Rice Sector of Pakistan

Group Members: 1. Hasham Zahid 2. Kailash Metha Ram 3. Mansoor Ali Shah 4. Mushhood Ahmed Khan

Topics to be covered
‡ ‡ ‡ ‡ ‡ ‡ ‡ Overview History Porter s Diamond Model Analysis Macroeconomics of Rice Comparison with India Problems Recommendations

Overview
‡ 3rd Largest crop. ‡ Occupies 2.4 million hectares. ‡ 3rd Largest Exporter. ‡ Contributes 1.6% to the GDP.

History
‡ Main production in East Pakistan because of higher demand. ‡ Due to partition, production and area cultivated fell by 10%. ‡ Recovery started during Z.A Bhutto s period. ‡ Production fell by 10% due to floods in June 1977 and July 1978.

Contd.
‡ Production didn t increase during the 80 s due to extreme temperature during the cropping season. ‡ 1989: REAP (Rice Exporters Association of Pakistan) established. ‡ 1992: Establishment of Pakistan Rice Standards and Pakistan Standards Instituition.

8 million tonnes due to to floods in July/August 2010.Contd ‡ 1996: REAP negotiated with European Commission in getting 250 ECU/ton. ‡ 1998: REAP recognized by Ministry of Commerce. . ‡ Production fell by 1.000 tons due to earthquake on 8th October 2005. ‡ Production fell by 250.

Contd.900 2.187 3.410 3.030 2.900 3. Year 1960 1970 1980 1990 2000 2005 2006 2007 2008 2009 2010 Production (million tonnes) 1.802 5.450 5.718 3.200 3.900 6.018 1.182 1.000 Difference (million tonnes) 0.615 1.490 2.800 5.651 3.207 2.000 .000 Consumption (million tonnes) 0.547 5.981 2.142 1.143 2.100 2.049 0.892 3.123 3.896 2.700 6.243 2.243 4.981 2.

Porter s Diamond Model .

Factor Conditions .

Hafizabad. Sialkot.Basic Factors ‡ Rice growing areas: Punjab and Sindh ‡ Provincial Share: Punjab 56%. Okara. KP 2%. Balochistan 8%. Sindh 34%. Sheikhupura. Qamber Shahdadkot. Dadu Khairpur. ‡ Sindh: Sukkur. Nawabshah and Hyderabad districts. ‡ Punjab: Gujranwala. Faisalabad. Larkana. Mandi Bahaudin Din and Jhang. . Sargodha. Multan and Bahawalpur.

Contd. ‡ ‡ ‡ ‡ ‡ Temperature: Rice requires high temperature Rice is cultivated in early summer Requires 22-27 degree Celsius In the areas told summer is extreme Cultivation not possible in severe cold .

Contd. ‡ Water: Rice is known as plant of water ‡ Cultivation needs large amount of moisture ‡ Root of rice plant should be submerged in water for long ‡ Less water required during maturity ‡ The field should be dry when ripening ‡ The annual rainfall should be 40 but in Pakistan it is 20 .

Contd. ‡ Types of rice: 1.Long Grain Rice .

‡ 3.Contd. Parboiled Rice: Elite rice variety that is liked by consumers and chefs who love to have the best quality .Brown Rice: Light brown. particularly for the weight conscious people since it contains less starch. ‡ 2.

. rest imported from China.Advanced Factors ‡ Labor: easily available. farmers working on traditional methods. . Germany.RRIP ‡ Training of farmers: No training programmes. skilled labor to operate machinery only ‡ Machinery: 90% home-made. Switzerland and Thailand ‡ Research Institutes: Mostly Ineffective.

Conclusion ‡ Rich in basic factors ‡ More focus should be on advanced factors .

Demand Conditions .

0. Production=6883000 tons. Yield=2387 kgs/hec ‡ Comparison: Area= -2. yield= 1. Production= -1.7%.7 ‡ (Source: Pakistan Economic Survey) . Production=6952000 tons.Rice production in Pakistan ‡ 08-09: Area=2963000 hectares. Yield=2346 kgs/hec ‡ 09-10: Area= 2883000 hectares.

Supply factors ‡ Supply from farmers to mill owners ‡ Supply from mill owner to exporters or wholesaler ‡ Supply from exporter to international buyers and from wholesaler to retailers and consumers .

Supply from farmers to mill owners ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Price of sugarcane and other crops Urea and Dap price Commodity support price Rain and availability of water Crop insurance Improvement in irrigation Providing free land to farmers Agricultural loans Use of good quality seeds .

Supply from mill owner to exporters or wholesaler ‡ ‡ ‡ ‡ ‡ ‡ Broker fees Transportation cost Production capacity Overheads (fuel and energy cost) Electricity Paddy and labor cost .

Supply from exporter to international buyers and from wholesaler to retailers and consumers ‡ Government taxes ‡ Exchange rate .

2 million tonnes so it leaves about 4 million tonnes of rice for export. ‡ Demand From farmers by mill owners ‡ Demand from mill owner by exporter and wholesaler .Domestic Demand and consumption ‡ The domestic demand of rice in Pakistan is 2.

Demand From farmers by mill owners ‡ Availability of funds ‡ Interest rate ‡ Exports .

Demand from mill owner by exporter and wholesaler ‡ Exporters demand depends on demand from global markets and wholesalers demand depends on demand from retailers and local consumers. ‡ Economic growth abroad ‡ Quality ‡ Bad weather in Asia .

whose demand does not depend on price.‡ An increase in price of good quality rice will increase demand of low quality rice ‡ there are some segments of the society. .

