Preventing decline of rice exportsArchive
PAKISTAN’S rice exports have been falling in recent years, mainly due to higher prices, energy crisis, poor quality seeds, low yield and persistently lower commodity prices in global markets.
The fall has a bearing on the country’s economy for rice is the second main earner of foreign exchange for the country after textiles.
However, the office of Global Analysis of USDA has raised Pakistan’s exports forecast by 0.1m tonnes to 4.5m tonnes on a stronger pace of trade.
In the just-ended fiscal year of 2015-16, rice exports witnessed a decrease of 8.60pc. The country earned $1.86bn from these exports during the year compared to $2.04bn earned in the fiscal year 2014-15. Besides, 503,037 metric tonnes of basmati worth $455.25m was exported as compared to 523,450 tonnes a year ago, valuing $601.27m.
Meanwhile, for 2016-17, USDA Grain Report forecasts global production at a new record, primarily due to a larger crop in the United States, while global trade is forecast lower, with reduced imports and consumption in Bangladesh, Iran, and Nigeria. USDA expects about 20pc larger purchases by Saudi Arabia and Azerbaijan from Pakistan. Saudi Arabia would in fact import about 1.6m tonnes of rice during the period. The USDA maintains Pakistan’s rice export quotes at $410/tonne.
The Rice Exporters Association of Pakistan (REAP) in a recent meeting with officials of the ministry of national food security and research in Islamabad pleaded for measures to either reduce the cost of production or introduce high-quality seeds to increase productivity.
The ministry asked the chief secretaries of the provinces to take appropriate measures to facilitate growers in lowering the cost.
While looking into the reasons for decline in exports, the fact remains that high production cost of rice is hampering its sales in the international market. Exporters are finding it difficult to sell the commodity because of sluggish demand and comparatively higher price.
The price of Pakistani rice is higher than the paddy produced by India and other regional countries. The price of Pakistani basmati is higher by at least $100 to $150 compared to Indian basmati, and, hence, selling it is a big challenge.
Since 1997, no new basmati seed has been introduced in the market and that’s the reason for the low yield per acre, which has pushed rice prices higher. India, on the contrary, has introduced five new seed varieties in the last 10 years and that has helped it in increasing yield.
Another step the government could take is to subsidise rice exports so that the stock could be disposed of, Malik Jahangir, a REAP official suggested. “If we fail to export the existing stock, then next year farmers will not grow the grain.” The association also wrote to the Rice Research Centre, Kala Shah Kaku Lahore, but received no appropriate response.
An office-bearer of the Pakistan Rice Growers Association says hybrid varieties are becoming popular and being used in many areas, giving better results. Pakistan’s rice exports have crossed the 4.0m tonne mark in the past. If the country’s production during the year 2016-17 reaches 7.0m tonnes, trade surplus will surely surge to 4.5m tonnes.
But the problem arises from the lower prices being paid to growers which are compelling them to shift to alternate crops. A number of rice growers in Sindh have already switched to sugarcane due to low rice prices. However, the hybrid seed, one of them say, can resolve the problem, for it produces higher yields on smaller land. China, being a big market, likes to use hybrid seeds for better results. However, there are concerns among Pakistani farmers and officials regarding effects of hybrid produce on both human beings and the soil.
Although the United States produces less than 2pc of the world’s rice, it is a major exporter, accounting for more than 10pc of the global rice trade per annum.
In Thailand, rice and corn production in 2016-17 is expected to gradually recover from drought-reduced production in 2015-16 due to an acreage expansion and average yields. Rice production is forecast to increase to 17.5m metric tonnes, up 11pc from 15.8m tonnes in the just-ended fiscal year, assuming some recovery of off-season rice production. While new-crop rice supplies are tight in 2016, larger supplies in 2017 will potentially boost Thai rice exports to 10m tonnes. Meanwhile, supplies from new-crop in 2016 will likely limit Thai rice export potential at around 8m tonnes.
Published in Dawn, Business & Finance weekly, August 8th, 2016