Pakistan's rice trade is facing severe challenges due to rising cost of agricultural inputs and its export may decline sharply during this fiscal year. Noman Ahmed Shaikh, Senior Vice Chairman, Rice Exporters Association of Pakistan (REAP) has said that rice export trade, the second largest earner of valuable foreign exchange for the country, is continually being neglected by the federal government.
"Owing to high cost of agricultural inputs including fertiliser, electricity, water and lack of seeds development, Pakistan's rice is uncompetitive in international market especially Basmati varieties," he added. Presently, Indian rice exporters are offering as low as $300 per Metric Ton price for Basmati rice in the world market. As the prices of Indian rice were much lower than Pakistan, major importing countries and international buyers were switching to Indian rice, Noman informed.
"We have rice stocks of some 0.5 million tons rice, having a value of more than a billion dollar, of previous year's crop, while new crop paddy arrival is expected in the market by October-end," he said, adding that it was an alarming situation for the rice trade as previous stocks were still lying in the godowns and new crop would arrive in next two weeks, resulted in losses to the growers. "In the current situation, exporters are not in a position to buy paddy from growers due to shortage of cash flow as their finance limit have already been choked. It believed that rice growers will not get a good price of their commodity due to availability of previous stocks in the market, therefore the government should take some immediate measurers to support the growers," senior vice chairman REAP demanded.
"We (exporters) are even not in the position to pay back dues of export refinance facility instantly because rice is still in millers' stock and financial charges on these stocks are daily increasing the cost," he mentioned. Noman said that in order to save the rice stocks from pesticides, it needed regular fumigation to avoid damage of commodity, resulted in an additional burden on the exporters.
He said last month Prime Minister of Pakistan Nawaz Sharif convened a high-level meeting with all leading exporting sectors including rice. During that meeting former chairman REAP Rafique Suleman presented a detailed proposal to protect the growers as well as exporters from huge losses, however unfortunately none of demand is so far accepted.
"Our major demand is withdrawal of 3.5 percent withholding tax on local purchase of rice and repayment of Export Refinance loans in 360 days instead of current 180 days," he mentioned.
Senior Vice Chairman REAP said rice export sector was the only sector which had shown the outstanding performance during a very short span of time of 10-12 years by massive surge in the export. With the struggle and efforts of rice exporters, Pakistan's rice export has reached near $2 billion by end of FY15, compared to only $300 million in FY05.
"We assured the federal government that the implementation on the REAP's suggestions not only save the growers and exporters from huge losses but also help to expand rice exports to over $4 billion within next three years," Noman said. He proposed subsidy on agricultural inputs such as seed, water, diesel, electricity, besides measurers to enhance the per acre yield.
"We demand that Rice Research Institute should work on a mage project to minimise the input cost and increase the yield and quality of Pakistani rice, so that cost of paddy will be reduced and exporters can compete in the world market. In addition, to protect Basmati rice export trade, Pakistan must focus on the markets of Iran and Saudi Arabia, as these are the major importing countries of Basmati rice. In this regard legal and official banking channel should be developed that can help to start official rice export to neighbouring country Iran, which has already lifted a ban on the commodity import from Pakistan," he suggested.