Unable to compete, rice exporters demand incentives

Say competitors are providing hidden concessions to their industries

Peer Muhammad June 29, 2015
25% is the increase in rice production in Pakistan in the past 15 years STOCK IMAGE

ISLAMABAD: Say competitors are providing hidden concessions to their industries

Rice growers and exporters have voiced concern over their future after losing some major markets to Asian competitors and failure to meet export targets over the last five years.

They have sought assistance and facilitation from the government like the way their rivals in Thailand, India and Vietnam are receiving.

According to the Rice Exporters Association of Pak­istan (REAP), the country has not been able to achieve higher export targets and the highest shipments recorded so far were in 2009-10 when exports were valued at $2.2 billion. Since then, the exports have remained more or less stagnant.

The growers and exporters are apprehensible of the challenges ahead and have invited attention of the authorities.

Prices of basmati rice were Rs4,400 per 40 kg in 2013-14, which came down to Rs3,400 and then to Rs2,600.

The prices fell after India flooded the international market with its basmati rice. India had also captured the rice market of Iran but for the last two years, Tehran has slapped a ban on shipments from India.

For Pakistan, China has been the main market of Irri-6 rice as 362,000 tons were exported in 2011-12, 589,000 tons in 2012-13 and 353,000 tons in 2013-14. However, this year, exports to China stand below 200,000 tons, which is very low compared to the last three to four years. With the situation persisting for the past two years, paddy and rice prices have recorded an unprecedented decline of more than 40%, causing huge losses to the industry.

The exporters believe that governments in Thailand, Vietnam and India are providing hidden incentives to the rice industries and fear they will offer more concession and facilitation. These incentives will put Pakistan’s industry at a disadvantage and throw it out of the international market, leading to piling up of surplus stock in the country.

REAP President Malik Jahangir, in a statement, called on the government to provide relief and bail out the rice industry. He stressed that the government must process all applications of rice exporters pending with the State Bank and provide loans in the next three months.

He said commercial banks should be asked to provide relief in margin calls as prices had dropped about 50% in Punjab for some varieties of rice, especially old basmati.

The industry also asked the government to provide rice farmers with seeds, pesticides, electricity, water, dryers and other equipment free of charge in order to bring down the cost of production and enable exporters to compete in international markets.

Outlining the key reasons that hurt rice exports from Pakistan, the industry pointed to the global surplus of grains, particularly rice, with major producers - Thailand, India and Vietnam - holding huge stocks from the last three years. This has pushed their governments to offer hidden export subsidies to sell the surplus commodity.

In the last 15 years, the global rice trade has grown almost three-fold from 12 million tons to 33 million tons per annum. The major producers are not only doling out huge cash subsidies to the farmers, but are also assisting in research on seed varieties.

Published in The Express Tribune, June 30th,  2015.

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