Monthly Archives: November 2015

Rice exports down on Basmati slump

For the four months ended FY16, PBS numbers show a 24 percent surge in the quantity of rice exported year-over-year, but a 6 percent decline in dollars earned. The plot thickens when one looks at the types of rice – in both dollar and quantity terms. Basmati exports have plummeted over last year while non-Basmati exports have gained tremendously. Recall that Basmati is of superior quality and more expensive, so its margins are higher. What went wrong?
This column has discussed the issues of Pakistan?s rice industry at length (Read “Rice: another dying commodity,” published on October 20, 2015). To recap, the main issues highlighted by industry sources were low international prices, a high cost of doing business, and a lack of research in Basmati. However, there have to be some factors other than these for this free-fall of Basmati exports over last year; for the four months ended FY16, the volume of Basmati exports was lower by 34 percent year-on-year. Meanwhile, non-Basmati rice exports shot up around 40 percent. What explains this shift from a premium-priced Basmati to inferior type exports?
Wajid Paracha from REAP told BR Research that the answer to this can be found in lower buying from Iran, which happens to be Pakistan?s largest market for Basmati rice. Pakistan was already having trouble in the Iranian market for Basmati thanks to India, as also confirmed by Guard Rice CEO Shehzad Malik, who added that India has been producing evolved Basmati varieties that give twice the yields.
Iran happened to be an important market for India as well. Since last year, however, Iran stopped importing, perhaps owing to its own stockpiles, or perhaps in anticipation of the removal on sanctions and access to a broader market. Moreover, Wajid Paracha said the inspection standards of Iran had been raised as well.
So, Pakistan lost its biggest Basmati market, as did India. As a result, India began slashing its prices and aggressively marketing its Basmati in other markets where Pakistan was present as well. This explains the enormous drop in Basmati exports as of late.
As for the rising non-Basmati exports, Shehzad Malik said that there have been significant developments in other seed varieties. He said that the private sector has done a lot of work (particularly in Sindh), introducing hybrid rice technology that gives twice the yield and reduces the cost of production. It may thus be the case that growers are now opting for non-Basmati varieties.
While there’s no arguing that the commodity crunch is playing a huge role in our exporters’ troubles, one can’t ignore the fact that the dollars earned could easily be higher if Basmati is given due emphasis.

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Thailand deepens trade ties with Iran as end of sanctions looms

With international trade sanctions against Iran about to be lifted shortly, Thailand is making further efforts to deepen trade ties with the former pariah state. Back in July, the Thai Commerce Ministry already said that it wants to boost ties and will organise a “Thailand Week 2015” in Tehran, as well as lead a trade mission to Iran (Gulf Times reported on July 31).
The trade mission, the first of its kind, took place last week. Thailand’s Deputy Commerce Minister Suvit Maesincee led a 75-member delegation of Thai officials and business people of 53 companies which arrived on November 23 in Tehran.
The main target of the mission was to find ways to increase bilateral trade from $357mn in 2014 to $1.2bn in three years. This will, as a fact, need strong efforts as trade has been declining in the past, particularly due to low oil prices. Bilateral trade between Thailand and Iran used to stand at an average of $600mn a year, but fell as oil prices slumped. During the first 10 months of 2015, Thailand’s exports to Iran were worth $181mn.
According to Maesincee, the two countries had “great opportunities” to strengthen trade and investment. The Thai business delegation consisted of representatives of companies active in the fields of food and agriculture, construction, car spare parts, as well as clothing and jewellery who are seeking new trade channel not just with Iran, but to the greater region.
“Iran could be a gateway for Thailand to penetrate the Middle East market,” the Deputy Commerce Minister said. “In turn, Thailand is being considered by Iran as a gateway to markets in the Association of Southeast Asian Nations, particularly Cambodia, Laos, Myanmar and Vietnam,” he added.
According to the Tehran Times, Iranian officials said that Iran had the capacity to invest in Thailand’s petrochemical, automotive, food, agriculture and textile sector, as well as specifically seek cooperation in tourism and hotel management as Iran acknowledges Thailand’s high expertise in this field.
Thailand, on its part, could invest in hotels, shopping malls and other touristic infrastructure and set up hotel management training facilities in Iran.
Iran also showed interest in enticing more Thai investment in other infrastructure development. To that end, both sides considered to set up government-to-government and government-to-private initiatives which could involve Thai construction firms which are seen to have high potential to join Iran’s public infrastructure and building projects. Large Thai construction companies such as Italian-Thai Development were specifically named to have good potential to join projects launched by Iran’s New Towns Development Corp which is planning and building entire new cities in the country.
Representatives of Thai financial institutions also joined the mission to look into the possibility of improving payment channels as Iran is about to get re-integrated into the global banking system. To facilitate trade for both countries, the Bank of Thailand and the Central Bank of Iran are jointly developing financial transaction systems which are aimed at making trade payments easier in the future. Banking sanctions against Iran might be lifted by mid-January.
Big hopes are also being set on two sectors were Thailand is undeniable a strong global force: Thailand wants to ship about 200,000 tonnes of rice to Iran next year and compete with India and Pakistan, Iran’s main current rice sources. Iran has demand for up to 1.5mn tonnes of rice each year, the mission was told.
More Iranians would also be encouraged to visit Thailand for holidays or as health tourists whereby the Thai side promised to speed up visa services. The new six-month multiple entry visa for Thailand available since November 13 should also simplify travel paperwork and increase tourist numbers from Iran.

