KARACHI - The Union of Small and Medium Enterprises (Unisame) urged the Trade Development Authority of Pakistan (TDAP) to take serious note of decline in rice exports
President Unisame Zulfikar Thaver said TDAP surely needs to examine the causes of decline in exports as with a handsome production of almost 6.5 million tons and with a domestic consumption of only about 2.5 millions tons as rice is not our staple food, we have 4 million tons available for exports which definitely calls for a proper study to maintain traditional markets.
Thaver said the yield per acre is hardly 32 mounds per acre which is almost 48 mounds per acre in our competing countries and this increases the cost of production. The farm inputs too have become costly due to imposition of taxes making us uncompetitive. TDAP needs to impress upon the ministry of finance to remove duties and taxes on farm inputs.
The other reasons for decline are the credit crunch although the monetary policy has reduced the discounting rates and mark up rates the SME rice exporters are not in a position to benefit as in the very first place the commercial banks are not providing them finance on their export orders and in hand letter of credits and demanding immovable properties as collateral and also not discounting their post shipment bills for exports made to third world countries.
It is pertinent to note that the value addition is done by the SMEs in basmati and non-basmati rice as well as the big exporters merely ship non-basmati rice by break bulk to third world countries and manage to obtain huge pre-shipment finances from the banks under export refinance scheme. It is therefore very important that the SMEs are given finance facilities backed by credit insurance to enable them ship regularly value-added rice to global destinations and regain the lost markets.
He added that unless and until there is an export credit guarantee in place to make the banks comfortable in financing the SMEs, the exports will not pick up because after the 2008 financial set back of the global economies there is a global credit crunch and banks are not inclined to take risk.
In such a situation, the TDAP needs to impress upon State Bank of Pakistan (SBP) to take remedial measures for risk management and developed a strategy to enable the exporters get their bills discounted on the basis of insurance which will enable the banks get their value in case of default either of the importer or his banks inability to pay the bill.
Due to various factors the Indian export prices which were lower than Pakistan’s have increased and now that they are at par with Pakistan. Our prices are matching the Indian prices and since our quality of super basmati is superior to the Indian basmati every effort must be made to regain the lost markets with strategy.