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BR Research

An interview with Shahid Hussain Tarer, Managing Director Galaxy Rice Mill (Pvt.) Limited

“Agri-exporters cannot demand price premium without attracting foreign delegations” Shahid Husein Tarer is the...
20 Sep, 2021

“Agri-exporters cannot demand price premium without attracting foreign delegations”

Shahid Husein Tarer is the Managing Director and CEO of Galaxy Rice. The company is based out of Kalar (north-eastern Punjab) region, which is considered the birth area of basmati.

Galaxy Rice was founded in 1974. The company works with rice farmers to improve their farming practices by adopting resource-efficient techniques for reducing the cost of production and enhancing crop yield, water productivity, and farm income in addition with maintaining food safety “to ensure safe and healthy rice from farm to fork”.

Under Tarer’s leadership, it has become one of the largest basmati exporters from Pakistan. Tarer’s stated vision is to improve the capacity of rice growers in adopting innovative water-efficient techniques, certified seed, and responsible use of pesticides to reduce their cost of production, harvest losses and increase their paddy yield. His company has also spearheaded efforts to provide extension services to farmers for promoting resource efficiency through laser land leveling, Mechanical Transplanting of rice Alternative Water and Drying Tubes (AWD) & use of specialized rice harvesters.

In this interview, BR Research spoke with Tarer regarding the sustainability of local rice production, given the crop’s high-water footprint, and discussed the challenges and opportunities for local basmati rice since the inclusion of the country in EU’s GI directory. Below are the edited excerpts:

BR Research: Rice has one of the highest water footprint among all kharif crops. Can Pakistan’s agriculture sector really achieve sustainability without diversifying away from basmati?

Shahid Hussain Tarer: All Kharif crops grown in Pakistan are water-intensive, be it cotton, rice, or sugarcane. Often, misleading comparisons are drawn such as one kilogram of rice uses two thousand litres of water, or a pair of denim pants consumes four thousand litres of water. It would be more sensible to consider the Economic Value Added (EVA) of any commodity and consider whether its substitutes could help make up for the lost foreign exchange.

Basmati is not only the unique selling proposition (USP) of Pakistan’s crop sector but is also priced at more than 2 times multiple over other coarse varieties such as Thai, and Vietnamese rice. Few other commodities that are only grown in our region enjoy such premium in international markets. It would be a mistake to make basmati a casualty of environmental criticism due to misplaced motives.

BRR: Among basmati varieties most commonly cultivated in Pakistan: PK 1121, Super basmati and others, which varieties have the highest water footprint?

SHT: The rule of thumb to compare water consumption is to compare the ‘Days to maturity’ (duration) of various varieties. Among approved varieties, Super basmati, Basmati 515, and PKR 1121 are the most commonly cultivated varieties in the country. Each of these has an average ‘Days to Maturity’ period of 110-115 days on average. Thus, their relative water consumption is also similar.

BRR: There is some confusion whether Pusa 1121 – commonly known as Kainat in local market – should be considered a true basmati variety? Many believe the success witnessed by Kainat in recent years is attributable to its lower water requirement.

SHT: The variety is officially known as PK-1121, and it is an indigenous variety. PK 1121’s official Days to Maturity are same as Super Basmati. However, due to weather conditions in southern Punjab where Kainat is more common, PK-1121 is harvested early. This has built a perception that its water requirement is lower than other traditional varieties.

PK-1121 is a true basmati variety, containing both basmati genotype and phenotypical characteristics. Its parentage can be traced back to original basmati gene contained in Basmati 370. The aromatic expression of basmati gene is stronger in local variety than in its Indian counterpart. Over the past decade, PK-1121 has also gained considerable share in both local and export markets due to its attractive farm economics and sustainability.

BRR: By that logic, can any cross-bred variety that contains genes from 370 be considered true basmati?

SHT: It is important to understand the context first. During the pre-partition era, the Rice Research Institute of Kala Shah Kaku was tasked with creating a seed bank of all rice varieties grown in pre-partitioned Punjab. Hundreds of wild varieties were collected, of which, rice varieties that met specified phenotypic expression criteria such as aroma, non-sticky cooking, and elongation were classified as basmati. These varieties are still present in the Kala Shah Kaku seed bank. However, many could not be successfully commercialized due to various reasons such as higher cost of production, height etc.

The original variety to be commercialized with official assent was called Basmati 370. Today, the defined criteria of “true” basmati for derived varieties is that direct parentage of at least one parent is traceable to 370 or other original varieties such as Super. Along with whether geographic indication (GI) can be traced back to the atmospheric, soil, temperature, water, and climatic conditions in which original basmati varieties were grown.

BRR: How does the water footprint of IRRI varieties compare against local basmati varieties?

