Rice Sector Report
Rice Sector Report
Rice Sector Report
PAKISTAN
ANALYSIS OF PAKISTANI INDUSTRIES
5/7/2013
Submitted to: Ms. Mehwish Ali
Submitted by: Maha Talha, Aaqib Nazim, Kanza Zulfiqar, Bilal Ahmed, Syeda Mahrukh Fatima
Naqvi, Komal Asim, Jitesh Jewani
TABLE OF CONTENTS
Executive Summary
Literature Review
11
Introduction
13
Brief Overview
13
16
17
Export details
21
PEST Model
25
SWOT Analysis
27
38
39
Factor Conditions
40
Demand Conditions
42
44
47
49
52
Interview Analysis
54
Recommendations
60
Conclusion
63
References
64
Appendix
78
EXECUTIVE SUMMARY
Pakistan is the 4th largest producer and 11th largest exporter of Rice. It earns a significant
amount of foreign exchange revenue for Pakistan which helps our economy stay competitive.
Since the independence of Pakistan, our achievements in the rice industry have been
promising. Production has increased by a ratio of 2:1 compared to increase in land. This can be
credited to the variety of seeds present, improved facility for rice production and introduction
of various preventions for rice crop against diseases. Punjab is the major producer of rice,
followed by Sindh. This has also been the reason that Pakistan was able to stand the global
financial recession in 2008 comparatively better than the world, as it opened up new markets
for us to export rice.
The privatization of the industry has benefited us tremendously. It led to the introduction of
new technology, new ideas related to production and introduction of variety of seed and it
opened up new opportunities for employment. Two research institutes also exist within
Pakistan to help with the research for new seeds and techniques, and plans to establish
institutes to train farmers are also in the pipe line. The price of rice, and hence the revenue
generated in dependent on the demand and supply. Pakistan is known for the production of
basmati rice internationally, which is highly demanded too.
However, there are a number of problems faced by the rice industry of Pakistan. The rice
industry receives no support from the government of Pakistan in the form of subsidies or tax
incentives, whereas international competitors are known to be fully supported by their
government which leads to them being able to offer lower prices to their consumers. This
depicts that imports of rice in Pakistan can increase, because our farmers are prey to
inflationary pressure in the form of rising raw material costs; oil and the shortage of gas in
Pakistan which affects our ability to deliver and produce orders of parboiled rice at the required
time. The rice produced in Pakistan is 40 percent domestically consumed and 60 percent is
exported. This case will lead to a fall in our export level of rice, affecting the foreign revenue we
are from rice exports which is the backbone of the Pakistani economy. Currently, Pakistan is
facing a fall in exports of 53 percent; whereas rise is domestic demand is for 15 percent. Thus
we face a mismatch in demand and supply.
We are also affected by the failure to incorporate new technology in our production ways
which is a big deterrent for us as Pakistan Rice producers and sellers lose out on efficiency and
quality, as those employing the new technology take advantage of spread out costs, and
economies of scale. India is an example of this case. Numerous unregistered seeds also exist
and are used by the rice farmers, however because they are unregistered, the government is
not aware of them and so, the revenue earned by farmers in this aspect is lower than it should
3
be. There lack export incentives as well as lack of quality checks on the rice exported, which
ultimately affect our brand name in the international market because mixing of varieties exist.
To analyze the rice industry, we conducted the SWOT analysis, PEST analysis to fully analyze our
weaknesses and strength internally and externally, as well as in the local environment. The
climactic conditions of Pakistan are a major strength Pakistan should be proud of, as it allows
rice production and cultivation more than any other naturally endowed country. Pakistan also
produced variety of rice and seeds therefore allowing us to cater to different types of demands
internationally. The recent privatization of the rice industry of Pakistan has increased the
efficiency of this industry by allowing the employment of new and improved technology and
modern mechanized ways to cultivate rice. Pakistan also has the advantage of being blessed
with a population that works in the urban sector as well as population working the rural sector.
The hunger for employment can be used in our advantage by training those individuals to the
specifications of the rice industry, and such labor can be employed at cheaper rates.
However, weaknesses can be identified as the mixing of rice variety, ruining our name in the
international market and as no check and balance exists, there is no way to counter that
weakness. Pakistani rice is internationally known and demanded, however black markets exist
for its sales which again make us lose out on the revenue that could have been earned. There
exists lack of value addition and lack of trained labor too. On the other hand, Pakistan is open
to take advantage of opportunities like TDAP, collaborations with REAP, tender with Philippines,
new market with China, but international competition from Bangladesh, India, and Vietnam can
work against our leverage in those opportunities. The climate is also unpredictable, and floods;
unexpected, bring along with it diseases that ruin the crops and thus hamper the total yield.
Economic and political problems of Pakistan also pose as a major threat.
We also conducted a diamond model analysis to understand the different factors affecting the
rice industry. Factor conditions affecting the rice industry are that it is a staple food, and
employs a lot of labor and earns considerable foreign exchange revenue. Pakistan is renowned
for producing Basmati because we have an absolute advantage in this arena owing to our fertile
soil and favorable climate. It is also an ideal industry for FDI. However, limited water, untimely
rain, lack of proper storage of rice stock, backward in technology, law and order situation of
Pakistan and transport costs all are factors working against our farmers and thus, the yield and
our competitiveness. Moreover, majority of our farmers are of the export view affecting
domestic quality of rice and increase in imports.
Role of government is merely present in the rice industry owing to the recent privatization. No
tax exemptions or tax holidays exist. Lack of subsidies also play a negative role as it reduces our
competitiveness. Suggestions for the government sector include training the rural population to
ou outies agiultues adatage, iig the ua ad ual populatio to ipoe the
4
rice industry and production techniques, holding seminars, helping with procurement of seeds,
pesticides and raw materials like DAP and Urea. Other than that, checks to ensure the superior
quality of rice should be made compulsory. Methods to increase the fertility of soil should be
employed because that would ensure rice production for the future, even if more land is not
taken up for rice production. More improved varieties should be developed, and lastly, ways for
the easy disbursement of credit for the small farmers should be put in play, to encourage
investment and business, ultimately aiding to our foreign exchange and economy.
LITERATURE REVIEW
Rice is not only a food crop, but is also considered an essential cash crop in Pakistan. Also, rice
is one of the main export items of our country. Pakistan grows high quality rice to meet both
domestic demand and for exports. According the business recorder of December 2012, the
gad suess of a i ta ie epots as it diesified a etig stateg. a i ta is oe of
the largest exporters of rice. Rice is a monsoon crop and is mostly sown in the Irrigated area
next to Indus River and its tributaries. Around 11% of the total agricultural land is used in rice
production.
The rice crop has always been an essential part of the economic planning of Pakistan. It is the
second biggest source of foreign exchange for Pakistan and is second staple food after wheat.
Rice contributes for 6.7% in value addition to agriculture and accounts for 1.6% in the GDP of
Pakistan. Pakistan's production of rice is enough to meet the domestic requirement, as well as,
export rice of up to one million ton per annum. Pakistan trends in growing a wide variety of rice
for example, Basmati PK-385, IRRI-6, IRRI-9 and Super Basmati, the most prominent of which
are Super Basmati and Basmati PK-385. The two varieties which dominate the market share are
Basmati and IRRI. Basmati is grown, mainly, in Punjab whereas Punjab and Sindh both boast
wide cultivation of IRRI rice. Basmati, alone, accounts for 2% of the exports.
Furthermore, rice trade in Pakistan was initially under the government control. The industry
was liberalized in the 1990s after disbandment of the state run Rice Export Corporation of
a i ta ECP. a i ta ie tades hae e poded ell to aket liealizatio ad hae
taken a leading role in rice market. In 2009, however, in the wake of a record harvest and
concerns over a slump in market prices the government intervened in the rice market and
started procurement from farmers through PASSCO and Trading Corporation of Pakistan (TCP).
As far as production is concerned, Pakistan would experience a growth in its rice exports in MY
2010/11 at 28 percent to 3.2 million tons mainly due to increased demand and better prices in
the world market. Rice exports in MY 2012/13 are projected at 4.0 million tons based on a good
harvest. However reduced water availability during this period would have a greater impact on
the op pospets. a i ta ie epots also eefited fo the Idia goeet a o
rice exports earlier in the marketing year. MY 2011/12 rice exports are estimated at 3.7 million
tons, three percent higher than last year exports estimate.
a i ta MY / ie podutio is o e tiated at . illio to , thit peet
higher than the 2010/11 flood affected production level of 5.0 million tons. The average
production of rice for the last five years is 5.97 million tons. But unlike 2010 disastrous floods,
6
Association of Pakistan (REAP). This was highlighted by Mubarik Ali and John Finn in their article
in 1989, that the demands were increasing but the yields remained constant. Seeds, fertilizer,
tube wells, tractor etc. are the variables which help to produce good quality rice. The farmers
were not provided with these especially with the growing technology, Farmers in Pakistan were
using the traditional techniques. They lacked technical, as well as allocative efficiency.