227,000 Tons of Rice Imported from Vietnam

TEMPO.CO, Jakarta – Djarot Kusumayakti, president director of the State Logistics Agency (Bulog), said on Sunday, November 29, 2015 that his institution had imported 227 tons of Vietnamese rice since November 7, 2015.

Earlier, the state logistics company gained a license to import 1 million tons of medium-quality rice from Vietnam to anticipate famine that was predicted to occur in early 2016.

Djarot revealed that the rice was distributed in several regions based on their demands.

“In total, there are 16 ports handling the arrival of the rice,” Djarot said.

However, the distribution was hampered by infrastructure limitations and capacities at the ports. For instance, rice that arrived in Tanjung Perak, Surabaya, was unable to be distributed to East Nusa Tenggara since the port in the province could only accommodate small vessels.

According to Djarot, such a condition would not occur if the decision to import rice was made earlier. Therefore, Bulog would have more time to plan the distribution.

Djarot revealed that the rice imports had increased Bulog’s stock to 1.3 million tons. However, the government was still concern with crop failures caused by this year’s El Nino. Djarot added that the government had considered importing more rice from other countries.

“Rice imports from Pakistan have been considered, but no agreement has been reached yet,” Djarot explained.

Rice exports from Vietnam may increase 14 percent in the first quarter

Rice exports from Vietnam may increase 14 percent in the first quarter as the strongest El Nino in almost two decades shrivels crops in some countries, spurring importers to build reserves.
Shipments will jump to 1.3 million metric tons in the three months ending March from 1.14 million tons a year earlier, said Tran Tuan Anh, Vietnam’s deputy minister of industry and trade. The world’s third-biggest exporter is already seeing a spurt in demand, he said in an e-mail on Nov. 25. October rice shipments surged 43 percent to 859,000 tons from a year earlier, the highest level since July 2012, government data show.
Indonesia and the Philippines are among nations importing rice after dry weather induced by the strongest El Nino since the record event in 1997-98 hurts crops. Prospects for the event to further strengthen may prompt buyers to secure supplies before prices run up as the United Nations’ Food & Agriculture Organization predicts a decline in global rice output in the 2015-16 season with consumption surpassing production.
“Rice supply and stockpiles will decline, and demand for imports will rise because of unfavorable weather conditions,” Anh said. “The El Nino event occurring this year and prolonging into 2016 will affect production in many countries, especially Thailand, Indonesia, and the Philippines.”
Rough-rice futures on the Chicago Board of Trade have rallied 29 percent from the lowest level in more than eight years in May on concern that the El Nino will shrink global harvest. The contract for delivery in January closed at $12.13 per 100 pounds on Wednesday.
Output Decline
Production in Thailand may decline to the lowest in 19 years as dry weather may prompt the world’s top exporter to further restrict plantings to preserve water supply. The Philippines is monitoring rice production closely to see whether there’s need to import more on El Nino after purchasing 750,000 tons from Vietnam and Thailand for delivery from November to March 2016. Indonesia this month agreed to import 1.5 million tons from Vietnam and Thailand and is in talks with Cambodia and Myanmar for additional supplies, according to state-run food company Bulog.
Vietnam’s paddy rice output may increase 0.3 percent to 45.1 million tons this year, VietnamPlus reported in September, citing the Agriculture Ministry. Exports may climb to 7 million tons in 2016 from 6.2 million tons this year, according to the U.S. Department of Agriculture.
Boosting rice exports will still be a challenge for Vietnam as Thailand is looking to draw down the stockpiles it accumulated under a state purchase plan, Anh said. Major importers, especially in Southeast Asia, are also diversifying supply sources and boosting domestic production, he said.
Thailand has about 13.7 million tons of rice in state stockpiles after the military government sold 5 million tons, Chutima Bunyapraphasara, permanent secretary for commerce, said Nov. 16.

