons of Basmati paddy from Punjab and 0.5 million tons Irri-6 paddy from Sindh; later TCP also floated tenders for purchase of a few thousand tons of Basmati and Irri-6 rice of new and old crop (a target of 0.25 million tons each was set for Basmati and Irri-6 rice).
Malhi said the current situation in the rice sector is very precarious. Passco has wound up operations of Basmati paddy purchases since December 31, 2008 (with 50,000 tons less than target purchases of Basmati paddy) while it continues purchases of Irri-6 paddy/rice in Sindh.
He said the Basmati paddy purchase price of Rs 1500 per 40 kg announced by Minfa managed to keep the market at Rs 1300-Rs 1400 per 40 kg during November-December, 2008. The rates of paddy in the first half of January 2009 were supported by the news of TCP tenders but later TCP cancelled all tenders and only 2300 tons of Basmati rice have been purchased while there have been no purchases of Irri-6 rice.
He said Basmati paddy prices are at rock bottom @ Rs 1000 and Basmati rice prices are @ Rs 2000 per 40 kg now a days. "The big stockists and exporters are making a kill while the trade sits as a lame duck in the absence of a clear government intervention," he contended.
Malhi maintained that the surplus production of Basmati which is valued at $2.4 billion (2.0 million tons x 1200$/ton) needs export marketing as the existing pace is unable to cater for the required outflow. "Around 1 million tons of Basmati rice is consumed in the country and the remaining 2 million tons is available for export" he added.
He said most of the export during the last eight months (July 2008 to February 2009) was from the 2007-08 crop while the current crop lies unsold, whereas the cost of doing business is also higher as compared to last year. Malhi pointed out that in another eight months the new Basmati crop would be in the market with no buyers, therefore it is extremely essential that a strategy is evolved to deal with the current situation.
He said the country can earn around $2.5 billion (Rs 200 billion) just from the export of 2008s Basmati crop. "This would not only relieve the whole stakeholder chain from the extra burden of stocks but would also give a positive signal for increased production of the next crop thus further boosting export earnings.
Former President, Rice Exporters Association of Pakistan and a prominent rice mill owner Azhar Akhtar told this scribe that there is a total chaos and mismanagement in the rice trade and export business. He suggested that the government should immediately call a meeting of all stakeholders to take corrective measures for putting the rice export business on sound track.
"Rice is too precious a commodity to be left at the mercy maverick exporters." President of Pakistan Agri Forum Ibrahim Mughal stated that the rice growers have been able to sell only 75 percent of the 2008 crop whereas 25 percent paddy was still lying with them and there was no buyer of the left over commodity.
He said the rice millers and traders have not paid price of the sold paddy to the growers and according to his network information nearly Rs 50 billion of the poor farmers money was stuck up with the traders and millers. He warned that if the rice growers dues were not cleared off forthwith, they would be unable to make any fresh investment in the sowing of next rice and other crops.