Therefore the export of basmati rice has suffered a setback and non basmati rice is not fetching
a good price. The milling plants have old machinery and banned varieties are also being
ultiated. Ule ad util epots pik up, the epotes liailities ill keep iea ig. Thus
the epote eed oe tie to adjust thei epot efiae loa ad a edutio i the
finance rate due to the lowering of the discount rate.
Varieties of rice are subdivided into grades based mainly in the proportion of broken rice on a
consignment. Khapra beetle was detected in some rice consignment from Pakistan to United
States and if effective measures are not taken, this can cause significant problems for the future
Pakistan rice exports to US as rice is a major Pakistani export to United States.
Pakistan produces one of the best varieties of rice in the world due to the rich soil and humid
climate found here. However due to traditional and outdated post-harvest practices there are
substantial losses in the output and quality of rice which in turn affect the farmers profits.
Pakistan may face a decrease in export demand as it faces intense competition from India in the
Basmati rice segment. Also the industry has suffered a loss of competitiveness brought about
podue shift toad ultiatio of hid ie athe tha fagat ie. Futheoe
increasing rice production in Asia means that the region that consumes the most rice will not
need to import so much of it
Like most agricultural commodity markets, the rice market also suffers from the cobweb
phenomenon, where price fluctuations are caused by the time lag between making the decision
to cultivate the crop and the ultimate selling of the crop. To decrease the risk faced by farmers
from fluctuating prices, the government has set support prices for various varieties of rice
(Ahmed, et al., 2000).
According to an article published on 8th February, 2012, in Express Tribune, Pakistan has the
capacity to increase its rice exports to up to four billion dollars but barely reaches up to one
billion dollars worth of rice export. The reason being that farmer interest has declined in the
cultivation of rice due to stagnancy of prices since 2008 and a downward trend is expected to
be seen in 2012-13. BGA President, Hamid Malhi, also pointed out the lack of innovation that
persists in the sector. He said that the only available type of rice is Super Basmati which was
brought under use in 1996. Since then, public sector institutions have failed to invent
9
something new. He also claimed that urea prices have hiked up to Rs 2,000 from Rs850 in a
atte of ea . These fato fail to attat faes attetio toad the ultiatio of
rice and stops the sector from reaching the benchmark.
Furthermore something that needs to be focused on is investment in the rice industry. Private
sector investment in milling improved the quality of rice available for exports and so improving
the competitiveness of a i ta ie i the old aket. The potetial fo foeig ie tet
in this sector is very high due the limited global avenues for investment in other countries world
over. This investment is much needed as the standard agrarian infrastructure present in major
rice exporting industries is missing in Pakistan. The members of the rice export industry realize
the potential of this sector and thus are also investing heavily in rice paddy processing facilities
and their expansion. However billions of dollars of investment are needed to modernize
Pakistani rice industry so that there is minimum wastage.
An article on Matco, one of the biggest rice firms in the industry, states that Match has
investing in the most modern agro-processing infrastructure that addresses the post-harvest
losses problem in Pakistan. Matco's plant is located in Sadhoke. With the collaboration of the
latest Japanese and American technologies, this plant will include the most modern paddy
dryers, rice parboiling units, and silos that monitor humidity, temperature, moisture of the rice
paddy amongst other things. This shows that the rice industry realizes the need to invest in
technology and infrastructure thus we might see an increase in production in the coming years.
According to an article published in Express Tribune on the 5th of February, 2013, Pakistan has
started reaping benefits from the System of Rice Intensification (SRI) method that was
introduced in the Sheikhupura district by Lok Sanjh Foundation (non-profit organization) back in
2005. But now, as many as 65 villages and 300 farmers are using this technique for rice
cultivation. 80% of the farmers who are using the SRI method have reported multiple
advantages, such as the development of strong roots in order to fight lodging and crop loss and
the use of less water for cultivation. As said by the CEO of Lok Sanjh, Shahid Zia, use of SRI
cultivation method produces five to ten tons more in contrast to the usage of orthodox
cultivation methods. He stated that due to SRI being a more tedious and tiring job, NGOs tend
to neglect of introducing this method. He also asserted that due to the water crises and
pollution of wetlands, it is necessary to introduce such measures.
10
11
A bright spot in the economy is the amount of foreign remittances that Pakistan receives daily.
However due to high oil prices and lower cotton export prices, Pakistan is stuck in a low income
and low growth trap with its growth averaging at 2.8% per year from 2008-2011.
Pakistan must address government spending and revenues along with energy production in
order to increase economic growth and employ its growing population. Investment in
education, healthcare and infrastructure also needs to be increased for long term benefits.
Borrowing needs to reduce as our foreign debt totals up to $130 billion. Foreign aid needs to be
diminished as well as this has done nothing but make the economy more dependent on
external factors for growth and survival.
12
INTRODUCTION
BRIEF OVERVIEW OF THE SECTOR
Rice is not only the third largest crop which is grown but it also earns a lot of foreign reserves
for Pakistan. Production of Rice is gro % i last fie ea . a i ta ahieeet, oe
the past 50 years, has been phenomenal in reference to the rice industry. Pakistan had around
856,000 hectares of rice cultivation land back in 1947, which increased to 2.4 million hectares
by 1998. The production of rice, during this period, showed a significant increase by
approximately 6 times (from 737,000 to 4.6 million tons) whereas the increase in area was half
of this. Apart from increase in area of cultivation, production increased due to introduction of
high yielding variety seeds, improved facilities to the farmers and different methods to protect
the crop. Punjab is the leading producer of rice in the country. It accounts for 59.5 percent of
the total production. The next leading province is Sindh. It accounts 29.5 percent. The
remaining provinces NWFP and Baluchistan contribute 11 percent of the total production.
Many of the rice processing units are traditional huller type and are inefficient. Therefore, there
is a dire need to establish modern rice mills through which entrepreneurs of rice mills can be
able to produce the high capacity production.
Rice is an important food and cash crop. It has been the third largest crop of Pakistan falling
behind wheat and cotton. Its plantation takes an area of approximately 2.5 million ha (11% of
the total cropped area) and adds up to 27% of the cereals produced annually in Pakistan.
Production of milled rice, on an annual basis, has increased from 5.5 million tons to 11.7 million
tons posing a share of 8.1% in agriculture sector and 2.1% in GDP. Long grain aromatic Basmati
rice is the main product over which Pakistan has gained popularity as a rice exporter. Around
4.1 million ton per annum, of exported rice, has accounted for 7.3% of the foreign exchange
from exports of food based goods. The rice export increased manifold during the recent years
and a record export of 4.7million tons of worth about Rs.100 billion was made. The country
ranks 11th in terms of rice production and 4th in rice export in the world.
Despite the global recession of 2008, Pakistan was able to succeed in exporting rice because of
its diversified marketing approach and by trying to take new market share in Middle Eastern,
African and other Asian countries. One other reason is that wheat is majorly consumed as a
staple food item in Pakistan rather than rice.
The pivot point for the rice industry was back in 1988 when government decided to fully
privatize it, after that our export earnings increased from 300 Million dollars to 2200 million
dollars. Currently Rice is the second highest export earner for Pakistan as it earns 11% of total
foreign earnings. There is a lot of demand for Pakistani Basmati rice. Pakistan grows the best
basmati of the world.
13
PK-385 (famous for their aroma), Basmati 2000 and basmati KS-282 (equivalent to Thai rice) are
found in the Punjab province. Sindh accounts for 41% of the rice population. IRRI 6 and IRRI 9
are found in Sindh. Some Basmati is grown in Sindh but at a very low level. Overall the Basmati
yield is lower than that of IRRI in Pakistan.
We have two rice research institutes of rice in Pakistan, one at Punjab and the other at Sindh.
Prices of rice are not determined by farmers instead they are determined by market forces. The
rice sector is deregulated but the government intervenes in exports of rice. However it does not
provide any subsidies and does not determine prices as well.
Punjab is a Basmati growing area and so it needs more efforts for sowing, plantation and taking
care of required water, harvesting, milling and ageing etc. Due to all this Punjabi rice captures
more value in the international markets.
The value addition of farm products in Punjab encourages potential investors to reinvest in
modernizing the agro industry of Pakistan. New financial instruments are also merging
industries and agriculture together. Pakistan markets are ready for expansion in next five years
and that will determine not only local but international prices.
Due to ease in economic policies and investment policies now Pakistan will be going for
mergers with international players and this sector is gaining a lot of attention and investment
by foreign markets. Due to sufficient domestic demand in Pakistan for rice, there is a lot of
chance for this sector to grow and expand. Basmati is always a leading player from the demand
side of international players and due to shoulder to shoulder competition with India, Pakistan is
also becoming more competitive and is introducing new breeds of good quality basmati.
CURRENT PROBLEMS
Many unregistered seeds are available in the market at quite a low rate which results in low
yields.