Bahrain. Mauritius. UK. Qatar. Kuwait. ‡ Rice exports crossed $2 billion mark in 2009 which is 10 percent of total exports ‡ Country s second largest export category ‡ Third largest rice exporting nation . Oman. USA and Canada. Malaysia. ‡ IRRI goes to African countries and Mauritius. Iran. and Abu Dhabi.Export Markets ‡ Saudi Arabia. Dubai.

Related and Supported Industries .

. ‡ Rice husks is used for fuel in steel mills. ‡ Rice bran (extracted from the outer layer of brown rice) is used in cereals because it has high levels of magnesium and is also rich in potassium and fiber. ‡ Rice starch is used as a thickener in sauces and deserts.Contd. ‡ Used in the brewing industry. ‡ Rice Bran Oil is healthy cooking oil.

Firm Structure and Rivalry .

100 mill owners ‡ Majority by imperfect market standards ‡ 60% of the exports are handled by less than 50% of the players.Industry Structure ‡ Monopolistic structure in the industry ‡ The industry has approximately 1. .

‡ Rice is sold by retailers. quality and other factors are mostly same or are of little consideration by the buyer. majority of the rice is sold khulla or lose to the masses . No such advertising or promotion is carried out.Rivalry ‡ NO relevant competition in the industry ‡ Absence of any major brands. and the pricing.

5 to 2 million tonnes of rice have been wasted. ‡ Due to the flood about 1.Chance Events Flood ‡ In the year 2009 Pakistan had bumper crop of 6.7 million tonnes of rice and 4 million were exported. .

Macroeconomic Factors ‡ ‡ ‡ ‡ Interest rates Inflation Technology Environment .

Interest rates ‡ The industry is mostly dominated by private investors. ‡ Hence rice prices are not effected significantly by interest rates. . ‡ Private investors prefer to take loans from third parties rather than from bank.

. ‡ Most of our machinery is imported . ‡ Price of 1 kg of rice has risen from Rs 55 to Rs 120 in the last two years. affordability has decreased as machines have become more expensive due to devaluation of rupee.Inflation ‡ Food prices have risen to 30-50% while price of rice has increased by more than 100%.

Technology ‡ Capital intensive sector ‡ Uses numerous machines for different processes ‡ Current inflation has increased the prices of these machines. .

. ‡ The machines usually last for around 10 years however recent inflation has increased the inflation rate.Contd. ‡ Since most of the machines are imported there fore it has become very costly to acquire new machines.

‡ On other customs such as Eid etc rice is eaten preferably by masses. ‡ Pakistan is famous for its wedding culture where rice is the most important dish. .Environment ‡ Rice is mostly grown in Sindh and Punjab hence it is a popular dish of these areas.

. ‡ Easy and simple to cook. ‡ Mughal rulers have left a deep impact on our culture hence rice dishes are very popular.Contd.

India ‡ India has shown an annual production growth rate of 11.03 % for rice while Pakistan has a mere 3.08 % growth. .Comparision Pakistan vs. ‡ India follows a policy of trying to produce more from less land while Pakistan brings more land under cultivation every year to enhance the total yield and meet domestic consumption needs.

Contd. it would have to devote an additional area of more than one million hectares under rice . Mr. ‡ According to Indian Agriculture Minister. . If India were to produce the same amount of rice with Pakistan's productivity level. Sharad Pawar.

production is almost equal due to large-scale corporate farming across the country. .Contd. ‡ In India. ‡ In Pakistan. indicating inequity in the availability of resources to farmers. production varies from farm to farm.

‡ Land is suffering a process of degradation in Pakistan and India. ‡ India has countered the problem with 'widespread use of gypsum to combat salinity from tube well irrigation by providing gypsum at subsidized rates to states facing salinity. .Contd.

.Contd. ‡ One of the reasons for low production of rice is Pakistan's emphasis on low yielding high value Basmati rice. ‡ India focuses and cultivates only early maturing coarse rice.

Year 1960 1970 1980 1990 2000 2005 2006 2007 2008 2009 2010 Pakistan (Yield kgs/hectare) 1310 2198 2426 2317 3032 3176 3175 3353 3555 3643 3125 India (Yield kgs/hectare) 1524 1687 2005 2611 2874 3173 3183 3314 3277 3193 3239 .Contd.

Problems .

‡ ‡ ‡ ‡ Water Problem Transportation and poor infrastructure Inflation Storage Problems: Pakistan Agriculture Services and Storage Corporation (PASSCO) ‡ Low quality seed ‡ Weeds and Admixtures ‡ hoarding and artificial shortages .Contd.

Contd. Un-hygienic conditions within milling process Unbalanced nutrients Lack of marketing awareness and education Post Harvest Losses: Rice Post harvest losses are high in developing countries 14-16% but 30% in Pakistan ‡ Lack of Research and Training ‡ Technology issues ‡ ‡ ‡ ‡ .

Recommendations .

Contd. Healthy Rice ‡ Transportation by trains ‡ Independent committee to control hoarding and artificial shortages ‡ Up gradation of technology ‡ New seed varieties compatible with soil ‡ Marketing and exposure in international exhibitions . ‡ Value addition is necessary.

‡ Information on proper harvesting.Contd. methods and importance ‡ Ministry of food and Agriculture must collaborate with IRRI Philippines ‡ Storage is a critical operation for rice representing between 4 and 6 percent of total post harvest losses .

.Contd. ‡ The small silo technology highly recommended by FAO for small and medium rice farmers to prevent food losses. ‡ The govt should coordinate with REAP and set price mechanism to get higher price in int l market.

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