LAHORE - Pakistan will restart rice export to Iran from October 2015 after a ban of almost six years.
“Although there (in Iran) exists a huge opportunity for the exporters of Pakistani rice but country’s rice sector is not ready to take advantage of this opportunity yet, as energy crisis and lack of R&D (research & development) have turned us regionally uncompetitive,” said Rice Exporters Association of Pakistan chairman Rafique Suleman while addressing a press conference here on Saturday. He said restart of rice export to Iran will remain ineffective until detailed mechanism is evolved and appropriate currency transfer arrangements are made through State Bank of Pakistan.
The government will have to announce freight subsidy of at least $200 per ton on rice export to make it globally competitive, the chairman proposed.
According to him, Iran is the one of the largest rice importers of the world, importing around 11 per cent of the world rice worth $2.5 billion. He said that the demand for rice in Iran has doubled during 2012-13 and in the last five years, import of rice grew more than 35 percent.
Pakistan, once, was the largest exporter of rice to Iran, before imposition of sanctions on Iran, which it has lost to India and now almost 90 per cent of rice is coming to Iran from India though import from Pakistan is more economical, he said.
He asked the government to refund markup amount of 2013-14 and 2014-15 loans of rice exporters besides withdrawing withholding tax of this period, suggesting a slash in this tax to 0.25 per cent for fiscal year 2015-16.
The REAP chairman further suggested to extend export refinance period to 360 days from 80 days to facilitate the rice exporters. Presently, the rice exporters are paying withholding tax of 3.5 percent on local purchase of rice which may be abolished so that export industry’s loss may be lessened to some extent, he added.
He said that local rice research institutes have failed to provide any new and good quality seed of Basmati rice during the last 15 years. He demanded that rice mills should be exempted from gas and electricity loadshedding for the next five months which are crucial for us to achieve rice export targets.
Rafique Suleman said Pakistan rice export is stagnant for the last many years, both in quantitative and value terms and is hovering around 4 million tons in quantity and $2 billion in worth because of devastating energy crisis and inconsistent and discouraging export policies of the government. He said that India has entered the global rice market with a huge surplus and 20 per cent devaluation of its rupee, giving it almost unbeatable comparative advantage against Pakistani exporters. The State Bank of Pakistan also honoured sanctions against Iran, resulting in drastic drop in basmati exports to it. But the exporters still maintained their share and were able to achieve the mark, he added.
Giving the latest data of rice export, he informed that Pakistan’s rice exports posted a sharp decline of 27 percent during the first month of this fiscal year mainly due to declining price trend in the world market. The country exported rice amounting to $91 million in July 2015, compared to $125 million in July 2014, depicting a decline of 27.24 percent.
Major drop has been witnessed in the export of Basmati Rice, which registered a 30 percent decline to $34 million exports during the period while non-Basmati exports stood at $57 million in July 2015, down by 25 percent.