Pakistan’s basmati export hopes fade; Indian prices fall

Ripples in global rice market
February 20, 2016
Pakistan again enters Iranian market after six year gap
March 14, 2016

Pakistan’s basmati export hopes fade; Indian prices fall

Pakistan’s basmati export hopes fade; Indian prices fall

By Erum Zaidi

Pakistan’s basmati export hopes fade; Indian prices fall

KARACHI: Pakistan’s aromatic basmati rice exports fell almost 30 percent in the year to October due to cheaper rival supplies from India, a trend that is expected to continue and would make it difficult for the country to stay competitive, traders said.

“India’s competitive rice prices have helped the country in grabbing a bigger share of the global market and increasing exports,” Muhammad Shafique, Chairman Rice Exporters Association of Pakistan (Reap), told The News in an interview.  “Our exports are already on the decline.”

Pakistan’s various varieties of rice were quoted at $950 to 1,100/ton in the international market, while Indian varieties of basmati rice, which competes with Pakistan, were priced at around at $720 to $850/ton.

Basmati – a premium long grain variety of rice – saw a sharp drop of 30.35 percent to $185 million in July to November FY16 as compared to $264 million a year ago. Exports of non-basmati rice increased 6.30 percent to $503 million compared with $474 million earlier.

Shafique said India’s lower export prices are taking toll on the Pakistan’s Basmati exports. “Still we are not mulling to reduce prices to compete India,” he added. “The exporters will continue to sell at even higher prices despite decline in earnings.”

Analysts said world rice prices have taken a hit because of bumper crops in Thailand and Vietnam, which will make it difficult for a number of counties, including Pakistan to export some of its burdensome stocks.

Pakistan’s traditional customers of rice are African and Middle Eastern countries. The country produced seven million tons in 2014/15 as against 6.098 million tons in the preceding fiscal year. Given an ample supplies, it was easy for India and other Southeast Asian countries to sell at a price that was lower than shipments from Pakistan.

Figures from the Pakistan Bureau of Statistics (PBS) revealed that the cost of basmati rice fell to $1,130.92/ton during January to November 2015 from $1,200.87/ton in the same period of the preceding year. Non-basmati (broken rice) prices declined to $404.30/ton compared with $456.39/ton a year ago.

A rice analyst said the country’s exporters are selling rice on high prices in comparison of Indian counterparts because of their rising input cost.

“However, by and large, Pakistan’s rice export prices remained subdued in line with the global trend of softening staple commodity prices since 2012,” the analyst added. “Otherwise, the levels of crop production, inventories and supply in Pakistan are quite encouraging.”

The country hopes to regain its share in the Iranian market after the world’s sanctions on neighbouring Iran eased in July last.

Iranian government said that it would restart rice imports from Pakistan from October. For Pakistani exporters, Iran can become the good destination for their basmati exports.

“We are trying to capture around 1.2 million tons of Iranian rice market, but lack of payment mechanism between the two countries is the major hurdle in meeting this objective,” Shafique said.

He said the Reap representatives’ scheduled visit to Iran on January 15 to discuss the issues related to the resumption of rice exports from Pakistan, implementation of currency swap agreement and the condition of good manufacturing practices (GMP) certification with Iranian authorities has been postponed owing to the recent diplomatic crisis between Saudi Arabia and Iran.

“Iran is one of the largest rice importers and purchases world rice output worth $2 billion every year. However, Pakistan’s rice accounts for nearly an eight percent of Iran’s market.”

Data on Reap’s website showed that around 2,234 tons of rice was exported to Iran in 2014/15, while the export receipts stood at $1.32 million.

Presently, trade with Iran is done on barter basis.

“If a currency swap agreement is implemented between the two countries, traders of the both sides can look forward to conventional deals,” Shafique said.

The Iranian health ministry has set health standards for the rice import and only those who are registered under its GMP certification program can export to the country.

“The Iranian authorities have so far registered only 15 Pakistani companies, giving them a clean chit that their consignments are fit for human consumption and meet specific health standards,” Shafique said.

Article Published on https://www.thenews.com.pk/print/89561-Pakistans-basmati-export-hopes-fade-Indian-prices-fall

Save

Save

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>