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.
 Contd
• 1996: REAP negotiated with European
Commission in getting 250 ECU/ton.
• 1998: REAP recognized by Ministry of
Commerce.
• Production fell by 250,000 tons due to
earthquake on 8th October 2005.
• Production fell by 1.8 million tonnes due to to
floods in July/August 2010.
Contd.
Year Production (million Consumption Difference (million
tonnes) (million tonnes) tonnes)
1960 1.030 0.981 0.049
1970 2.200 2.018 0.182
1980 3.123 1.981 1.142
1990 3.243 2.100 1.143
2000 4.802 2.615 2.187
2005 5.547 1.896 3.651
2006 5.450 2.207 3.243
2007 5.700 2.718 2.892
2008 6.900 3.490 3.410
2009 6.800 2.900 3.900
2010 5.000 3.000 2.000
 Porter’s
Diamond Model
 Factor
Conditions
 Basic Factors
• Rice growing areas: Punjab and Sindh
• Provincial Share: Punjab 56%, Sindh 34%,
KP 2%, Balochistan 8%.
• Punjab: Gujranwala, Sheikhupura, Sialkot, Okara,
Hafizabad, Mandi Bahaudin Din and Jhang, Sargodha,
Faisalabad, Multan and Bahawalpur.
• Sindh: Sukkur, Larkana, Qamber Shahdadkot, Dadu
Khairpur, Nawabshah and Hyderabad districts.
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
Contd.
• 2.Brown Rice: Light brown, particularly for the
weight conscious people since it contains less
starch.

• 3. Parboiled Rice: Elite rice variety that is liked

by consumers and chefs who love to have the
best quality
 Advanced Factors
• Labor: easily available, skilled labor to operate
machinery only
• Machinery: 90% home-made, rest imported
from China, Germany, Switzerland and
Thailand
• Research Institutes: Mostly Ineffective..RRIP
• Training of farmers: No training programmes,
farmers working on traditional methods.
 Conclusion
• Rich in basic factors
• More focus should be on advanced factors
 Demand
Conditions
 Rice production in Pakistan
• 08-09: Area=2963000 hectares,
Production=6952000 tons, Yield=2346 kgs/hec
• 09-10: Area= 2883000 hectares,
Production=6883000 tons, Yield=2387 kgs/hec
• Comparison: Area= -2.7%, Production= -1.0,
yield= 1.7
• (Source: Pakistan Economic Survey)
 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
 Domestic Demand and consumption

• The domestic demand of rice in Pakistan is 2.2

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
 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
• An increase in price of good quality rice will
increase demand of low quality rice
• there are some segments of the society,
whose demand does not depend on price.
 Export Markets
• Saudi Arabia, Kuwait, Oman, Dubai, and Abu
Dhabi, Qatar, Bahrain, Iran, Mauritius,
Malaysia, UK, USA and Canada.
• IRRI goes to African countries and Mauritius.
• 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
Related and
Supported
Industries
 Contd.
• 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 Bran Oil is healthy cooking oil.
• Rice starch is used as a thickener in sauces and
deserts.
• Used in the brewing industry.
Firm Structure
and Rivalry
 Industry Structure
• Monopolistic structure in the industry
• The industry has approximately 1,100 mill
owners
• Majority by imperfect market standards
• 60% of the exports are handled by less than
50% of the players.
 Rivalry
• NO relevant competition in the industry
• Absence of any major brands, No such
advertising or promotion is carried out.
• Rice is sold by retailers, and the pricing,
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”
 Chance Events

Flood
• In the year 2009 Pakistan had bumper crop of
6.7 million tonnes of rice and 4 million were
exported.

• Due to the flood about 1.5 to 2 million tonnes

of rice have been wasted.
 Macroeconomic Factors

• Interest rates
• Inflation
• Technology
• Environment
 Interest rates
• The industry is mostly dominated by private
investors.

• Private investors prefer to take loans from

third parties rather than from bank.

• Hence rice prices are not effected significantly

by interest rates.
 Inflation
• Food prices have risen to 30-50% while price of
rice has increased by more than 100%.

• Price of 1 kg of rice has risen from Rs 55 to Rs 120

in the last two years.

• Most of our machinery is imported , affordability

has decreased as machines have become more
expensive due to devaluation of rupee.
 Technology
• Capital intensive sector

• Uses numerous machines for different

processes

• Current inflation has increased the prices of

these machines.
Contd.
• Since most of the machines are imported
there fore it has become very costly to acquire
new machines.

• The machines usually last for around 10 years

however recent inflation has increased the
inflation rate.
 Environment
• Rice is mostly grown in Sindh and Punjab
hence it is a popular dish of these areas.

• Pakistan is famous for its wedding culture

where rice is the most important dish.

• On other customs such as Eid etc rice is eaten

preferably by masses.
Contd.
• Mughal rulers have left a deep impact on our
culture hence rice dishes are very popular.

• Easy and simple to cook.

 Comparision
Pakistan vs. India
• India has shown an annual production growth
rate of 11.03 % for rice while Pakistan has a
mere 3.08 % growth.
• 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.
• According to Indian Agriculture Minister, Mr.
Sharad Pawar, “If India were to produce the
same amount of rice with Pakistan's
productivity level, it would have to devote an
additional area of more than one million
hectares under rice”.
Contd.
• In Pakistan, production varies from farm to
farm, indicating inequity in the availability of
resources to farmers.
• In India, production is almost equal due to
large-scale corporate farming across the
country.
Contd.
• 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.
• 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.
Contd.
Year Pakistan (Yield India (Yield kgs/hectare)
kgs/hectare)
1960 1310 1524
1970 2198 1687
1980 2426 2005
1990 2317 2611
2000 3032 2874
2005 3176 3173
2006 3175 3183
2007 3353 3314
2008 3555 3277
2009 3643 3193
2010 3125 3239
Problems
Contd.
• 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.
• 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.
• Value addition is necessary; “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
Contd.
• Information on proper harvesting, 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.