India’s rice flooding hurts Pakistani exports

India’s rice flooding hurts: LAHORE Pakistan’s exports are being harmed by subsidized Indian rice, and the government should file a complaint with the World Trade Organization (WTO) against New Delhi for jeopardizing international food security in violation of its regulations, according to a spokesman of local rice dealers.


Between July 2020 and May 2021 (11MFY21), Pakistan rice exports, both Basmati and coarse kinds, are 14% lower than the previous year. Pakistan has so far exported 3.3 million tonnes of rice in 11MFY21, down from 3.87 million tonnes in the same period last year.


India has quoted a price of $360 per tonne for their rice, while we have quoted a price of $450 per tonne. This discrepancy of roughly $100 per tonne has severely harmed our exports, said Abdul Qayyum Paracha, President of the Rice Exporters Association of Pakistan.


Flooding international markets with subsidized food, particularly rice, is an infringement under WTO rules, Mr. Paracha told Dawn. How can India offer rice export prices of $360 per tonne while Cambodia, Myanmar, Nepal, Thailand, and Vietnam all offer prices of $420 to $430 per tonne? He noted that Indian Basmati exports had reached a new high, with the country having shipped 4.3 million tonnes of the item thus far.


Two years ago, for example, we were spending $1,500 per container freight for Italy. The same has now risen to $8,000 per container, a $250 per tonne increase. He requested that the government bring the problem of India flooding foreign markets with subsidized exports, putting international food security in jeopardy, to the WTO as soon as possible.


As a result, Pakistan was unable to maintain its highest-ever basmati rice export volume reached in the fiscal year 2010-11. The value of the country’s rice exports has increased in recent years, not because of bigger volumes, but because exporters have been able to obtain a better price for basmati rice. Exporters received a record average price for basmati rice in the international market during FY14. In FY14, Pakistan exported $1.85 billion worth of rice, with basmati accounting for only $846 million of that total. India’s rice flooding hurts


The situation is considerably worse in the non-basmati rice segment, where brands are essentially non-existent. Is launching a brand really so difficult, or is it just a case of incompetence and complacency?


Experts discuss


Successful exporters who have mastered the art of branding have a mixed opinion. Jawed Ali Ghori, managing director of Matco, possibly the country’s largest basmati exporter, said, I used to export basmati rice in bulk. I realized over time that I wasn’t receiving the best deal and that I was also playing into the hands of importers who took advantage of their position. India’s rice flooding hurts


Ghori is the second generation of his family to work in the rice industry, which his father started 50 years ago in 1964. Matco now distributes rice to more than 65 countries, with its flagship brand Falak being available in more than 35.


I was like any other rice exporter to importers since I was exporting rice in bulk without branding. They used to terminate big transactions over little pricing differences, like $10 per tonne. Importers’ attitudes prompted me to make my goods stand out.


I created my own brand a decade ago after decades of bulk rice exports, and after a few years of effort, I am obtaining the price I want. According to industry officials, Pakistan exports the majority of its rice without proper processing or packaging, resulting in a yearly loss of millions of dollars.


Rice shipments in bulk amount surely hurt Pakistan’s export earnings, said Abdul Samad, Chief Executive Officer of Engro EXIMP. Engro EXIMP is a subsidiary of Engro Corporation, one of Pakistan’s major corporations, which began selling rice in 2010. Its ‘Rymah’ basmati brand is currently accessible in a number of countries. In 2013, the company’s rice sales, including exports, totaled 58,500 tonnes, up 50% from 39,000 tonnes in 2012.


Pakistan’s basmati rice exports have fallen as a result of the success of Indian brands in the worldwide market, but we can fight back by introducing good quality brands and investing in them, he added. India’s rice flooding hurts


According to Khan, the top branded basmati rice exporters earn roughly $500 per tonne more than non-branded basmati rice exporters. Leading Indian basmati rice exporters are simply pocketing $300 per tonne due to branding after deducting all other costs, including packing. Pakistan exported 733,860 tonnes of basmati rice worth $846 million in FY14, however, just 70,000 tonnes were branded, accounting for less than 10% of total basmati exports.


Why is Pakistan lagging behind its rivals?


One of the causes for the poor exports, according to industry officials, is a lack of professionalism. Rice is still classified as a small and medium-sized business with only a few participants. According to Khan, Indian companies have crossed that bridge many years ago and have competent managers in charge of their operations who understand how to establish and manage brands.


It takes time and money to develop a brand. In general, the rice sector in Pakistan has been unwilling to make that investment, he said, adding that the business also lacks the size to afford the amount of expenditure required.


What does it take to build a brand?


According to Khan, a decent brand-building effort in the worldwide market can take anywhere from two to three years. It necessitates entry into at least six to seven Middle Eastern markets, as well as expenditure during the brand-building phase. India’s rice flooding hurts


He explained that while the concepts for launching a domestic or international rice brand are nearly identical, the execution for each market is distinct and that the company must invest separately in market research to gauge consumer product and price preferences, find the right distributors, and ensure placement.


India has been priced out of the market (because of the rise in the currency), claimed R.S. Seshadri, Director of Tilda Riceland, a leading basmati rice exporter. According to industry estimates, Indian traders shipped roughly 2.1 million-2.2 million metric tonnes of basmati in 2009-10. In 2010-11, India’s basmati production is predicted to remain constant from the previous year’s 4.5 million tonnes.


Between April and September, the number of export contracts registered with the government fell by about 12% to 1.42 million tonnes, down from 1.61 million tonnes a year before. India’s rice flooding hurts


India, the world’s largest producer and exporter of basmati rice, currently allows exports with a floor price of $900 per metric tonne, however, non-basmati rice shipments are prohibited. The UAE, Saudi Arabia, Iran, and the United Kingdom are the top export destinations for the country.


According to industry sources, the average price for Indian basmati exports has been around $1,050-$1,100 per metric tonne, which is around 12% higher than the price offered by Pakistani exporters. India’s rice flooding hurts


Exporters have been unable to cut prices and compete with lower-cost Pakistani cultivars due to high basmati paddy prices. Indian farmers are selling Pusa 1121 paddy, a popular basmati strain, according to industry officials.


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