duty
Business

Rice exports hindered by Import duty, taxes

KARACHI: Rice exporters have urged the Sri Lankan government to reduce import duty on Pakistani long grain rice. A visiting delegation of Rice Exporters Association of Pakistan (Reap) to Sri Lanka held several meetings with the government officials, trade bodies and rice importers.

Reap Chairman Rafique Suleman informed the Sri Lankan officials that there are two separate categories of Pakistani rice — basmati and non-basmati. Super Basmati, PK-385, PK-198/D-98 etc are included in the basmati variety and these are premium quality rice and may be added to the list of luxury item. Whereas Irri-6 and Irri-9 etc are coarse varieties and called non-basmati rice which are cheaper and famous in Sri Lanka. Average price of non-basmati stands around $325-400 per tonne internationally. The Reap chairman urged the Sri Lankan officials to rectify the situation by reducing the duty in the larger interest of both the countries.

Meanwhile, Rice exports continue their decline vis-à-vis the mounting trade deficit. For the eleven months ended FY17, Pakistan’s total rice exports are down by 17 percent year-on-year in terms of quantity, and 15 percent in terms of dollars earned.

It was a particularly difficult time for exporters in general, as the ten-day transporters’ strike did a lot of damage. The Rice Exporters’ Association of Pakistan (REAP) even threatened to shut down their mills in response to the strike, as export consignments were delayed and orders were canceled. In May, the total quantity of rice exported was 41 percent less than April.

Basmati exports continued their decline, and were lower by six percent over 11MFY16. The same fundamental reasons are there as always – lack of research and development into new varieties and better yields, competition from India, and the loss of the Irani market. However, the Irani market has opened up again recently and Basmati has been seeing a rebound lately – notwithstanding the decline in May due to the transporters’ strike.

The real decline comes from the non-Basmati variety, which has seen 18 percent lower exports year-on-year for the eleven months ended. This has evidently been due to an inability to compete with international prices. Over the past several years, there had been a boom in non-Basmati exports, particularly to African countries. The non-Basmati variety is cheaper and earns significantly less than its aromatic counterpart. However, the boom has now ended and the forex earned from rice is at a new low.

Rice is an overlooked export. After textile, it is the single largest export commodity, amounting to around nine percent of total exports. Its importance is highlighted in the Commerce Ministry’s trade policy documents, which never saw any implementation. The rice industry was also not given any relief in the export package, or in the latest budget. Finally, on top of everything, the commodity’s production has been suffering due to a decline in area as well.