Post Source: Dawn economic and business review (May 24 to 30, 2010)
By Ahmad Fraz Khan
AS rice sowing season begins, every stakeholder in the crop and its trade – farmer, miller, trader and exporter – starts wondering what it would bring for him, in the face of changing ground realities. Given the huge carryover stocks which the government and exporters have failed to clear, the farmers are mulling how to go about it. Their concern is multi-dimensional, ranging from prices to government rescue plans. They want uncertainties to be removed before making investments.
A recent letter of the Basmati Growers Association (BGA) to the federal government explains the farmers’ dilemma. The association says that the carryover stocks of Basmati rice of 2008-09 and 2009-10 have caused virtual glut in the market, as the exports have stagnated around one million tons for the last three years.
Over 200,000 tons of stocks with Pakistan Agriculture Storage and Services Corporation (Passco) – 150,000 tons from 2008-09 and 40,000 tons of 2009-10 – and another 25,000 tons with the Trading Corporation of Pakistan (TCP) are lying unsold.
The nursery sowing is about to begin and the farmers are in a fix whether to invest in the crop or not. If they do, what kind of returns they would get.
The exporters have their own list of complaints. They think that the official intervention in the trade cycles have led to problems in the last two years, making the crop non-competitive in the international market. The farmers are sticking to archaic production methods, which are highly inefficient and expensive, rendering the crop non-competitive.
They maintain that current basmati seed is fast losing its vitality, and should have been replaced to keep the production and trade efficient and economically feasible.
Instead of moving on these fronts, the government prefers subsidising financial cost of farming inefficiencies. Thus, they cannot export rice for higher than world prices. Neither the government officials nor farmers are ready to respond to the market demands; rather they want market to adjust according to their production and preferences, an impossible task for anyone. .
Then research is lagging far behind. Over the last many years, no research institution – Pakistan Agriculture Research Corporation, National Agriculture Research Corporation and Rice Research Institute – has been able to come up with any new variety that could revitalise rice production and the market.
Instead of building on the current advantage that Pakistan rice has in the world market – its taste and aroma, the government is busy importing hybrid seeds of unknown parentage. The VAC has recently approved 20 hybrid varieties – all of unknown parentage, character and production potential. Exporters are thus left to themselves to find new markets for the hybrid seeds.
Exporters have done some branding and marketing for rice – fine and coarse – within and outside the country. But, of late, ‘Others’, a third group – is emerging, and eating fast into areas of both established varieties. In the last two years, out of the total two million acres under rice crop, this “others” group now occupies 738,000 acres – a whopping 31 per cent. In 2008-09, the area under “others” group was 561,000 acres. .
The country suffered badly when it ignored new seeds introduced for cotton crop. No one knew what was being sold in the name of BT cotton until the so-called new BT seeds swarmed over 90 per cent of traditional varieties. The government woke up to the reality when the crop was threatened.
No one can oppose new varieties, if they have market potential. But one can argue that they must be able to stand on their own and add to national exchequer. In order to achieve that, the government, in the first place, should know what was being sown and what kind of share they can have in the world or domestic market. On the basis of such studies, they must be regulated and restricted to areas where they do not threaten traditional varieties and the over $2 billion export.
If approved, they must be legally separated from two established varieties and subjected to independent branding and marketing.