The Ministry of Food and Agriculture (Minfa) has proposed intervention price for Basmati paddy up to Rs 1,250 and Irri at Rs 500-600 per 40 kg during 2009-10, official sources told Business Recorder. The new prices proposed by the task force on agriculture, will be submitted to the Economic Co-ordination Committee (ECC) of the cabinet in its forthcoming meeting.
According to the Minfa, the government announces intervention price (not support price) of rice paddy every year. Last year the government had announced intervention price at Rs 1,500 per 40 kg for super basmati, Rs 1,250 for basmati-385 and Rs 700 for Irri paddy. The interaction by Passco and TCP has stabilised the prices which averaged at Rs 1,181 per 40 kg for Basmati paddy, Rs 660 for Irri paddy in Punjab and Rs 585 in Sindh.
The Agriculture Policy Institute (API), an attached department of the Minfa, was tasked to propose reasonable paddy prices for the current crop keeping in view the ground realities like inputs price. It has estimated the cost of production of basmati and Irri paddy in the Punjab at Rs 972 and Rs 606 per 40 kg which implies that cost of production estimates are higher by 24 and 26 per cent over the last year.
The Irri cost of production in Sindh has been calculated at Rs 490 per 40 kg, showing an increase of 24 per cent over the last year. Major factors of higher cost of production are land rent, tractor rates, tube well water and wage rates. The domestic price during 2008-09 for Basmati paddy averaged at Rs 1,181 per 40 kg during October - February in the Punjab ranging between Rs 1,020 to Rs 1,298 per 40 kg.
The market price of Irri paddy in the Punjab averaged at Rs 660 per 40 kg during the same period ranging between Rs 579 to Rs 726 per 40 kg. In Sindh, the market price of Irri paddy averaged at Rs 585 per 40 kg during November - February ranging between Rs 535 to Rs 686 per 40 kg.
In view of future forecast pertaining to world supply and demand, the prices of rice in the world market are likely to be stable. Similarly, the market prices of rice are also expected to follow the same pattern in view of domestic supply and demand situation, the sources continued.
Based on average fob (Karachi) price of Pakistani basmati rice during April, 2009, the export parity price of Basmati paddy was worked out at Rs 1,657 per 40 kg. Accordingly, the export parity price of Irri paddy was calculated at Rs 707 per 40 kg. The API has recommended the intervention price for 2009-10 crop at Rs 1,250 per 40 kg for super Basmati, Rs 1,000 for basmati-385 and Rs 600 for Irri paddy.
The Minfa has endorsed the recommendation of the API. Last year Passco was inducted to procure paddy and TCP procured rice from the market. On the basis of experience gained so far, following three options are available to stabilise the price of paddy this year. The Minfa has the following two proposals for stabilising the price of paddy.
Option-I: Maintaining the last year''s paddy procurement policy.
Option-2: Passco and TCP should only procure rice (basmati as well as Irri) from open market as soon as the price is below the rates as proposed by the ECC.