Lack of awareness about mechanical transplantation, use of fertilizers, use of technology
and maintenance of plant population which results in low yield and quality.
Use of old technology, like use of tractor, increases the ratio of broken rice.
Low feasibility and no incentives to import.
Paddy dealers are also not using moisture meters or other upgraded technology which
again results in huge losses.
ISSUES WITH EXPORTS:
1) No proper refinement of exporting rice giving rise to quality issues
2) No checking of quality by any authority at different levels of the supply chain
14
3) Though Sindh is perfect for IRRI only but farmers do produce Basmati which causes not
only lower yields and lower profits but disparity in quality between Sindh and Punjab
Basmati as well
4) Inferior quality seeds available
5) No pre-shipment check of exporting rice
15
Title
Estimated cost
Evaluating suitability of exotic rice varieties and elite germplasm for par- Rs.5.193 million
boiling
PSDP (RADP)
PSDP (RADP)
Development and dissemination of water saving rice technologies in South US$ 63000/
Asia
ADB (through
IRRI)
PSF
Marker assisted selection and genomic studies for stress tolerance in wheat Rs.71.785 million
and rice
Rs.5.26 million
Rs.1.889 million
Funded by
PSDP (RADP)
16
procurement of paddy for the year. The International Basmati prices were lower in first half of
2012 due to prevalence of Indian Basmati, however they started improving by the second half,
and Pakistani Basmati was able to trade with Indian Basmati at a premium. By cutting down on
the energy costs, the business is aiming to achieve an improved margin.
Sales
39kT of finished rice equivalent accounted for the total sales during FY 2012 out of which 25kT
were catered to the local market while the remaining 14kt were exported.
18
Private Labeling
Matco is involved in private labeling of brands to cater to customers worldwide. Presently, the
private labels are being exported to over 60 countries. Few of the varieties of rice available in
private labeling include Super Basmati, Super Basmati Brown, Super Basmati Sella, Super Fine,
Pure Basmati, and so on.
GUARD GROUP
Overview
Established in 1989, Guard Agri is the very first company in the private sector which has its own
Rice Research and Development (R&D) facility. Ever since its inception, the business has
progressed dramatically and currently owns five divisions-- R&D, Crop Agronomy, Food, Seed
and Agriculture Machinery. Guard Rice Mills is a subsidiary of Guard Group, with a history of 50
years in manufacturing, trading and distributing variety of products not only in Pakistan but
across the globe.
Production Capacity
The company has latest rice mills located in Lahore, with the production capacity ranging to
12.5 ton/hour.
Quality Control
Within Pakistan, the company has the honour of being the first rice mill that has been awarded
ISO 9001:2000 Quality Management System certification in the year 1998. In 2006, it was again
the first rice mill to be certified ISO 22000:2005 Food Safety Management System certification.
It has the supreme standard of ensuring food safety along the entire food chain, until it reaches
the point of consumption.
Market Share
As a symbol of its quality strength, Guard is supplying to predominant rice brands, along with
owning labels with an export range of up to 36 countries. Aside from export markets, Guard
Rice is the National Market Leader, and has a massive distribution network country wide.
Products
The product range includes Supreme Basmati-Easy cook Sella-Super Kernel-Super Kernel SellaBrown Rice-Tibar Basmati-Guard Awami-Longrain rice.
The most preferred choice of people worldwide is Super Kernel Basmati, and is perceived as the
highest quality basmati. Guard rice is known for procuring and processing very high quality of
Basmati Rice, and is positioned for sale in big markets such as hyper marts and super marts.
19
South America
North America
Eastern Asia
Western Europe
Eastern Europe
Africa
Mid East
Oceania
Southeast Asia
Keeping into consideration the customer's high quality expectations, Garibsons (Pvt.) Ltd., has
installed the Sortex Series 90,000, which uses the most up-to-date CCD technology, and
encompasses state-of-the-art optical sensing, data-processing plus ejector technology. The
Product yield increases by the resorting capabilities of the Sortex Series 90,000. Garibsons
assures "absolute" quality on the basis of employing the latest equipment installed.
Quality Control
Fauji Foundation
Fauji Foundation initiated the rice category under its subsidiary Fauji Cereals. They introduced
ie fla e i the ea 9, hile Ba ati ie has ee eetl itodued i . Fauji
started its journey in 1954, and has the vision of creating a stronger and smarter Pakistan. Fauji
Ceeals poduts ae podued u ig latest state of the at i plat that as i talled
recently in 2012. Fauji has also achieved ISO 9001-2008 Certification for producing superior
quality food products. The company has established itself in the international market and
exports to numerous countries. It also supplies to UNICEF and World Food Program.
20
EXPORT DETAILS
AKITAN EXPOT of ICE.
As you can see here Pakistan exports a high quantity of rice to a number of different countries.
QRC RICE INSPECTION CELL
ARACHI,LAHORE,QUETTA& TCP
COUNTRY WISE POSITION OF EXPORT OF BASMATI RICE
S.NO NAME OF
COUNTRY
1 Aergentina
2 Afghanistan
3 Algeria
4 Angola
SUPER BASMATI
QTY(MT) VALUE($)
10.
67.
11,217.5
79,372.
5 Australia
6 Azerbaijan
7 Bahrain
8 Bangladesh
9 Belgium
10 Brazil
11 Brunei
12 Canada
13 Cape Town
14 China
15 Comoros
16 Congo
17 Cyprus
704.48
7,907.79
5,328.81
506.
1,120.11
50.
25.
1,481.38
936,620.52
3,985,869.
6,081,724.64
629,775.
1,116,174.7
58,000.
35,500.
1,765,291.95
347.38
263.41
130.8
25.
18 Denmark
19 Djibouti
20 Egypt
21 Estonia
22 Finland
23 France
24 Germany
25 Gerogia
26 Gothenburg
27 Greece
28
Haiti
8,523.57
7,907.79
7,018.38
527.
1,248.07
50.
25.
2,547.21
20.
290.33
246.1
59.
26.
7,515,384.27
3,985,869.
7,466,481.44
646,099.98
1,243,750.38
58,000.
35,500.
3,073,260.28
16,280.
335,667.65
239,863.6
44,305.
22,880.
882
504
1064
1226
997
1160
1420
1207
814
1156
975
751
880
400.03
591.39
52.
44.
48.
444.06
226.68 180,854.37 1,601.51
17.81
25.
626.64
25.
19,946.
185.5
497,550.09
677,640.44
44,025.
58,215.3
55,944.38
551,078.61
1,902,620.58
26,817.34
19,000.
621,812.5
103,148.53
1244
1146
847
1323
1166
1241
1188
1506
760
992
556
239.6
166,121.
50.46
50,169.68
581.52
788,143.28
311,833.83
141,855.8
26,250.
8.92
7,183.82
329.96
489.76
15.
44.
48.
348.56
652.03
438,776.09
590,596.28
15,015.
58,215.3
55,944.38
424,305.98
777,465.04
46.
39,514.
25.
16,950.
523.14
546,098.11
72.5
540.44
17.81
25.
53.5
98,422.6
755,615.83
26,817.34
19,000.
30,768.39
1,449.97 1,218,635.8
21.
16,324.98
52.5
57,460.
484.31 519,825.06
20.
16,280.
18.
16,650.
115.3 98,007.8
34.
18,055.
26.
22,880.
24.08
101.63
12.
19,260.
87,044.16
12,060.
23.
28,350.03
182.36 188,685.34
25.
185.5
25,000.
103,148.53
25.
19,946.
21
S.NO
NAME OF COUNTRY
29
30
31
32
33
34
35
36
37
Helsinburg
Hong Kong
Indonesia
Iran
Iraq
Ireland
Italy
Ivory Coast
Johannesburg
38
39
40
41
42
43
44
45
46
47
48
49
50
Jordan
Kenya
Korea
KSA
Kuwait
Labnon
Liberia
Libya
Lithuania
Madagascar
Madagscar
Malawai
Malaysia
51
52
53
54
55
56
57
58
59
60
Maldives
Malta
Matadi
Mauritius
Maurtius
Monorivia
Mozambique
Muara Daru
Netherlands
New Zaeland
SUPER BASMATI
PARBOILED RICE
BASMATI RICE
BROWN RICE
TOTAL
FOB PER
QTY(MT) VALUE($) QTY(MT) VALUE($) QTY(MT) VALUE($) QTY(MT) VALUE($) QTY(MT) VALUE($) M/TON ($)
22. 21,340.
22.
21,340. 970
170.83 214,743.57
7.46 8,788.02
3.52 3,829.76
181.81 227,361.35 1251
12. 15,600.
12.
15,600. 1300
13,862.38 12,057,304.48 9,914.4 5,320,792.11 6,362.7 3,721,830.78
30,139.48 21,099,927.36 700
458.66 241,255.49
458.66 241,255.49 526
250.26 286,826.23
250.26 286,826.23 1146
572.06 656,546.49
436.24 364,979.9
94. 66,670. 514.77 449,437.7 1,617.07 1,537,634.09 951
575.