Rice exports post 10.78pc growth in July-October

Rice exports from the country during the first four months of the current financial year posted 10.78 percent growth as compared to the exports of the corresponding period last year, as per Pakistan Bureau of Statistics (PBS) data published Thursday.

During the period from July-October 2015, about 898,603 metric tons of rice worth $339.92 million exported as against exports of 657,420 metric tons valuing $306.89 million in the same period last year.

According to the PBS data, rice exports on month basis also grew by 24 percent during the month of October as compared to the same month of last year.

During October, about 347,685 metric tons of rice worth $121.66 million was exported as compared to 22,948 metric tons valuing $9.493 million of the same month last year.

However, the data revealed that exports of basmati rice decreased by 31.22 percent in the first four months of the current financial year and reached at 131,160 metric tons from 174,191 metric tons in the same period of the last financial year.

During the period under review, the country managed to earn $145.43 million by exporting the basmati rice as against $11.319 million in the same period last year, the PBS data adds.

Meanwhile, wheat exports registered 100 percent increase, as about 1,061 metric tons of wheat was exported during the period from July-October 2015 and earned $0.220 million.

The data revealed that vegetable exports during the last four months also witnessed an increase of 89 percent, as the country was able to export 195,659 metric tons of vegetables of different kinds and fetched $56.779 million for the country.

The vegetable exports during the first four months of the last financial year were recorded at 85,420 metric tons, valuing $28.689 million, the data revealed.

Jute millers worried about ban on export by Bangladesh

Pakistan Jute Mills Association (PJMA) has asked the SAARC Chamber of Commerce and Industry President Suraj Vaidya to intervene immediately to resolve the crisis due to the ban on the export of raw jute by Bangladesh.

“You are requested to intervene immediately into the situation to get the ban abolished in the best national interest of both Pakistan and Bangladesh,” said PJMA Chairman Ahsan Ahmed Khan. “You may like to activate all diplomatic and governmental channels of the member states to get the matter resolved on priority. We believe that your swift action shall spare the exporters and importers on either side serious problems ahead,” PJMA’s letter continued.

The PJMA chairman expressed his deep concern on the ban imposed by the government of Bangladesh on exports of raw jute from November 3, adding that the matter is quite serious as Pakistan, being one of the biggest importer of jute from Bangladesh, fulfills all basic raw material requirements of its jute industry from single country imports.

The letter reiterated that SAARC Chamber of Commerce and Industry has been chartered for the purpose of promoting and regularizing the economic (trade) and other developmental relations between all its members. The strengthening of the relations between these countries through cooperation/collaboration to achieve better future for its citizens is one of its objectives. The SAARC countries have further been tied up through SAFTA and SAPTA.

“It is also believed that the chamber is to play its role in case any confusion, misunderstanding or any unfair act towards the mutual trade is taken by any member state. The ban on export of raw jute has come without any forewarning. And the jolt thus received shall have drastic impact upon our industry; pushing it into deep and non-recoverable crisis,” the letter said.

