TCP tender ruins rice export deals

TCP tender ruins rice export deals

By Parvaiz Ishfaq Rana


Wednesday, 21 Oct, 2009
KARACHI: The involvement of the Trading Corporation of Pakistan (TCP) in rice exports has badly damaged the private sector export contracts worth millions of dollars, exporters allege.
The state-owned TCP made its debut in export trade through an international tender last week for the sale of 25,000 tons of super basmati rice procured last year.
The rice exporters allege that the involvement of the corporation in rice export trade at a time, when the new paddy crop is just around the corner, is having a crippling impact on the price structure.
‘I was in the midst of finalising a 5,000 tons deal with the foreign buyers but immediately after the issuance of the TCP export sale tender about 10 days back the buyers held back the deal,’ lamented Shamsul Islam Khan, member managing committee of the Rice Exporters Association of Pakistan (REAP).
He further said that the corporation had upset the export strategy of the private sector, which is presently perplexed over the course of action to be taken to protect its efforts stretching in developing the export market.
He recalled the performance of the defunct rice export corporation of Pakistan (RECP), which exported rice worth $300 million only and after incurring billions of rupees loss, was ultimately rolled back by the government.
He further said that when the private sector entered rice export trade 20 years ago they faced lot of hardships because the legacy of the RECP kept them hunting in the world market.
The Pakistani rice, he said, used to be branded as ‘poor quality’ product by importers in the world market. There were other complaints such as delays in delivery and there was a business mistrust at large.
Another rice exporter Zulfikar Thaver said that it was most shocking that the TCP had entered into export market at a time when the private sector was in full swing to enter the world market with the new crop.
He said that the role of the state in trade and commercial activities had been eliminated the world over. The state-owned corporations presently only operate as an arm, which could help governments meeting shortage and keep buffer stocks of essential commodities.
Mr Thaver said rice prices in the world market were already under pressure and immediately after the TCP tender most of the buyers withdrew to the sidelines and some even cancelled contracts, which were in advance stages.
The ministry of food, agriculture and livestock (MINFAL) has put the paddy harvests at around 5.5 million tons, which is less by around 1.4 million tons from last year.
He suggested that instead of allowing the TCP to enter into export trade, the procured stocks of last year’s crop with the corporation and the Pakistan Agriculture Supplies and Storage Corporation (Passco) should be held back as buffer stocks.
He said the stocks held by the state-owned entities should be released in the domestic market and directly to the consumers through the Utility Stores Corporation.