Retail basmati rice prices set new record

JAVED MAHMOOD looks into the fresh spike of rice prices as the retail price of the superior quality rice had hit the record benchmark of 140/kg, which is far above the export price amid deepening tug of war between the coalition partners


Taking advantage of the political tug of war between     the coalition partners in the government over the     reinstatement of the judges, the rice cartel in the    country has set a new record by increasing retail     price of basmati rice up to Rs 45 per kg. The retail rice of basmati rice has mounted to 140 rupees per kg (a superior quality brand) and 115-120 rupees kg price of rest of the famous brands. Before the fresh spike in rice prices (a couple of weeks back) the rice of superior brand was being sold at Rs 85-90 per kg at retail stage, but the new price of Guard rice had gone up to 140 rupees/kg, retailers told MoneyPlus, adding that the rice of this famous brand was also in short supply.

The other famous brands too have increased the retail price of basmati rice ranging between 115 to 120 rupees/kg this week, from previous rate of 65 to 75 rupees/kg. Believe that only inferior quality basmati rice is being sold at slightly below 100 rupees/kg that was earlier available at 50 to 60 rupees/kg. The prices of basmati rice had been increased to record level with the fresh supply of rice last week, a retailer said.

As the new rulers have locked their horns over the formula of the reinstatement of the deposed judges, the hoarders and major suppliers/producers of grains (wheat and rice) had taken advantage of this situation by creating artificial shortage and unprecedented increase in the prices of rice and flour this year.

Interesting to note is that the domestic prices of basmati rice were far above the export price. For example, the federal government had recently announced 1500 dollars per ton minimum export price of super basmati rice (US$1.50 or Rs 100 per kg keeping in view dollar-rupee exchange-rate at 67 rupees). However, the domestic prices of superior quality basmati rice have been raised to 140 rupees per kg, far more than the minimum export price of the commodity in the international market. Similarly, the minimum export price of normal basmati rice had been set at 1300 dollars per ton (US$1.30 or Rs 87 per kg) while the domestic price of this variety of rice had gone around 120 rupees a kg.  What was the logic to incorporate fresh unprecedented increase in the prices of rice when the country was having a surplus basmati rice of over one million tons, argued a retailer.

Meanwhile in their recent talks to The Nation, famous rice exporters Rahim Janoo, Zulfiqar Thaver and M. Afzal said that the hoarders' mafia was the factor behind the abrupt rise in the domestic rice prices. They pointed out that more than 0.4 million tons rice had been hoarded by the profiteer that was resulting in the artificial shortage of the commodity and hike in its retail prices.

Rice exporters said that they were ready to identify the hoarders of rice, in case the federal government was serious in taking a tough action against the hoarders and the profiteers.

They pointed out that the Shaukat Aziz government had neglected the wheat crisis, but the caretaker government involved the Rangers to take action against the wheat hoarders/millers as a result the retail price of flour declined to 16 to 18 rupees/kg, from earlier level of 30 rupees/kg and above this level.  But the retail flour prices again shot up to 25 to 30 rupees/kg for the fine and 'chakki' flour, respectively, while the rice prices too set a stunning benchmark as the rulers were engaged in their political agenda and ignoring the economic miseries of the consumers and the general public. The rice exporters and retailers said that the retail price of the super basmati rice could hit 200 rupees per kg mark in next few weeks because of the artificial shortage of the commodity and the manipulation of the market players. Surprising to note is that during the past one year the retail prices of basmati rice have increased by over 200 per cent in the country. For example in March 2007 the retail price of the fine quality super basmati rice was around 40-45 rupees per kg in March last year. But from April last year a well-organised and calculated spike in rice prices engulfed the entire country and this trend continued during the 13 months as the hoarders and major suppliers of rice continue to jack-up prices in different phases.

The current prices of basmati rice are completely out of the reach of the common people in the country, a consumer said, adding if the prices increased further only the elite class would be able to eat fine quality basmati rice.

He pointed out that serious efforts were not being made by the coalition government to reign in the flour and rice prices despite the warning of the consumers, their voters and the international agencies like the International Monetary Fund, the World Bank and the Asian Development Bank.

A senior executive at a financial company also lamented that the unending rift between the coalition government was further eroding the economic foundations of the national economy, irritating the investors and spoiling the investment climate in the country.

The rupee has depreciated from 62.70 to above 67 rupees, after exceeding 71 rupees mark, as a result the foreign investors were diverting their investment from stock market and other projects to abroad, he said, adding the ongoing political mess was further destabilizing the economy and triggering the outflow of capital to Dubai.

This was evident from the hefty and steady decline in the foreign exchange reserves of the country to 12.20 billion dollars as against 16.46 billion dollars in October last year and over 13 billion dollars when the coalition government came into power. If the new rulers continued to ignore the economic corrosion, the economy of the country would suffer more damage that might be beyond redemption, he added. The record high food inflation, trade deficit, fiscal imbalance, energy crisis and shortage of food items have already emerged as the key challenges for the new government and the rulers should set aside their political agenda and give top priority to the economic issues, he said.

During the last one year the economy of the country had suffered a lot and the coalition government should not waste any more time and strive to reign in the economic erosion.