Iran is expected to be a big buyer of Pakistani rice after lifting of sanctions
Interview with Zulfikar Thaver – President UNISAME
Pakistan is the 4th largest producer of rice following China, India, Indonesia. Rice is the major export product of Pakistan following wheat, cotton. It export earns about 13 percent of the country’s foreign exchange making it the second most important source of foreign exchange following cotton. Total share of Pakistan in world’s trade of rice is up to 10 percent while 25 percent in world’s trade of basmati rice.
Basmati rice covers 52 percent of the total cultivated area of rice in Pakistan. Generally in Pakistan rice production system is followed by rice-wheat production system means both are grown in a alternate pattern, as rice are grown in the monsoon months and wheat in the cooler months of winter season, in the province name Punjab there is sufficient water available to grow rice in the kharif season (summer) as per the requirement of rice while wheat is grown in the rabi (winter) months from November to April.
Rice is cultivated over 10 percent of total cropped area of Islamic Republic of Pakistan. It is contributing approximately 6.7 percent in value-addition of agriculture and the contribution of rice in GDP is about 1.3-1.6 percent in total GDP.
The production of rice in Pakistan by the different provinces indicates that Punjab ranks first by contributing 58 percent, Sindh ranks second by contributing 29 percent, Balochistan ranks third and its contribution is about 3 percent and Khyber Pakhtunkhwa ranks fourth by contributing 10 percent.
Zulfikar Thaver, President Union of Small and Medium Enterprises (UNISAME) while sharing an overview of the cash crop of the country said in an interview that the total production of rice in Pakistan estimated around 6.6 million tons which includes IRRI-6 the largest single variety while rest is other varieties.
PAGE: What is the current status of rice export in Pakistan?
ZULFIKAR THAVER: Approximately we export about 2.5 million tons of Irri-6 and Irri-9 while at one time Pakistan was exporting about 100,000 tons of basmati but unfortunately exports are on decline and at the moment we are hardly exporting about 25,000 metric tons, which is also when there is any tender purchase in Gulf countries. The domestic consumption of basmati is about 100,000 tons.
PAGE: Can you discuss our marketing strategy and finding new export markets besides discussing the existing export destinations of Pakistani rice?
ZULFIKAR THAVER: Pakistan exports its rice to different countries including Iran, Oman, Bahrain, Kuwait, KSA, UAE Qatar for Basmati while most of non-Basmati rice goes to African countries. The Gulf & Middle East countries are also buying low value 386 and 1121 and also Irri-9 and Irri-6 for their under privileged class.
However, there is huge potential for rice exports to non traditional countries and third world countries but we have to make the banks comfortable in financing the SMEs by providing export credit guarantee insurance.
The real issue is that we have become uncompetitive as Indian rice prices are lower as compared to Pakistan, which is one of the reasons that choosy international buyers have shifted to India.
PAGE: Can you point out reasons other than low Indian prices, which are creating irritants in boosting our rice export in the international market?
ZULFIKAR THAVER: Besides higher prices compared to our competitor India, we only have a handful of varieties whereas India has a large number of rice varieties to meet the demand of the international market. Actually we need to accelerate our research activity for new varieties as the available variety is not enough to cater to the demand of the export market while on the other hand our marketing effort is also poor and not fully supported of our commercial attaches in our missions abroad.
Another area which also need immediate attention is the packaging of our brands. Our packing is not attractive like India because the packing material is costly.
Since farm inputs are expensive in our case giving an impression that the government was also not interest to promote rice exports while the Rice Exporters Association of Pakistan (REAP) is also lacking advocacy to highlight problems faced by the export regime. It is unfortunate that more than 1,000 units have been closed down due to lack of demand.
In this connection, the worst affected are the SMEs as most of the parboil units manufacturing Super Basmati grains were closed down in the province of Sindh.
PAGE: Would you like to discuss rice export out and export potential in Pakistan?
ZULFIKAR THAVER: With the lifting of sanctions on Iran and restoration of banking channels in Pakistan and Iran there is a hope that Iran would resume importing rice from Pakistan. The rice exporting sector is hopeful for resuming export to Iran because the sanctions have been lifted but the banks are not yet ready as they are re-establishing their contacts with their correspondents and determining the limits for the banks in Iran as long time has elapsed and their ratings have to be assessed, Iran is the only hope. In fact Iran is a substantial buyer and can lift about 100,000 tons of basmati and non basmati rice annually.
PAGE: What steps you would suggest give a push to rice export from Pakistan?
ZULFIKAR THAVER: Actually we from our platform UNISAME have urged the chairman FPCC&I committee on rice to include in the agenda the up gradation of the industry, the marketing support by the Trade Development Authority of Pakistan (TDAP) and invite the officers of the ministries of agriculture, commerce, industry and science and technology to attend the meeting and co-ordinate with the trade bodies to uplift the rice sector.
UNISAME after carrying out a study of the requirements for the uplift of the sector stated that dedicated efforts are required from grass root level from modernization of farming, milling, processing, packaging and marketing.
SMEDA and PCSIR could take up the issues of paddy drying, parboiling, steaming and preparation of iron and vitaminised rice and also pre-cooked rice. Various products can be made from rice flour and rice grains if PCSIR could educate the sector on increasing shelf life of the products. PCSIR is capable of doing great work for the sector.
However, the State Bank of Pakistan (SBP) facilitating trade with Iran and giving the commercial banks a go ahead for import and export with Iran. The delay in resumption of trade activities is due to commercial banks who are still in the process of sharpening their international risk management departments. Now is the time for the commercial banks to expedite their process to be ready for facilitating import and export business with Iran as it now appears on the list of countries with which trade is allowed without sanctions.