“The storage of the crop yields especially of wheat, rice, grains and potatoes etc. are likely to go waste throughout the country given a scenario of ‘no supply of sacks’, the lifting and the transportation of the crops from farms to markets shall also get adversely affected and thus the small farmers would be worst hit who would not be able to sell their crops without the required Bardana (Jute Bags),” the letter added.

The PJMA chairman requested the SAARC Chamber of Commerce and Industry president to use his office to immediately release consignments for which LCs had already been established before the imposition of the ban. “The raw jute consignments on the verge of exports and for which LCs had already been opened before the enactment of the ban notification have also fallen prey to the immediate decision. The government of Bangladesh should not renege on prior commitments and signed contracts of their trade and business community,” the letter added.

Rice basmati strengthens on firm demand

Rice basmati prices strengthened up to Rs 400 per quintal at the wholesale grains market today on persistent buying by stockists against restricted supplies from producing regions.

Bajra and maize prices were also up on increased offtake by consuming industries.

Traders said persistent buying by stockists in the face of restricted supplies from producing regions and report of a likely lower output kept rice basmati higher.

In the national capital, rice basmati common and Pusa-1121 variety advanced to Rs 6,300-6,600 and Rs 5,300-6,300 from previous levels of Rs 5,900-6,400 and Rs 4,900-5,900 per quintal respectively.

Non-basmati rice permal raw, wand and sela followed suit and settled higher at Rs 1,950-2,000, Rs 2,200-2,275 and Rs 2,750-2,850 from previous close of Rs 1,900-1,925, Rs 2,050-2,150 and 2,350-2,450 per quintal respectively.

Other bold grains like, bajra and maize rose by Rs 50 each to Rs 1,350-1,360 and Rs 1,550-1,600, while barley edged up by Rs 10 to Rs 1,440-1,450 per quintal respectively.

Following are today’s quotations (in Rs per quintal):

Wheat MP (desi) Rs 2,000-2,600, Wheat dara (for mills) Rs 1,675-1,705, Chakki atta (delivery) Rs 1,705-1,720, Atta Rajdhani (10 kg) Rs 230, Shakti Bhog (10 kg) Rs 230, Roller flour mill Rs 900-905 (50 kg), Maida Rs 945-950 (50 kg) and Sooji Rs 1,090-1,095 (50 kg).

Basmati rice (Lal Quila) Rs 10,700, Shri Lal Mahal Rs 11,300, Super Basmati Rice Rs 9,700, Basmati common new Rs 6,300-6,600, Rice Pusa (1121) Rs 5,300-6,300, Permal raw Rs 1,950-2,000, Permal wand Rs 2,200-2,275, Sela Rs 2,750-2,850 and Rice IR-8 Rs 1,700-1,720, Bajra Rs 1,350-1,360, Jowar yellow Rs 1,600-1,700, white Rs 3,100-3,200, Maize Rs 1,550-1,600, Barley Rs 1,440-1,450.

Double whammy for basmati farmers in Punjab

Farmers of the aromatic, long-grain staple basmati rice in Punjab and Haryana faced huge losses on account of low prices earlier this season and now when the prices have shot up, most of farmers are left high and dry as they have already sold their produce.

Rice industry experts believe there’s an urgent need for the governments to implement reforms in the rice intrade.

What is happening in Punjab and Haryana, where a majority of farmers are deprived of profits even after basmati rice prices have risen, could have been avoided had there been a better mechanism of payments.

In the markets of Punjab and Haryana, basmati prices have seen a sudden rise during the past few weeks. The basmati variety PUSA 1121 is now fetching between Rs. 3,000-3,100 a quintal, which was being sold in the range of Rs 1,300 to Rs 1,800 per quintal early this month. Besides, the price of the 1509 variety has also jumped to Rs. 1,800 a quintal as against Rs. 1,000-1,200 a quintal, traders said.

Farmers allege that traders and commission agents of being in hand in glove.