705,525.
575. 705,525. 1227
11.5
16,560.
6. 8,940.
2. 2,900.
19.5
28,400. 1456
71.5 56,874.5
1,406.82 1,521,461.8
1,653.33 955,004.46
4.
5,200.
2.27 2,549.21
11,536.32 13,334,474.8 3,076.98 2,603,512.1 8,628.92 6,957,707.52
908.78 1,059,213.55
194.9 223,791.49
778.08 720,747.13
163.97 206,506.1
900.92 743,454.23
275.
347,825.
42. 59,823.96
18.7 17,834.26
163.
185,265.
74. 74,836.
2. 2,200.
24.
28,680.
20.
25,600.
173.
163,205.
50. 64,950. 3,400. 2,798,200.
241. 273,186.98
18.
16,038.
24.
24,000.
2,174.99 2,761,142.19
75.
211.7
23.
209.2
93,075.
282,131.8
28,402.93
252,721.85
878.88 773,272.05
15. 12,482.
24. 12,000.
296. 252,764.
25. 16,250.
2.
3,400.
28.2
40,250.
91.9 85,040.5
67.22 62,370.
195.71 230,480.68 1,310.23 1,278,962.92
22
S.NO
61
62
63
64
65
66
67
68
69
SUPER BASMATI
PARBOILED RICE
BASMATI RICE
BROWN RICE
TOTAL
FOB PER
NAME OF COUNTRY QTY(MT) VALUE($) QTY(MT) VALUE($) QTY(MT) VALUE($) QTY(MT) VALUE($) QTY(MT) VALUE($) M/TON ($)
New Zealand
136.79 147,257.46 1077
8.44
12,655.56
7.
10,745.
121.35 123,856.9
Nigeria
75.
45,000. 600
75.
45,000.
Norway
384.57 498,115.68 1295
214.95 259,870.44
157.62 224,745.24
12.
13,500.
Oman
28,249.41 31,636,785.93 1120
23,990.27 27,870,598.67
174.42 221,924.87
4,084.72 3,544,262.4
Parague
21.
32,004. 1524
21.
32,004.
Philippines
68.8
88,599.56 1288
68.8
88,599.56
Piraeus
24.
24,696. 1029
24.
24,696.
Pireaus
57.
56,544. 992
48.
50,784.
9.
5,760.
Poland
50.
57,500. 1150
50.
57,500.
70
71
72
73
74
75
76
77
78
79
80
81
82
Port Au Prince
Qatar
Reuinon
Reunion
Romania
Russia
Seychelles
Seychells
Singapore
Sir Lanka
South Africa
Spain
Sri Lanka
83
84
85
86
87
88
89
90
91
92
Sudan
Sweden
Switzerland
Tanzaina
Tanzania
Thailand
Thessaloniki
Trinidad & Tobago
Tunisia
Turkey
S.NO
NAME OF
SUPER BASMATI
PARBOILED RICE
BASMATI RICE
BROWN RICE
TOTAL
FOB PER
COUNTRY QTY(MT) VALUE($) QTY(MT) VALUE($) QTY(MT) VALUE($) QTY(MT) VALUE($) QTY(MT) VALUE($) M/TON ($)
U.K.
1,339.77 1,506,641.77
668.85 833,728.34
151.6 151,092.2 8,355.35 7,450,994.4 10,515.57 9,942,456.72 945
UAE
47,245.07 49,545,906.04
431.81 416,576.27 4,056.73 3,344,032.23
4.35
5,644. 51,737.96 53,312,158.54 1030
Ugenda
40.
21,200. 530
40.
21,200.
Ukraine
353. 388,430.38 1100
301. 333,830.38
52. 54,600.
USA
1,895.04 2,448,692.77 2,488.65 3,424,953.95
422.65 459,769.33
222.77 228,474. 5,029.11 6,561,890.06 1305
Wellington
19.74 16,090.55 815
7.49 6,102.72
12.26 9,987.83
West Indies
19.16 24,572.36 1282
19.16 24,572.36
Yemen
17,250.83 17,620,371.22 1021
7,512.03 8,367,974.23
168. 171,024. 9,570.8 9,081,372.99
Zambabwe
1.
800. 800
1.
800.
93
94
95
96
97
98
99
100
101
TOTAL
5,091.5 6,410,808.38
20.
18,600.
288.
239,400.
7.9
11,114.
347.
377,033.
208.
210,080.
312.
319,280.
455.49 612,305.09
145778
315.8
429.87
377.04
393,122.84
533,626.84
433,555.04
928.2
124.94
20.
163.
24.
28.
24.
19.79
22.
708.
1,248,179.1
144,772.27
38,600.
191,921.66
24,000.
32,200.
25,632.
31,020.5
26,422.
360,868.
154780654 21060
14.5
7,540.
3,415.66 2,584,727.03
93.
82,635.
217. 245,189.58
370.23 401,949.33
11.5
11,960.
10.
7.
6,750.
8,708.
158.2 151,482.42
72.
38,736.
274.73 233,565.4
104.69 100,600.69
3,111.2 2,442,265.39
371.98
426,848.
2.
2,500.
100.
112,875.
24.
12,000.
17745777 61955
138.
13.
11.62
87.88
24.05
167,118.
15,549.91
13,653.5
50,751.25
25,589.2
32.
38,552.
50793356 10971
72.
57,442.09
350.
319,784.
1,175.
937,462.
9669985
14.5
7,540. 520
8,507.17 8,995,535.41 1057
20.
18,600. 930
453. 379,477.09 838
7.9
11,114. 1407
934.23 1,024,171.91 1096
208.
210,080. 1010
312.
319,280. 1023
625.19 775,747.51 1241
72.
38,736. 538
600.52 633,438.24 1055
891.56 962,719.53 1080
3,488.24 2,875,820.43 824
1,066.2 1,415,297.1 1327
1,684.92 1,524,632.18 905
31.62
52,253.5 1653
252.88 245,172.91 970
48.05
49,589.2 1032
128.
145,075. 1133
24.
25,632. 1068
19.79
31,020.5 1567
22.
26,422. 1201
764.
411,420. 539
239765
232998772
23
U.S.
Second
grade
2007
2008
2009
2010
2011
2011
335
695
587
518
565
332
722
619
532
563
Thai
Viet
5.%
436
782
545
510
577
325
682
555
492
549
Argentina
5.% max 10%
313
614
432
416
505
India
July
548
548
549
532
505
August
582
588
605
566
564
September
618
625
650
601
555
October
620
610
639
604
576
November
649
624
597
632
560
December
620
598
569
603
492
2012
January
548
531
546
531
446
February
563
570
535
547
431
March
567
614
524
551
428
April
569
608
514
552
431
May
613
622
544
602
434
June
619
615
565
609
413
July
600
584
572
597
411
2011
528
530
552
511
473
Jan.-Jul.
2012
Jan.-Jul.
583
592
543
570
428
% Change
10.4
11.7
-1.7
11.6
-9.6
Sources
: Jackson Son & Co. (London) Ltd., Thai Department of Foreign Trade (DFT) and other public sources.
1/ White broken rice. 2/ No. 1, maximum 4-percent brokens, sacked, California mill.
Note
U.S.
California Pak
Medium
Basmati
Thai
Thai
Parboiled Long
Grain
100.% 2,4%
450 ...
450 ...
450
450
450
468
475
475
472
470
470
470
470
491
472
-3.9
Pak
25.%
Thai
25.%
Viet
25.%
A1
25.% Super
1/
Grain
2/
Thai
Fragrant
Ordinary
100.%
409
290
498
351
372
433
305
603
460
444
511
294
553
384
387
467
275
506
329
386
464
557
913
1019
764
855
677
1077
937
881
1008
550
914
954
1045
1054
437
419
396
384
467
466
455
418
405
391
490
520
550
556
594
587
466
530
515
524
515
464
445
471
497
505
553
560
871
866
860
860
816
764
910
875
950
962
950
890
1062
1096
1110
1140
1141
1125
379
379
415
411
412
411
404
437
402
-8
529
542
551
553
580
579
570
474
558
17.6
410
395
387
384
388
369
379
437
387
-11.3
515
530
543
546
554
545
536
426
538
26.4
816
816
788
772
780
783
788
871
792
-9.1
950
950
950
825
881
931
931
1068
917
-14.1
1087
1110
1120
1091
1078
1062
1062
1004
1087
8.2
289
390
395
379
384
379
382
394
386
: Please note that data may have been subject to revision due to temporary unavailability and/or late publishing of weekly price quotations.
