Rice growers laud ECC decision

KARACHI: Welcoming the decision of the Economic Coordination Committee of the cabinet to allow PASSCO to export rice, farmers have urged the government not to succumb to any pressure of rice exporters.

“It is a breakthrough for rice farmers and they will be encouraged to increase rice production,” said Hamid Malhi, President Basmati Growers Association. Rice production reached a record 6.9 million tons during 2008-09 from 5.5 million tons in 2007-08 while rice exports fell from 3.3 million tons to 2.9 million tons during the same period. “The surplus rice caused a glut in the domestic market in Nov and Dec 2009,” Malhi told The News on Friday. The role played by PASSCO to the extent that it purchased 435,832 tons of rice from the market in 2008-09 was a great relief for the domestic rice sector.

“Although farmers could not fully benefit from PASSCO’s delayed intervention but the intervention did decrease pressures on the trade which caters for purchasing of the total rice produce,” he said, the 6 per cent purchases by PASSCO during 2008-09 were a relief to that extent only.

PASSCO’s performance during 2009-10 has been nominal and its rice purchases of Basmati have not exceeded 50,000 tons which is not even 1 per cent of the total rice production. In the event of exports by PASSCO which are to be on a government to government basis, it would not affect the existing export trade especially when a $900 per ton minimum export price (MEP) has been enforced for PASSCO, below which it would not be able to sell its stocks.

Malhi said rice exporters feared that the $900 per ton rate would uncover the under invoicing which is rampant in the rice export sector. “The fake clamour and lobbying by rice exporters last year was successful in stopping TCP from making further purchases from the domestic market and it only procured 25,000 tons of Basmati rice and a small quantity of Irri 6 rice,” Malhi said.

He said the country could not afford decrease in rice production which was the major foreign exchange earning commodity.

“Such decisions would enable the government to decrease trade deficit while generating economic activity in the rural areas,” he said. He suggested that monopolistic behaviors and policies should be strongly done away with. Malhi said they chose to remain on the sidelines and in comparison to the Rs1,250 announced by the government for Basmati paddy the rates in the market hovered around Rs800 per 40 kg. “This is what forced the government to intervene through PASSCO and TCP to bail out the farmers.”