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| Rice prices may skyrocket on back of damaged crop |
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Tuesday, January 06, 2009
By By Shahid Shah
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KARACHI: A bumper crop of rice will have little relief for consumers as prices are likely to shoot up amidst damage to 1.2 million tons of Irri-6 variety in Sindh alone.
A bumper crop of 1.8 million tons was expected in upper Sindh but it is estimated that 70 per cent of this was damaged in recent rains, causing a loss of more than Rs50 billion to growers. This is because the damaged paddy is earning them about 40 per cent of the market price, say market sources.
President of the Sindh and Balochistan Rice Mills Association, Arif Hussain Mahesar, said the damaged crop would be used in animal feed. If the government took an initiative, Mahesar said that the same rice could be exported to some countries that import low grade rice.
The Trading Corporation of Pakistan (TCP) as well as the Pakistan Agricultural Storage and Supplies Corporation (PASSCO) were given targets to intervene in the market with the purpose of providing support to growers.
However, both of them failed in Sindh, claimed one grower. The TCP provided relief to the trader through its open tenders while PASSCO purchased less than 20 per cent paddy against its target of 0.5 million tons in Sindh.
The growers were waiting for timely intervention by PASSCO after the government announced a support price of Rs700 per 40-kg for Irri-6 and Rs1,500 for basmati rice when the open market for Irri-6 was around Rs550 per 40-kg.
They did not sell it in the local market until heavy rains damaged their crop, lying open in the fields. This year, total rice production in the country was estimated to be 6.5 million tons. Out of this, 2.5 million tons were expected from Sindh and Balochistan alone. Production in upper Sindh was estimated around 1.8 million tonnes, of which nearly 70 per cent is damaged, claimed Mahesar. Since only a few growers sold their paddy to the mills, millers remained safe from damage, he said.
PASSCO was given a target of one million tonnes paddy purchase in the country with half of that from Sindh. So far, PASSCO has purchased 80,000 tonnes of paddy in Sindh, said PASSCO Managing Director Maj-Gen Anwar Saeed Khan.
The procurement in Sindh would continue till the end of February. But, the growers say they are left with the damaged paddy only, PASSCO refuses to buy. The corporation winded up its procurement in Punjab on December 2008 with 452,000 tons procurement from 240 centers.
Millers in Sindh differ with PASSCOs claim of purchasing of 80,000 tonnes of paddy. PASSCO has purchased around 1,200 tonnes only, said Mahesar. But, lifting from the millers in Sindh has remained in dispute. They say PASSCO has not provided funds for purchase of paddy and is using their storages. The moment we pick up, we will pay them, said Khan, we do not have much of storage in Sindh.
Khan said he was in negotiations to rent out some warehouses in Shikarpur, Hyderabad, Thatta and Karachi. Power cuts in Sindh also forced around 900 mills in Sindh and Balochistan to reduce operations to 25 per cent of their capacity, which has resulted in commodity shortage in the market.
The mills operated two shifts every season, said Mahesar, but they are now working for 4-5 hours only. On Monday prices went up to Rs2,800/100-kg against Rs2,200 a few weeks back. Damage to the paddy has increased its prices in the open market. Irri-6 paddy is being sold for Rs700 in the open market, but even 5 per cent damaged paddy is not purchased, one miller said. There would be two crisis, Mahesar said, price of fine quality rice would shoot up, while nobody would buy the damaged crop from growers.
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