24
PEST MODEL
PEST analysis is an analysis tool employed by companies for their product to judge the
environment they are going to operate in. PEST analysis gives a good view of the external
factors that can affect the product, locally and internationally. It evolves around four major
pointers; Political conditions, Economic conditions, Social conditions and Technological
oditio . It gie a id ee ie of the hole eioet, ad allo the aalsis of the
industries to be done easily. It helps companies and industries identify what issues they will be
facing if they launch into that particular environment and make the decision of countering
those issues easier by forming effective strategies. PEST takes into account four important
factors:
1. Political: These factors determine the extent of government intervention in the industry and
how it affects the industry. Government intervention can be via strict regulatory checks, fiscal
policy implementation, trade tariffs and its affect on exports and the business environment.
The political conditions affecting the Rice Industry are majorly the weak law and order situation
of Pakistan that deters foreign and local investment within this industry. It also affects the
demand and supply of the rice farmers by negatively affecting the procurement of raw
materials because of transport strikes, and delays the shipment of orders. Moreover, the
presence of feudal lords with strong alliances with political leaders work against the favor of a
common farmer as their stocks are at time left behind until the stocks of the influential people
are sold. However, government has employed field advisors who help the farmers with respect
to their education, the ways that can be used to farming, sowing and harvesting. Other than
that, no government intervention with respect to taxes and subsidies is present.
2. Economic: These factors try to understand the position of the industry economically and the
reasons for it being so. For example, inflation rate prevalent in the economy and how it would
affect the rice industry by affecting price, cost of raw materials. Other than that, interest rate,
foreign exchange rate also fall in this category. Foreign exchange has affected the rice industry
as due to the fall of the value of Vietnamese currency, their exports in the international market
have become cheaper, giving them an edge over the Pakistani rice products in the market.
Thus, Vietnamese variety has been able to claim the international market share of Pakistan.
Inflationary pressure domestically in Pakistan has led to rising oil prices and raw material cost
for the farmers. This has then led to higher prices as the farmers are not allotted any subsidies.
Higher domestic prices pave way for lower international competition, affecting the revenue of
the farmers.
3. Technological: These facts deal with the introduction of new technology that may affect the
25
competitiveness of the industry and its efficiency and how, ultimately demand and supply
would be affected. Research and development, and automation fall in this category. Pakistan
has been an agriculture based industry since the time of its inception in 1947. The farmers from
that time have only learnt the traditional ways of farmers, and those ways are which they are
comfortable with. With the developments in technology on a daily basis globally, this has acted
in our disadvantage because international rice producers have attained efficient and cheaper
ways of producing rice, exporting them at cheaper price, hence we face competition and are
susceptible to losing out our market share in the international market. The farmers in Pakistan
are also reluctant to learn these ways. Moreover, they even lack the awareness of new and
effiiet teholog ei tee. This is ou di adatage. Hoee, ee fi like Eip
Engro are now a part of the rice market because they found a gap in the rice market of Pakistan
which they saw as one they could cover. Such firms are also investing in the modern technology
now available. They also hold seminars for the education of rice farmers. Research institutes
are also now establishing themselves in Pakistan with the help of REAP, and so Pakistan can
have the technological factors work in its favor.
4. Social: These facts deal with the social environment and take into account trends of the
industry, demographics, population. The population of Pakistan is growing in a geometric trend.
This assures demand of rice for the future, hence promising good revenue to the farmers.
Furthermore, diet trends claiming rice to be nutritious are an attractive factor for the demand
of rice to rise in the future. The increasing popularity of the Asian Cuisine worldwide is also
aiding rice consumption because these are based on rice as the main ingredient. Example; Black
Rice and Chinese food. Rice is also considered to be eaten in a hurry and in a cleaner method
than curry with chapatti; therefore the social pattern depicts an increase in the rice
consumption and is a positive sign for the rice industry.
26
SWOT ANALYSIS
Strengths:
1.
2.
3.
4.
5.
6.
Climate/edaphic conditions
Variety of rice produced
Exposure to export markets
Privatization
Competiveness
Pakistan is the 4th largest exporter and
11th largest producer of rice
7. Availability of labor
Opportunities:
1. Agriculture based Economy of Pakistan
with high export and investment
potential
2. High demand
3. Export opportunities with China and
Philippines
4. Role of TDAP
5. Organic farming
6. Asian cuisine influence
7. New diet studies
8. Minimum export price
9. Introduction of new technology
Weaknesses:
1.
2.
3.
4.
5.
6.
7.
8.
Mixing of Rice
Technology
Selling without brand names
Lack of value addition
Seeds yield
Lack of facility with cluster
Black market (Punjab and Sindh)
Labor issues
Threats:
1. Competition in rice exports
2. Unpredictable Climate and Global
warming
3. Shortage of gas in Pakistan
4. Soil erosion
5. Water issues
6. Increase in small farmers
7. Feudal Lords
8. Lack of infrastructure in rural areas
9. Economic and Political situation of
Pakistan
10. Role of Urbanization
11. Falling value of the Pakistani rupee and
role of Vietnamese currency
12. No government support
13. Various duties and taxes imposed.
27
STRENGTHS:
1. Climate and edaphic conditions:
Rice is best grown in a hot climate with a lot of humidity. The required temperature is a little
above 25C and about 150-200mm of rainfall is required during the sowing period. Clayell land
and alluvial soil is also required. All this is present in Pakistan hence it acts as a major strength
for the industry. Pakistan is divided into 4 rice zones according to the climatic and edaphic
conditions for the different varieties of rice.
Zone 1- Sub humid monsoon, 750-1000mm of rainfall and flat valleys. High quality Basmati not
grown in this zone. Northern mountainous areas
Zone 2- Sub humid and sub-tropical climate. 400-700mm of rainfall. For better quality of rice.
Lies between the river Ravi and Chenab. Basmati rice is grown in this zone.
Zone 3- West bank of the Indus River. Arid subtropical climate with 100mm of rainfall. Has a
long and extremely hot summer. Good for many coarse of rice varieties.
Zone 4- In the Indus Delta. Arid tropical marine climate. Not much rain. Rice grown with
rotation.
2. Variety of rice produced
As stated by Mr. Naveed (BD manager Engro Eximp) that there are two major types of rice in
Pakistan Basmati and Non-Basmati (e.g., IRRI). Pakistan specializes in and is very famous for
exporting long and long grain which is aromatic basmati rice. This quality is exported to UAE,
Australia and European Union. Super Basmati is considered one of the best around the world by
the Agriculture Department of the Government. Others are:
1) Cargo Rice: (BROWN RICE, HUSKED RICE) is the kind of rice obtained from the paddy, the only
process implemented on it is Husk removal. This includes whole grain, head rice.
2) Plain or White Rice: is rice obtained from the paddy and it has been husked, milled resulting
in removal of bran layers. This includes whole grain, head rice.
3) Parboiled Rice: It can be husked and milled rice or husked rice having been subjected to heat
treatment after being soaked in water so that the starch is fully gelatinized. This is followed by a
drying process.
Pakistan produces varieties of rice, the popular ones being:
Basmati:
1) Basmati 2000
28
2) Basmati 385
3) Basmati 198
4) Super Basmati
5) Basmati 370
6) Kernal
7) Shaheen ( Basmati)
Other Rice Varieties:
1) IRRI 6
2) IRRI 9
3) PG (IRRI)
4) KS 282
These various varieties cater to various demands in different countries and because Pakistan
produces all these, Pakistan has an edge as it can cater to demands from various countries and
not be dependent on one quality.
3. Exposure to foreign markets (Exports)
The quality of rice which Pakistan grows gives it an edge over many other countries and helps
us export rice. Pakistan is the 4th largest exporter of rice in the world. There was an indirect
subsidy on tractors and bags of rice recently which helped Pakistan export more. REAP (rice
exporters association of Pakistan) was set up to assist the exporters.
4. Privatization
After the reign of Bhutto, all industries were privatized and so was the rice industry. We all
know that privatization of industries leads to more efficiency and productivity which leads to
lower prices, higher variety and more exports. There has been a 27.7% increase of rice
production in the country since the past year. The government sector mentioned themselves
about the issues a nationalized industry faces which are over employment and political
pe ue hih doe t eist i the ie idu t i a i ta afte it as privatized.
5. Competitiveness
29
Since we all know that the rice industry is privatized, there are numerous players in the market.
Engro Eximp entered the market recently and added to the competition which already existed
among the major players. Competitiveness has its own advantages. Each Company will want to
have an edge over the other hence they will produce the better quality with lesser costs. What
Engro did is it is using its brand name to capture the market. Whereas Guard being a company
with Chinese affiliation is using its low cost to compete.
6. Pakistan is the 4th largest exporter and 11th largest producer of rice:
Asian countries have 80 million hectares of land, able to cater to 75% of the total demand of
rice. Pakistan achieved phenomenal increase in ie podutio i Au Kha ea. Pakistan
produces 6.22 million tons of rice on 5 million acres of land. Rice export has remained the
second largest foreign exchange earning commodity for Pakistan. Pakistan exports 80% of
Super Basmati to European countries and has the potential to export more.
7. Availability of labor:
Pakistan being an agro based economy has an ample supply of labor. The rice industry being a
labor intensive industry has access to all this labor. Therefore there is a chance of high
production.