In rice-exporting Vietnam, consumers growing fond of Cambodian grain

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While Vietnam is among the world’s top rice exporters, many consumers in some southern markets now prefer several types of Cambodian rice to the domestically grown produce.
Some rice businesses in the southern province of Tien Giang have begun sourcing rice from Cambodia to distribute to Ho Chi Minh City and neighboring localities, instead of that grown in Vietnam’s Mekong Delta, known as the country’s granary.
Trung, who runs a major rice firm in the province, said he sells an average of 500 metric tons of Cambodian rice on a monthly basis.
He always comes to Cambodia to directly buy paddy there, and the rice processing and packaging are done at his own facility.
“So I can ensure competitive prices and good quality for the produce,” he said.
Many Tien Giang-based rice businesses say consumers in southern Vietnam are fond of four types of Cambodian rice, namely Sa Mo, Sa Ri, Mong Chim and Soc Mien, even though there is nothing special about their flavor and aroma.
“Cambodian rice fetches stable prices, so you do not have to worry about suffering losses,” Nguyen Thi Tim, a Tien Giang rice seller, said.
“The demand for Cambodian rice is also growing so it sells easier than the domestic grain.”
Kiet, who runs a rice-husking plant in Tien Giang, explains that the four most popular types of Cambodian rice in Vietnam are winter rice, which requires longer growing duration than the summer grain so “there are only two crops per year.”
“The short-grain Cambodian rice is less sticky when cooked, so those who do not like sticky and aromatic rice will prefer it,” he added.
His explanation is supported by Do Thi Mui, who runs two rice stores in Phan Thiet, the capital of the south-central province of Binh Thuan.
“The cooked Cambodian rice is soft and not sticky, which is easy to eat and digest, therefore largely enjoyed by local eateries and those doing heavy physical work,” Mui said.
Many eateries that sell cooked rice in Long An Province and Tien Giang admit that they can reap bigger profits by selling Cambodian rice over Vietnamese grain, as most consumers prefer soft to sticky rice.
Nguyen Thi Kieu Nga, a rice seller in Long An, also located in the Mekong Delta, said farmers usually do not use pesticide on the winter rice crops, which helps the Cambodian grain to win new customers.
Professor Vo Tong Xuan, a seasoned rice expert, confirmed that many Vietnamese consumers are eating Cambodian rice as the grain is ‘cleaner’ than that grown in Vietnam, thanks to the sparse use of insecticides.
“Many officials in the Vietnamese provinces bordering Cambodia have told me that they choose Cambodian or Thai rice for safety reasons,” he said.
“This illustrates the importance of growing rice under best practice methods such as VietGAP or GlobalGAP.
“People now eat for their health, not for a full stomach.”
Last year Vietnam exported 7.5 million metric tons, but the figure this year is expected to be only 6.7 million metric tons, according to the Ministry of Agriculture and Rural Development.
In the Jan-Oct period, the country’s rice export reached 5.03 million metric tons, according to the Vietnam Food Administration.

Asia rice prices high

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Asian rice markets saw little movement over the past week due to thin demand, while tight supply kept prices high in Vietnam and purchases by China and some Middle East clients failed to move up Thai prices, traders said Wednesday, according to report by The Business Recorder.

The rice export markets in Thailand and Vietnam, the world’s second and third biggest exporters of the grain after India, could stay quiet until early 2016 as most demand has been met before the holidays, traders said.

“Vietnamese prices are high and they won’t decrease as supply is tight,” said a trader in Ho Chi Minh City.

Vietnam’s 5-percent broken grain has been idle over the past month at $375-$380 a tonne, free-on-board (FOB) Saigon Port, while the 25-percent broken grain fell to $360-$365 a tonne from $362-$365 a tonne a week ago.

The next harvest is due to start in late February 2016 in the southern Mekong Delta food basket.

Prices have been firm due to tight supply, especially of the 15-percent broken rice bought by Indonesia in a deal involving 1 million tonnes, traders said.

Rising rice prices following Vietnam’s sales to the Philippines and Indonesia have contributed to a 0.31 percent gain in the country’s November food prices, the first month-on-month rise since February 2015, the government said.