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Pakistan soon to begin rice exports to Iran

Pakistan's Agriculture Storage and Supplies Corporation (PASSCO) is finalising its plan to initially export irri-9 and Basmati to Iran as per arrangements with Iran's Government Trading Company (GTC) at preferential duty.

Though with the abolishing of rice Export Corporation of Pakistan (RECP) few years ago, the private sector had already crossed one billion dollar rice export mark last year but the government still wants to encourage yet another government department to enter into the business.

Technically, PASSCO's role would be limited to purchase of rice, if the private sector is not able to procure and purchase at the support price. Now, rice is being sold domestically at much higher than the support price.

The proposed move of the government will discourage rice export from the private sector.

Pakistan's Commercial Counsellor based in Teheran has sent a letter to the agriculture ministry to examine whether it would be possible for PASSCO to enter into the business of rice export with GTC.

According to the letter, the GTC will import the rice at a rate of 4 per cent customs duty as against the private sector import duty of around 150 per cent. The GTC feel more easy and safe, while dealing with a government department as heavy transactions are involved.

The chairman of GTC visited Pakistan in last December and offered to purchase 400,000 metric tonnes of rice. Of these, agreement regarding 20,000 metric tonnes has so far been signed with the GTC, the letter said.

In response to this letter, the ministry of agriculture has sent a letter to the chairman of rice exporters association (REAP) seeking views and comments from the stakeholders for allowing PASSCO to export rice to Iran.

The agriculture ministry letter also sought views from the stakeholders regarding possibilities for export of rice to Iran on their terms and conditions from the private sector.

Surprisingly, while the letter from the agriculture ministry to chairman of REAP inquires about terms and conditions for export of rice to GTC that is acceptable to private sector exporters, the actual letter from Pakistan embassy to the ministry of agriculture (Minfal) asks a completely different question to examine the issue of allowing PASSCO to export rice to Iran. A leading rice exporter said that the private sector must oppose any move to revive the ghost of RECP in the shape of PASSCO or any other body.

"We should not agree for sale of rice to GTC Iran through any government body such as PASSCO, TCP or anyone else. Only private sector should remain in the rice export business and no government body should be allowed to export rice,", he stressed.

According to the exporter, a lot of rice is reportedly being smuggled from Pakistan to Iran evading import duty. Some rice is exported through under-invoicing to avoid or reduce the high duty.