30
WEAKNESSES:
1. Mixing of Rice.
We all know about the instability of pricing of Pakistani products in the foreign markets when
exported. Basmati rice has been mixed with non-basmati rice skillfully retaining the cooking
ability of rice and labeling it under basmati rice when it is not 100% basmati rice. There are two
drawbacks of this, people who do not know about the iig, the lael a i ta a ati as
ot as good as Thailad o a othe outies. Also he foud out that it has ee ied
with non-basmati rice, the customer feels cheated decreasing goodwill.
2. Technology
Although Pakistan has started using technology in the rice industry, it is still far behind a few
countries. According to the Bahoori Mills in Punjab, the inconsistent quality and quantity of rice
podued i a i ta is eause of the la of teholog. The taditioal tehologies aet
able to cope with the rising demand. According to Iftekhar Ahmed Khoso Sindh has two major
zones of rice production and none have ever achieved the desired per acre result because of
la of teholog. The ie goes though aiou poesses util it a finished good. The rice
ills loated i idh ae outdated ad that h Chia ad Idia ala had a lead i the
industry due to the up gradation of technology in their industry. This is also why Pakistan
experiences a lot of grains of broken rice after the final process.
3. Selling without Brand names
A major weakness of the Pakistani rice exports is that they sell without any brand names. This
was also highlighted by the Engro BD manager that despite the major players and high exports
the packaging expoted ae o as Ba ati ie, a i ta. This has haged a little ith
GUARD into the industry and Engro is trying to change it while trading rice. This has had a
drawback as each company differs in their quality of rice. When consumers buy Pakistani
exported goods, they are bound to get a different variety every time. Because of this the
exporters do not even get a good price for the rice exported.
4. Lack of value addition
Talking about exports specifically in this case. Pakistan exports rice in bulk quantity and rarely in
1kg, 2kg and 5kg packets. Again with the help of Engro and GUARD it has just started but not
on a very large scale. The majority is in bulk. The consequences of this are that it loses its
foreign markets as other countries sell in every possible quantity.
5. Seed yields
31
Although new seeds have been developed but due to lack of technology and use of good quality
fertilizers, the seed yield of rice has been falling. Because of this rice seeds have to be imported
into Pakistan. Hybrid seeds are being imported; Hybrid seeds have a much higher yield than
Basmati in Pakistan. The Kissan Food spokesman said that the government should invest more
into the rice industry rather than companies importing seeds.
6. Lack of facility within culture
The rice industry is privatized in Pakistan and the government of Pakistan does not provide any
diet susidies. The faes aet e ell taied ad euipped. Most of the poe e ae
mishandled by them which results in lack of crop. They have been learning from their
forefathers and the experience they have received. The farmers need to be educated more to
help podue oe ie. EA has ee odutig okshops ut it udestood that the
cannot cater to entire Pakistan with a few individuals. The government sector proposed
themselves that the private sector has better schemes to facilitate the industry then what the
government does.
7. Black Market
I the past ea , a issues hae theateed a i ta ailit to feed itself a it e ie,
wheat or any other crop. Pakistan has faced black marketing in wheat and sugar extensively.
However black marketing of Urea has given a rise in price of rice from Rs. 635 to Rs. 850 in
interior Sindh. Urea consumption has been increasing due to bumper crops hence the
marketers started taking advantage of this situation. Other than that, the rice is cheaper in
Punjab than in Sindh, so traders buy rice from Punjab and sell it in Sindh. This is how they
exploit the market and earn a higher profit in Sindh.
8. Labor Issues
Most of the labor employed in the rice industry is not educated and there is little training
provided especially regarding rice processing. This has led to increased losses in the yield
because proper knowledge and training is not available to the farmers.
32
OPPORTUNITIES:
1. Agro-based economy with high export and investment potential:
Pakistan is an agriculture based economy, with the majority of population living in rural areas
and using agriculture as their source of income. This is an opportunity because as more farmers
are present in agriculture, there is a greater chance of human investment in this sector. Even at
the high political level, most of the leaders have lands in their name used for the purpose of
agriculture. Rice is produced in Pakistan in Sindh and Punjab. Despite the demand of rice in
South Africa, Senegal, Saudi Arabia, Kuwait, USA, Turkey, Sri Lanka, Australia, Malaysia,
Indonesia, Philippines, Pakistan has a small share in these markets. Immense potential for
investment is present in the Rice sector via development of Silos, Parboiled rice processing
plants, quality polishing and processing. Saudi Arab and USA are major demanders of parboiled
rice (70%) therefore investment in this sector is an opportunity for Pakistan.
2. High Demand
Population growth in Pakistan is quite visible. Rice being the 2nd staple food of Pakistan is
required in large quantities. This helps the industry to produce more with lower prices and
provide ample rice for the entire country.
3. Export opportunities with China and Philippines:
Punjab Governor Makhdoom Ahmad Mehmood said that our rice exporters have been able to
attract the interest of the Chinese buyers into buying the rice we produce (04-04-2013,
Business Daily Recorder). Tanzania and China have become major rice exporting importing
companies from and for Pakistan resulting in them being a sure source of our demand for the
variety of rice that Pakistan produces. This is because of the efforts of Rice Exports Corporation
to encouage epot of a i tai ie. As of Jaua , a i ta ie epot to Chia has
recorded an increase as the volume of non-basmati rice (72,623 MT) to China worth $30 million
in just one month was exported. (DAILY TIMES (14-03-2013)).
Pakistan has won a tender for supply of 50,000 MT rice to Philippines as a result of bidding held
on December 2, 2009. Philippines have also announced another tender for purchase of 600,000
MT rice. Pakistan can avail this opportunity.
4. Role of TDAP:
Trade Development authority of Pakistan (TDAP) has announced to strategize with a detailed
program focused on the promotion of rice export to Central Asian States. Exhibitions such as
Epo ae plaed to e aaged i ollaoatio ith the ie epotes to a et a i ta
33
rice. As it would help exporters to earn more foreign exchange for the country, this is good sign
by TDAP. Punjab Government will sign 5 acres of land for the establishment and development
of Rice Technical Training Institute, where skilled manpower for the rice industry would be
trained. (THE NATION (29-03-2013))
5. Organic Farming:
Sales of organic food have increased in comparison to the production of organic food at the
ratio of 1:3. It shows an increasing demand supply gap. This is an opportunity for agriculture
economy of Pakistan. If the rice farmers shift towards Organic farming and production for rice,
this could be sold at higher prices meaning higher profits for farmers. This will attract more
farmers, convince them to improve their ways or farming and ultimately, increase international
demand.
6. Asian cuisine influence:
Asian restaurant and food are gaining popularity all over the world. Asian recipes rely heavily
on rice as their stable ingredient example Chinese food, porridge, black rice of Valencia. As
Asian food becomes more popular, the demand for rice will also increase.
7. New diet studies:
The new diet studies have shown rice to be more nutritious than any other food. These
researches for the health conscious people lead to an increase in demand for rice, which is
again a window of opportunity for the farmers, promising future stable demand.
8. Minimum Export Price for Rice:
ie Epot A oiatio of a i taEA s ole i fiig a iiu epot pie fo ie is a
opportunity because it promises for the farmers, a stable price for rice, and hence promises a
steady amount of profits too. Therefore, it is also an incentive for farmers to increase their
supply of rice and earn higher revenue.
9. Introduction of Technology
There have been glimpses of Pakistan rice industry using technology in the recent years which
have helped the industry go in a very positive manner. Dr. Fida Abbasi developed a technology
that happened to increase the number of grains per panicle of a rice plant from 250 to 700. The
technology Super NPT has helped increase rice production from 5 ton per hectare to 15 tons
pe hetae. Aodig to D. Aasi this id of ie a t podued ahee i the old.
34
Threats:
1. Competition in rice exports:
Idia is uetl poduig aiet of ie hih is of ette ualit tha a i ta
basmati rice. Due to this, it is highly demanded by the international market at a higher price as
well becoming a major competitor for Pakistan.
Ba glade h faes ae epeted to podue a e aiet of ie seeds i the oig ea
that will speed the maturity of the rice crops process in 105 days, which is the fastest of all the
varieties ever produced and tested. This seed was developed by Bangladesh Rice Research
Institute (BRRI) via hybridization or cross mixing of a local rice variety with the high-yielding
BRRI Dhan-9. Baglade h goeet ill also aid the faes the poi io of fee seeds
and fertilizers to boost the cultivation of rice watered by rain and hence, protect the
eioet as a esult. Baglade h is the olds fouth iggest podue of the gai ad this
would lead to an increase in its exports.
2. Unpredictable Climate and Global warming:
Global warming is an international concern as it leads to higher temperature globally. That
leads to melting of glacial in the seas and rivers, leading to floods. Pakistan has been known to
be badly affected by floods in the Pakistan. Lower Sindh is a major producer of rice and is also
the area most affected by floods, which affect the crops harvested in those areas. Rice needs a
constant and specific supply of water. Too much water, caused by floods cause water logging
and also brings with it various diseases. Unexpected climate also brings about droughts and
famines, and as Sindh is a major producer of rice, it needs water supply constantly.
