Pakistan has started losing the highly valued Iranian market of rice as importers of our western neighbour are now focussing on the cheaper commodity from India. According to sources in Rice Exporters Association of Pakistan (REAP), Pakistan’s export of rice, which has already been reduced under the increased import duty in Tehran, has now started facing stiff competition with the cheaper rice of India.
IMPORT FROM INDIA: Soon after lifting the ban on export of rice from India after three-year sanctions, many of Iranian importers, sources claim, have moved towards our eastern neighbour which has a huge stock of the commodity at a considerably lesser price. Iranian rice market was being taken over by Indian exporters despite having a delayed payment issue. According to sources, owing to US sanctions, there were lots of payment issues in the trade with Iran as payments were being diverted through Dubai. India had exported at least 900,000 tonnes rice to Iran last year which was almost 30 per cent of total export from India.
IMPORT FROM PAKISTAN: Talking to Profit, Taufiq Ahmed Khan, former vice chairman of REAP said the fresh development was another blow to the country’s rice exporters who were already facing stiff competition in the international market after arrival of the Indian commodity. Iranian importers were earlier importing around 0.3 million tonnes rice annually from Pakistan, especially basmati, which is very popular among Iranians. To a question, he said there was little impact of the import duty in Iran on the import of rice from Pakistan as it varies as per the Iranian demand and existing stock.
IRAN’S IMPORT REQUIREMENT: However, sources claimed, the smuggling of rice through border area was going on and in turn generating huge losses for the national exchequer. It is also exacerbating legal trade with the neighbouring country badly through official channels. According to a report Iran’s annual import requirement of rice of 0.8-1.0 million metric tonnes was mainly imported from Pakistan, India, Vietnam and Uruguay. The better quality rice i.e. Basmati and Sela was imported from Pakistan, which exports almost 88 per cent of its total rice exports to the host country.
REAP shows concerns: On the other hand in statement issued by REAP, the association has expressed serious reservations fresh demands of farmers made to government for buying rice via Trading Corporation of Pakistan (TCP) to stabilise the rice prices, as an effort in the wrong direction. REAP said such efforts in the recent past by PASSCO and TCP are prime examples where the state objective of supporting the farmer was not met and in return the state not only lost billions but due to intervention by PASSCO and TCP the markets were inflated artificially, which in turn resulted in huge loss of export earnings.
FIRM SUPPORT: REAP firmly stands in support of the farmers and would like to see government’s effort in the right direction to directly support the farmers. REAP would support government to provide financial assistance in the shape of subsidies for buying fertiliser, reduction in electricity tube-well bills and purchase of seeds, etc to the farmers who have land holdings of 10 acres and less. Such a programme will not only help the farmer directly but will also avoid any distortion in the market and supply of rice for exports.
REMINDER: While stating its reservation REAP again reminds all concerned authorities and the economic managers that owing to recent devaluation of Indian rupee versus the dollar by a good 20 per cent during the last four months; lifting of ban on export of non basmati rice and releasing two million tonnes of non basmati rice for export and 20 to 30 per cent decrease in the basmati and non basmati rice export prices, Pakistani rice is already facing tough competition from cheap Indian exports. And at this important juncture, if government proceeds with any intervention it will be contrary to its pledge to rice exporters.
EFFORTS NEEDED: Such an effort made in last two years programmes, where TCP and PASSCO purchase primarily benefited big hoarders and traders, not only left the small farmer benefit objective unfilled, the state carried these stocks at exorbitant bank markups cutting off export targets by a good $500 million. REAP fears any intervention at this time will put a halt on rice exports causing huge losses in foreign exchange earnings up to $1 billion and an expensive carryover stock in the country.
A typical sale window for Pakistan is between October 2011 through to February 2012 after which the two largest exporters Thailand and Vietnam harvest their main crops combined with the 2nd Indian crop, REAP fears any intervention at this time will shut off sale opportunity and disrupt rice supplies for exports, and leave rice exports stagnant.