SHT: Days to Maturity of IRRI varieties is usually lower than basmati. The duration of IRRI and hybrid varieties is 90 days. Theoretically, that translates into 15-20 percent lower water consumption. However, these are sown by May or early June, when raining season is yet to commence. As a result, growers are forced to pump groundwater to irrigate their crops.

In contrast, basmati varieties are sown in late June, even July in some areas. By this time, monsoon rains usually begin all over Punjab. In fact, monsoon rains are a crucial part of the basmati heritage in the Indo-Gangetic Plain which makes up the Geographic Indication (GI) criteria.

Thus, in terms of water-intensiveness, it is difficult to conclusively state whether IRRI and hybrid varieties consume less water. At best, water consumption may be at par with basmati (due to IRRI’s early sowing and greater dependence on groundwater).

BRR: According to official data, share of basmati in local rice production has reached 50 percent – or 4 million tons. What do you think is driving increasing popularity of basmati?

SHT: I am not sure if official data is truly reflective. Out of the 8 million tons of rice produced, 2 million – 2.5 million tons is paddy. Moreover, it is possible that some varieties may be misclassified as basmati, such as PK 386.

But leaving aside the accuracy of numbers, basmati is definitely growing in popularity locally. This not only includes higher at-home cooking, but also a growing culture of expenditure on dining-out, weddings, and festivities. On the supply side, improved pricing due to growing demand has helped improve farm economics, in turn increasing basmati’s popularity with growers.

BRR: Is the basmati originating in the traditional Kalar bowl of Gujranwala division considered more premium than the output of other regions such as southern and central Punjab?

SHT: Although the distinction is not very commonly drawn, processors understand the difference and place a discount or premium accordingly. For example, well-known centre such as Kamoki mandi or Mandi Bahauddin mandi rice are known by their place of origin, due to premium cooking quality, aromatic properties and taste. But output can also obviously vary from year to year due to input conditions, such as climatic conditions at sowing time, timely irrigation, temperature at the time of flowering stage etc.

Having said that, now that work on GI directory is in advanced stages, government should seriously consider issuing separate GI tagging to basmati originating from Kalar belt. As the region produces the top-quality basmati in whole Indus plain, on both sides of the border.

BRR: Does the foreign buyer draw distinction in basmati pricing based on its area of origin? For example, is a premium offered based on whether basmati originates from Kalar belt?

SHT: Those who have been in the business for long enough not only understand the distinction but also demand premium quality rice. However, foreign buyers do not necessarily demand premium quality based on area of origin but cooking quality levels. For example, any foreign buyer who demands rice with “A+” cooking quality in effect places an order for rice from Kalar belt, because “A+” cooking quality can only be found in rice belonging to that region.

BRR: Do you believe local processors should invest in branding high quality rice by its area of origin (such as Kalar belt) in order to fetch a price premium in international market?

SHT: Of course, if processors were to brand the rice in this manner, it would pay dividends. However, an even bigger impediment is the reluctance of buyers to visit. When foreign buyers visit in the form of delegation, exporters/processors can arrange field visits of farms, mandis, and mills; hold consultations with zamindars, wholesalers, dealers, and brokers; showcase paddy crop upon harvest, varieties, phenotypical characteristics, and cooking qualities. Field visits help build buyer confidence and trust, and in turn allows exporters to demand a premium price.

For at least last 10 years (with brief exceptions), foreign buyers have rarely been able to visit. In the past 18 months, travel has come to a complete halt due to Covid; but even before, delegations could rarely visit due to terrorism and security risks. These conditions make it impossible for exporters to gain buyer confidence, especially of those from Europe and North America.

BRR: Do you agree that ever since exchange rate underwent massive depreciation in 2018-19, basmati processors’ margins have improved on export?

SHT: Exporters only gain due to currency devaluation during the intervening period when orders have been placed based on older pricing (i.e. exchange rate) but shipment or payment realization is yet to take place. With future orders, the benefit is passed on to the mandi and farmers as local prices also rise; while the knock-on effect of currency depreciation leads to an inflationary impact in the cost of farm inputs, fuel cost, transportation etc.

Thus, devaluation does not affect basmati exporter’s margin too much in the medium to long term. They sell the same product in local market as in the export market, so selling price cannot vary too much. In fact, within local sales, prices of shorter-grains move in tandem with wheat and corn prices, whereas basmati prices have a correlation with prices on the other side of the border.

© Copyright Business Recorder, 2021

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Sahibzada Qasim Sep 21, 2021 05:54pm
Good day Mr Shahid tarar.i am a paddy grower from southern punjab.i would like to benefit from your experience in paddy crop by taking seed of some paddy variety of your recommendation. Care to contact me in email please. Thanking in anticipation
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