3. Shortage of gas in Pakistan:
The epot odes of paoilig ie ae at a ege of eig ot opleted eau e of
unavailability of natural gas which is a main raw material in the production, Parboiled rice have
a great demand in the international market to the extent that can fetch 15% of our foreign
exchange with value addition. Rice Exporters Association of Pakistan (Reap) Vice Chairman
Chaudhry Samee Ullah urged the Sui Northern Gas Pipelines Limited (SNGPL) authorities to
ensure uninterrupted gas supply to rice millers and exporters as the top priority because export
ake up a high peetage of ou eoo eeue.
4. Soil Erosion
To counter to soil erosion, no mode has been adopted to bring back the fertility to soil after
harvesting rice crops leading to the soil becoming infertile. The thickness of fertile layer of soil
35
in Pakistan is more than 6 inches whereas that of other countries is 4 inches. Despite that, the
yield of our soil is lower compared to those of other countries.
5. Water issues:
Water wastage is very high in our country. The traditional method of flood irrigation is still in
practice throughout the country which wastes almost 50 percent of water. Water is needed for
rice production. This wastage of water leads to water logging in some areas, and the other
areas being completely deprived of water, affecting the supply of rice.
6. Increase in small farmers:
The small farmers are increasing in our country as with succeeding generations, land gets
divided. These small farmers are unable to avail their credit facilities to purchase seeds,
pesticides, fertilizers because of lack of credibility. Additionally, a large area of land for rice is
owned by feudal employing the farmers as workers or tenants. This uncertain situation of
occupancy neither creates incentive of work nor does attract capital investment by the farmer
or by international investors either.
7. Feudal Lords:
The existence of feudal lords and their connections with the leading political parties of Pakistan
are a threat as they force up the prices of rice stock by using influence and making sure their
stock is sold before that of the small farmers. This is a threat as it negatively affects the small
farmers and their supply. The feudal landlords are also in possession f very large land, and
because they do not know the ways of farming, much of the land is left to waste.
8. Lack of infrastructure in rural areas:
The only means of communication in rural areas is television or radio. Via government
expenditure in this sector, programs related to rice sowing, germination and planting can be
aired so that the farmers can learn of them. However, these programs would need to be cast in
local and regional levels. Lack of guidance is the ai ea o of faes a adess. This is
because of communication gap between well qualified experts and simple farmers. The experts
are unwilling to travel to such areas because of lack of infrastructure. Due to this, the farmers
have not learnt the best techniques, which affect their output.
9. Economic and Political situation of Pakistan:
The political situation of Pakistan deters foreign investment. Also, this situation causes strikes
affecting the output and sales of farmers and their profits. This has led to farmers willing to
shift to Bangladesh. Lack of electricity and gas adds to the pressure.
36
37
These four factors promote the competitive advantages of firms, industries and nations.
Business leaders can use this model to determine competitive factors and create benchmarks
for their firms and industries. Furthermore the model can be used to analyze which countries to
invest in and which countries have more potential for development.
38
It helps a nation or a firm to utilize its resources to the best of its abilities
It helps a nation or a firm to be competitive
It helps a nation or a firm to streamline its natural capabilities and improve upon them
It brings about innovation and technology
It helps nations build up on their competitive advantage
It helps to open up nations and firms to global market and opportunities
ote odel a e applied to atio ao the gloe poided that the atio
concentrates on converting its basic resources into advanced ones. Pakistan can well focus on
its agricultural products as it has an advantage here. However the focus should be on making
the sector more technology and innovation savvy. Pakistan is still struggling in this aspect.
However according to recent research the industry has moved in a positive direction albeit
slowly.
39
as progressed as it should be. Traditional and outdated post harvest practices have resulted in
substantial losses of output and quality of Basmati rice. However, big brands in Pakistani rice,
like Matco, are trying to solve this problem. Matco recently invested in the most modern agro
processing infrastructure that aims to correct the post harvest losses problem in the rice
industry. With the collaboration of the new Japanese and American technologies the Sadhoke
project of Matco contains the latest technology such as modern paddy dryers, rice parboiling
units etc.
There is also a transportation issue associated with the rice industry. USA uses cargo trains to
taspot ie. Hoee i a i ta tu ig is ail used fo taspotig ie although it
much cheaper to use trains. Even though train transport will benefit farmers more, it is still not
done in Pakistan. Another factor to consider is the law and order conditions of Pakistan. This
factor along with rapidly changing governments and their policies can hinder development of
any industry, the rice industry included.
Agriculture is the major industry for Pakistan and thus this sector provides employment to a
large number of the population. This applies to the rice industry as well thus we can confidently
say that the rice industry is highly labor intensive. However just like most other agricultural
sectors of Pakistan, the workforce in the rice industry is also largely unskilled. Only workers
hired in big rice mills have the appropriate training to function the machines. The workforce is
highly underutilized as a lot of potential exists for training and development. However as the
ie idu t is a lao ite ie idu t, it is suited to a i ta high populatio as oe
employment is generated through this sector.
As far as investment is concerned, the Pakistan rice industry seems to be an ideal place to
attract foreign direct investment. This is because of limited avenues of investment in the global
arena. The investment in infrastructure and technology is much needed as both these things
are traditional and outdated still in Pakistan. This is contributing to a decrease in the
competitiveness of the rice industry of Pakistan. There is huge untapped potential in this sector
but millions of dollars are required to modernize this industry.
As local demand is easily met rice millers and producers tend to be export oriented because this
reaps them higher profits than local markets. Good crop and competitive pricing is expected to
increase exports. International competition from India with regard to Basmati rice decreased
Pakistani Basmati exports in 2012. Even though Pakistan has better quality rice than India,
Idia pootio, a etig ad fii hig is ette hih esults i highe epots. Hoee
this competition should be used to further develop the industry so that Pakistan surpasses its
competitors.
41
DEMAND CONDITIONS
Demand conditions are the second element in the diamond model. Porter defines the demand
oditio as: The atue of hoe dead fo idu ts product or service demand
oditio de ie the leel of doe ti dead that a fi fae . Thus dead oditio
depend on not only the quantity of the demand but also the nature or sophistication of
demand. Porter points out that the primary source of competition between firms is due to local
demand. A high and sophisticated domestic demand drives firms within a nation to have higher
productivity and efficiency which further drives these firms to be competitive on a global basis.
The nature of local demand also makes domestic firms aware of the new and emerging trends
i the i iteatioal a ets. It also helps i hapig a fi e po iee toad ue
needs.
According to Michael Porter, the local demand should be anticipatory of the foreign demand
and it should be sophisticated. Competition at local level can lead to national productivity and
innovation. It also means that a country can achieve national advantages in an industry or
market segment, if the local demand provides clearer and earlier signals of demand trends to
domestic suppliers than to foreign competitors. Normally, local markets have a much higher
ifluee o a ogaizatio' ailit to eogize u toe eeds tha foeig akets do.
Pakistan grows high quality rice for local as well as international demand. Rice is a very
important crop for Pakistan. It stands second after wheat in crop production in Pakistan and is a
staple food for the Pakistani people. Rice is also an important source of foreign exchange
ratings. Foreign and local demand for rice is increasing and the rice industry has the potential to
produce more so production is expected to expand to 6.3 million tons of milled rice. There are a
number of associations such as REAP (Rice Exporters Association of Pakistan) that are
promoting Rice industry in the international arena.
Local demand for rice is easily met as production is very high due to favorable edaphic
conditions. From all the rice produced In Pakistan only 40% is locally consumed whereas 60% is
exported. The domestic demand for rice in Pakistan measured up to be 2.5 million tons in 2012.
As far as brands of rice are concerned, there is few branded rice present in the Pakistani
market. The three most well know are Falak rice, Guard rice and Mughal rice. However research
shows that recently the brand awareness has increased and the consumer base has widened
very significantly due to brand promotion in the local markets. This trend is seen in the
international market for rice as well.
Moreover as we have seen there is little investment in the rice industry but a huge potential for
development exists. Recently only there have been investments in modern agro processing
42
infrastructure and technologies which will result in higher quality rice to be produced which is
now being demanded locally. It will also lead to reduced post harvest losses. When we
interviewed Mr. Naveed from Engro, he even stated that the reason Engro entered the Basmati
rice industry is because they saw huge potential in the industry and a huge gap where there
were not many known firms present for trading. He stated that there is a need for more big
firms in the industry because investment is desperately needed.
Initially after the rice industry was privatized, the competition used to be on price rather than
quality. However, now a shift is seen in the local market towards quality. Now buyers in the
local as well as international markets are demanding high quality rice. Demand for parboiled
rice is also increasing day by day due to its nutritional value and high quality. Furthermore, the
price of rice in the local market has increased despite higher production. This is because there
has been an increase in the cost of cultivation as well as strong local demand for high quality
rice.
