Rice: another dying commodity

At 46 percent of all Pakistan's food exports and over 8 percent of total exports, one would think that the rice industry is given some importance. But much like the case with textile, wheat, and sugar, a high cost of doing business and low international prices have rendered our rice exports uncompetitive and stagnant.

Rice exports observe a seasonal trend, falling by the end of the summer and bottoming out around the time the new crop starts coming in the winter months (September-October). As of late, however, the exports haven been bringing too much foreign exchange; although rice exports for the first two months of this fiscal year represent a volumetric growth over the preceding year, the price fetched seems to have been far lower.

Vice President of the Rice Exporters Association of Pakistan (REAP), Noman Shaikh told BR Research that there were two main reasons behind the industry's problems: one was the international commodity crisis, which is out of everyones hands. However, the other factor is the high cost of doing business, which is rendering the rice exporters uncompetitive and is a result of government inadequacies.

Shaikh said there are 5 lac tons of un-exported rice in stock, which is losing moisture by the day and losing its value. About the high cost of business, he said that electricity and gas is far more expensive in the region than the neighbouring countries and the supply is also interrupted. Moreover, he lamented that fertilizer in Pakistan is available for Rs2400 per bag, whereas in India the same is Rs800-900. With such high costs, it is increasingly difficult to compete in a market where the prices are already so low.

"No research has been done since the 70s into developing new varieties," the REAP Vice President added. "Meanwhile, India has developed new varieties that are also cheaper, and has snatched up the International market."

Indeed, its a disappointment that most of the Gulf countries, Pakistan used to export its Basmati variety have been lost. REAP has asked the government to provide a $200 per ton subsidy on Basmati rice and $50 per ton subsidy on IRRI-6 to get rid of the surplus stocks and rejuvenate the industry.