Monthly Archives: January 2016

Agricultural products: Delegation to leave for Iran to remove export hurdles

A Pakistani delegation, led by the federal minister of national food security and research, will leave for Iran soon to negotiate with the authorities there, particularly officials of the food ministry, in an effort to remove the hurdles in the way of export of agricultural products.

The visit was planned following a recent brainstorming session among officials of the ministries of commerce and food security, State Bank of Pakistan and Federal Board of Revenue in the backdrop of lifting of international sanctions from Iran, a senior officer in the Ministry of Commerce said while talking to The Express Tribune.

Pak-Iran trade: ‘Govt should weigh pros and cons before inking FTA’

They discussed how Pakistan could capitalise on the trade opportunities in the neighbouring Islamic republic and boost its exports.

According to the officer, most of Pakistan’s agricultural products have a good market in Iran, but the Iranian agricultural ministry is reluctant to issue necessary permits to its importers.

“To remove the obstacles, a high-level delegation is going to Iran soon to take up the challenges and help pave the way for favourable conditions for bilateral trade,” the officer said.

The delegation will highlight all possible avenues for giving a push to bilateral trade and investment. It will discuss the possibility of rice exports as the commodity is hugely popular in Iran and Pakistan has a surplus produce, which can be shipped to the neighbouring market to meet its demand.

The officer said the State Bank of Pakistan, in collaboration with the Iranian central bank, would establish banking channels between the two countries shortly to put in place a payment mechanism that had been suspended after the imposition of international sanctions on Iran for its alleged nuclear programme.

“We have been told by State Bank officials that they have made all arrangements for establishing banking links with Iran,” he said.

Apart from formal trade through banking channels, Pakistan will also allow informal trade under barter system to people living close to the border.

“Iranian border community gets import and export quotas from its government and we must tap that opportunity by encouraging our border community to engage in barter trade,” he said.

Among agricultural commodities, Pakistan’s rice has great demand in Iran. According to 2005-14 statistics, rice had a 63% share in exports and the remaining was held by other goods. Kinnow had the second largest share in exports to Iran.

Exports reached the maximum of $400 million in 2008-09, but they suddenly started falling in the face of added sanctions on Iran and in the very next year shipments dropped around 100% to $200 million.

Since then, exports had been falling rapidly and in 2013-14 they stood at just $53 million.

Post-sanctions: Pakistan expects positive response from Iran

Exporters have cited the absence of payment mechanism in the face of restrictions on banking channels as the primary factor behind the falling trade as in such a scenario the business community was reluctant to make exports to Iran.

Thailand outranked as world’s largest rice exporter

Thailand has been outranked by India as the world’s largest rice exporter, said Thai Rice Exporters Association head Charoen Laothammathat on Wednesday.

Thailand ranked second on the list of the world’s largest rice exporting countries with 9.8 million tons exported to the world market last year, compared to 10.9 million tons the previous year, while India topped the chart with 10.2 million tons and Vietnam was third with 6.4 million tons, according to the association’s president.

Last year, Thai rice export earned an estimated 4.6 billion U.S. dollars, compared to 5.4 billion U.S. dollars the previous year, Charoen said.

This year, Thailand is forecast to export about 9 million tons of rice to the world market, earning some 4.3 billion U.S. dollars.

Gross production of extra crops in varied rice-growing areas of the country will likely drop by millions of tons this year, he said.

Droughts in the producing areas and reductions in purchase volumes from African countries in the face of global economic slumps will primarily result in the forecast drop in the export Thai rice, he added.

Export prices of Thai rice the lowest in ten years

Global economic slowdown combined with huge rice stocks and substantial oil price drop which has sapped the purchasing power of Thailand’s main rice buyers have driven the export price of Thai rice to the lowest in ten years.

Mr Charoen Laothammathat, president of Thai Rice Exporters Association, disclosed on Thursday that 5% white rice now fetches between US$ 350-390 FOB per tonne which are the lowest in ten years.