The demand for rice is also affected by the way our consumers market is segmented. According
to buying power of consumers, the market for rice can be divided into three broad groups.
These are:
1. Lower Income groups: This segment is the major market of broken rice and IRRI rice
2. Middle income group: This segment purchases good quality rice which is polished rice as
well as semi-polished rice
3. Upper income group: This segment prefers to buy high quality branded rice
Furthermore unethical practices also exist in the local market that affects demand. Firms in the
rice industry usually mix different varieties of rice to lower the net price rather than
transforming the value chain to ensure good quality rice at a lower price thus having a negative
impact on the market.
There are several possibilities through which we can achieve the targets of demand conditions.
Firstly, our local buyers are progressing towards the point where they display sophisticated
demand and responsive behavior. Secondly, the base for innovation, product improvement and
quality maintenance is coming from Foreign Markets. Many exporting companies have been
barred because of their sub-standard products. For them, getting a quality assurance certificate
is the first step and maintaining it is another. Pakistan has now become aware of the need for
such credible quality assurances.
43
2.
RICE HUSK:
One more important by-product of rice is the rice hulls or rice husks. Many rice-producing
countries, inclusive of Pakistan, are currently proceeding with research on vast, industrial uses
of rice husks. Rice husks are the outermost coating of the rice grain and come as organic rice
husks and natural rice husks. Rice husks are an inexpensive byproduct of food processing,
serving as a high source of fiber that is used as a filler component in cheap pet foods. It excels
in maintaining body temperature according to the need. Rice husks are used as pillow filling and
have a high lignin content which makes composting them a tedious and expensive process.
RELATED INDUSTRIES:
These industries are involved, some way or the other, with the rice industry and with proper
planning and R&D we can make an international market for these industries as well.
1.
Fertilizer:
We cannot neglect the role of the fertilizer industry. The objective behind fertilizer research
and development is to improve the efficiency which would result in an increased crop
productivity and minimization of effects on the environment.
Rice is the most suitable crop for alkaline soils for it being fairly tolerant to alkalinity in the soil.
On large areas of moderate alkaline soil, rice mono-cropping is a routine practice during wet
part of the year. But the productivity of rice is very poor due to the deficiency of basic nutrients
or fixation of applied nutrients.
Fertilizer cost has a direct relationship with gross revenue but in case of rice, it is statistically
unimportant whereas chemicals cost is highly important in case of rice crop. One percent
increase in the cost of chemical leads to an increase in the rice crop gross income by 0.02
percent and it is significant at 99 percent confidence level. One percent increase in the cost of
irrigation used shoots the rice crop income by 0.26 percent.
2.
Rice bran, which is formed in the milling process, is that part of rice that has high fat content.
This form of natural oil, which is pressed, has anti-oxidants which make it a suitable ingredient
for food and food-related products. It is suitable for high temperature cooking as the antioxidants are unaffected by high temperatures. It is not just delicate and flavorful but it also
helps to lower cholesterol, fight diseases and boost the immune system. Rice Bran Oil is
extremely delicious and low on cholesterol. It functions as a raw material to be converted to
several forms such as oil and wax. Rice Bran Oil is quickly gaining popularity in commercial users
as well.
45
3.
DIETARY FIBRE:
Although bran fills a tiny corner of baking ingredient usage, it serves the purpose of an
important nutritional function. Grain's outermost coating is rich in dietary fiber, protein and
minerals depending from where the bran has been obtained. Bran is an ingredient in all types
of cereal grains, inclusive of wheat, corn, oats and rice. It helps to provide a whole grain identity
to baked products.
There is one problem linked to Dietary Fiber as well. Due to refined flour being more readily
available and changes in dietary habits, consumption of dietary fiber has reduced by at least
half during the past two eras. Various studies link fiber consumption with a reduced risk of
cardiovascular disease. To further add on, fiber can cut down blood sugar levels for people with
type 2 diabetes.
So clearly the importance of this industry cannot be negated as it is highly nutritious and also
used in confectionary purposes.
4.
PADDY:
The main raw material, which is paddy, is normally purchased from local cultivators and some
time from wholesalers. Both these raw material suppliers are located within a cluster at Larkin,
which is famous for its paddy production. The millers, within the cluster, purchase raw
materials directly from the respective suppliers on cash which is loaned by the banks during the
season.
AVERAGE RETAIL PRICES OF FERTILIZERS- PAKISTAN (rs.50/bag)
2007-2008
2008-2009
2009-2010
UREA
581
751
799
DIAMOMIUM
1934
2578
2267
PHOSPHATE
NITROPHOSPHATE 1267
1700
1452
2010-2011
1035
3236
2011-2012
1705
4118
2108
2768
46
with nutrients like Iron and Zinc. With this increase in sales, maintaining export levels would
also become tedious due to extensive marketing and technological involvement. It is essential
to perform analyses on rice production and marketing at world-wide level for both short as well
as the long term. This would in turn help develop a strategy that would not only stabilize the
present export levels but would also add to the value of Pakistani rice.
India, being the second largest producer of paddy rice in the world, has always been
competition for Pakistan. In 2009 it produced over 132 million ton of paddy rice. Bangladesh
also adds up to the list of being one of the most highly producing countries, growing over 38
million ton whereas Pakistan is subject to producing a little over 6 million tons. Together these
three countries contribute to about 30% in the total production of rice world-wide.
About 92% of Pakistan's rice production is concentrated in the Punjab and Sindh provinces and
nearly all the rice is grown on irrigated land. Punjab is the leading rice growing province with
about 61% rice area and concentrates on Basmati-rice for export, while Sindh produces high
yielding varieties and traditional varieties mostly for domestic consumption covering about 31%
of total rice area. Of the remaining 8% area under rice, 5% lies in the North-West Frontier and
3% in the Balochistan provinces, respectively. On the whole, Basmati-rice accounts for about
52% of the total rice area under cultivation.
Punjab is the largest rice-producing province and the Kala tat -the bowl of the world
famous Basmati rice is located between the Ravi and Chenab rivers. B.Natha Singh Karam Singh
(Pvt.) Ltd., incepted in the year 1895, laid the first rice mill at kamoki (Karachi), now in Pakistan.
They are the Pioneers in creating the brand. There are a total of 373 rice mills listed in Pakistan.
The government protects the farmer by setting a minimum price. However, the final price of
rice is not fixed by the government. Cost of oil amounts to 25% or less of the cost of rice
cultivation. Machinery is not imported, it is locally produced. Pakistan imports mainly from
China, Switzerland and Thailand. No licenses are required for importing, you need to be a
ee of EA ie Epote A oiatio of a i ta to import. REAP operates in Karachi
and Lahore.
48
Seed Selection
Land preparation
Crop establishment
Water Management
Nutrient Management
Crop Health
Harvesting
Postharvest
49
then the land is ploughed. The soil is still kept dry. Transplating however is when seeds a re kept
in a nursery for 20-80 days (depending in the seeds) and then broadcasted into the soil.
Water Management
A necessity for rice production. Rice requires a large amount and a constant amount of
irrigation. When water levels in the soil fall, so does the quality of rice. Hence you will find rice
zones near rivers of in areas which receive ample of rainfall. Irrigation methods used in Pakistan
are handpumps, tubewells, Sprinklers (rarely) and raised water beds of the agriculture land.
Farmers keep their land flooded throughout the production period. This is very beneficial for
lowland areas which do not experience much of the rain.
Nutrient Management
This is not much taken into account in the rice production of Pakistan specifically. This is
insuring that he rice requires all the nutrients that it requires to grow in an effective manner.
The flooded soils have unique attributes each which differ from land to land. A targeted higher
yield would mean more nutrients. This relies on many scientific specific purposes. Because of
the prolong flooding, farmers can extract soil organic matter and it can be used for other crops
aswell. UREA and DAP are major nutrient providers for rice in Pakistan
Crop Health
The rice plant has a number of enemies on the field. These may include pests, weeds, rodents
and diseases. The farmers have to protect the crop from all these viruses. The best case
practice would be pest management, but this can be harmful for the crops if the doze of
pesticide exceeds its limit. Farmers fare weeds through water controlling and land preparation,
by hand weeding, and in specific cases herbicide application.
Harvesting
Harvesting is done around 115-120 days later the seed is sowed into the ground. It is picking of
the mature rice grains from the field. There are 2 ways of harvesting, either mechanically or
through the use of hands. Manual harvesting is very common in Pakistan and it also takes a lot
of time and labour. Mechanical harvesting can be done though harvesters. These are very costly
but also save time. Harvesting activities include cutting, stacking, handling, threshing and
cleaning.
Post-Harvest
Drying, storing, milling and processes, these are 4 stages of the post-harvest of rice. Drying
reduces grain moisture; if this process is delayed the grain loses its quality as the moisture
50