Pakistani rice exporters losing out to India

Surplus crop across the border, changing regulations make Indians competitive.

FAISALABAD: Pakistani rice exporters may eventually lose ground to more competitive Indian neighbours who have begun to edge out Pakistan in the international market.

“Pakistani exporters are facing stiff competition from their Indian counterparts owing to low prices and excess supply of Indian rice,” Taufiq Ahmed Khan, former vice chairperson of the Rice Exporters Association of Pakistan, told The Express Tribune. “Indian rice is available for $150 per ton less than Pakistani rice.”

Total rice production in Pakistan is estimated to be 6.5 million tons this year, of which expected exports are 4.3 million tons.

Pakistan’s rice exports have fallen 13% compared to 2010, said Khan, adding that so far Pakistan has exported rice worth $800 million. “Last year, the country exported $2.2 billion worth of rice and exporters are struggling to meet that figure this year,” Khan said. On the other hand, India still has 27 million tons left over from last year’s crop and has produced surplus rice this year as well.

Among other reasons for increased Indian competitiveness, said Khan, is the lifting of a three-year ban on non-basmati rice exports and devaluation of Indian currency by 18% to encourage domestic exports.

But in Pakistan, exporters are expected to miss the target despite high international demand for Pakistani rice and improved conditions in the local market.

“Pakistan exports rice to over 120 countries and there is great demand for our product,” says Haider Ali, a rice exporter.

But to provide this quality of rice and still be competitive, Pakistani exporters need government support.

Growers say that the Indian government facilitates farmers through subsidies, low price pesticides, urea and seeds. Electricity, which seems to be at the root of most of Pakistan’s troubles, is available to Indian agriculturalists for almost free. No such luck in Pakistan.

“Exporters are demanding comprehensive policies, including lifting a 1.5% tax on rice exports,” Khan said.

Rampant power outages also increase production cost in Pakistan. Mill-owners and exporters say electricity load-shedding forces exporters to miss delivery commitments and rely heavily on power generators for their power needs.

Published in The Express Tribune, December 22^nd, 2011.