Pakistan is one of the leading rice exporter. But for the past three years the export have been declined to around 40% from 970,000 tonnes in 2010 to 630,000 tonnes in 2013.
Even now the familial prices are elevated; theta exporting basmati has become a massive issue. The exporters are well known about this fact too.
Currently the prices of high quality rice is Rs150 (around $1.5) per kilogram which cost around $1,500 for a tone excluding other expenditures like inland and export freight, profit margins and port handling, both domestic and destination.
On the other hand prices of Indian basmati have dropped down by $200 per tonne and have been selling it at around $1,050 per tonne over the last three years.
The Indian example fits the Basmati context. The Indians exports increased by almost 50 per cent — from 2.37 million tonnes in 2011 to 3.45 million tonnes this year.
The Indians, the Chinese, the Thais and others have done the same. They first concentrated on their domestic markets, where better seeds helped them double and even triple their per acre yield.
The quality assurance was also inducted in the seed. The Indian Basmati varieties yield more than double in Pakistan, changing the entire economics of the crop.
In Pakistan, the old seed first saw its yield stagnate between 25 to 30 maunds per acre, then become vulnerable to diseases (leaf blast and leaf roller), that hit the yield further. This finally changed the economics of the entire crop.
As production started dropping, domestic prices started going up.
In the last three years, they have gone up by almost 50 per cent — from Rs100 per kg in 2010 to Rs150 per kg in 2013. With the price increase, the rice exports, already being dumped in low-end markets, lost their commercial sense.
The exporters’ efforts of keeping domestic market suppressed (getting cheap rice) and dumping it in relatively easy export markets like the Gulf States only kept the pressure off the planners.
With the increase in Pakistani Basmati Rice,no international buyer is ready to purchase the Basmati rice.