KARACHI: Rice exporters have warned Pakistan that it could lose its traditional rice markets if the government buys the commodity from farmers to guarantee them high prices.
The Rice Exporters Association of Pakistan (REAP) has also asked the government to avoid buying rice from farmers, as it may destabilise the private sector.
The association said the government should provide direct subsidy to farmers in order to support them.
“The government’s involvement in such business activity (procurement) will be harmful to the private sector, which has invested billions of rupees to build an infrastructure and human resources,” Rafique Suleman, chairman of REAP, said in a statement.
“In case of the government’s involvement in rice business, we will lose huge foreign exchange, as well as the credibility, which the rice exporters have earned after long hard working.”
The price issue highlighted following reports of a pick-up in paddy harvest that has weakened its prices to at least 40 percent this season. The price of paddy – raw rice – has dropped by Rs1, 000/40 kilogram to around Rs1, 500-1,600/ 40 kilogram against the last year’s price of Rs2, 500-2,600/40 kg.
Suleman demanded the government to give due consideration to the grievances of the rice industry and give free hand to the private sector for playing their positive role, boosting the economy, which is badly affected due to a number of reasons.
He said the international market is depressed and all the rice exporting countries are facing tough competition and prices are on the decline. “This is the market phenomena and due to the demand supply aspect, we see such trend in times and have to cope with it,” Suleman added.
Growers, who lack the storage facility, have no other option, but to sell it, but buyers — notably the mill-owners and middlemen — are deliberately delaying the buying to pressurise the growers sell the crop at throwaway rates.
Farmers have asked the government to immediately announce subsidy to them through providing subsidised fertilisers, seeds and diesel for the next crop. They also demanded the government to fix a minimum export price at the previous year average export rate of $1,153/ton. This will help avert such price crisis at the growers end.
The government should also not intervene through the Trading Corporation of Pakistan and Pakistan Agricultural Storage and Supplies Corporation.
Suleman recalled PASSCO, in the year 2008, procured 200,000 tons of rice at a premium price and “even after six years they could not disposed of those stocks and ultimately government had to face losses of up to Rs24 billion.”
The RECP chairman also quoted the example of Thailand, where government procured the rice with higher prices, but the move damaged 17 million tonnes of rice in the absence of proper storage and warehouse facility and finally. “The Thai government suffered a loss of $30 billion.” Suleman said.
He advised the government to support farmers, but “this should be done through a proper mechanism”.
The government should compensate farmers in the shape of free seeds, free pesticides, free water, free fertiliser, free electricity and other facilities. “As farmers are not equipped with the latest machinery and due to the mishandling, every year we have to see crop loss, further we could not get the right quality of rice,” Suleman added.