The FOB export prices of Hom Mali fragrant rice and parboiled rice are quoted at US$700-720/tonne and US$350/tonne respectively. These have driven down the domestic prices of paddy to 8,000 baht/tonne and 12,000 baht/tonne for Hom Mali paddy, said Mr Charoen.

The association president said he hoped the current export prices of Thai rice had hit rock-bottom and would rebound because of drought which is expected to sutstantialy cut rice yields this year.

He expected the rice market situation would return to normal once the government manages to off-load 4-5 million tonnes of rice in the stockpile this year and another five million tonnes next year.

Thailand ranks the world’s second rice exporter last year with 9.8 million tonnes of rice exported compared to Number One exporter, India’s 10.2 million tonnes. The country is expected to export nine million tonnes of rice this year.

TCP scraps rice procurement tender

Trading Corporation of Pakistan (TCP) scrapped rice procurement tender, as the quoted prices were significantly higher than the prevailing local prices. Following the directives of the federal government, TCP invited bids for purchase of 15,000 tons of Long Grain White Rice (IRRI-6) for “Benin” as gift from people of Pakistan. Some seven bidders submitted their bids price ranging Rs 46,770 per metric ton to Rs 48,000 per metric tons for the supply of IRRI-6 rice. Out of seven bids, one bid found nonresponsive as its bid security was short.

Later, a meeting of the TCP’s Tender Award Committee was held on January 25, 2016 at TCP office to consider the received bids. The representative of Transparency International Pakistan and Rice Exporters Association of Pakistan (REAP) and Federation Pakistan Chamber of Commerce and Industry were also invited as observers to witness the proceedings of Tender Award Committee. However, the representative of REAP did not attend the meeting.

The Tender Award Committee noted that as per the Bid Evaluation Report the lowest responsive bidder is M/s. Meskay & Famtee Private Limited as it has quoted the price of Rs 46,770/- per metric ton on Cost Insurance and Freight basis. The Committee noted that the prices of Long Grain White Rice IRRI-6 (5 percent broken) have shown an upward trend over the last one month, especially during the last few days and the demand emanating from China has resulted in hike in prices of Rice in the local market.

However, it also observed that notwithstanding the recent upsurge in the prices of IRRI-6 Rice, the lowest bid of Rs 46,770/- per metric ton on CIF basis was significantly higher than the prevailing market prices of approximately 340 to 345 dollar per metric ton on FOB basis.

The Tender Award committee observed that since the price quoted by the lowest evaluated bidder was not economical and was significantly higher than the prevailing local prices. Therefore, accepting the bid would not be in the interest of the government. The Committee, therefore, decided to scrap the tender. Meanwhile, the TCP has invited fresh sealed bids (under Public Procurement Rules, 2004) from companies/ partnership/ sole proprieties dealing in export of rice for purchase of 15,000 tons long grain white rice (IRRI-6) on Cost and Free on Board (C&FoB) basis upto the port of Cotonou, Benin, packed in polypropylene (PP) woven bags as per provided specification. The fresh tender will be opened on February 3, 2016. As per tender documents, a party can submit a bid for minimum quantity of 7,500 tons or multiple therefore with maximum quantity of 15,000 tons.

Rice exporters brace for fluctuations amid oil volatility, climate change

WITH UNPREDICTABLE oil prices and climate change, Thai rice exporters foresee fluctuations in their business this year, expecting export volume to decrease slightly to 9 million tonnes worth US$4.3 billion (Bt154 billion).

The Thai Rice Exporters Association (TREA) yesterday reported that Thailand had lost its crown as the world’s largest rice exporter, with India claiming top spot last year. By volume, the Kingdom’s rice shipments dropped by 10.8 per cent to 9.79 million tonnes, lower than India’s 10.23 million tonnes. Thailand’s rice export value also decreased by 15.2 per cent to $4.61 billion in 2015.

Despite expected lower export volume, Thailand could again be the world’s largest rice exporter this year, as India expects to export only 8.5 million tonnes, and Vietnam will remain third with 7.3 million tonnes.

TREA president Charoen Laothammatas said rice trading would fluctuate this year since many importing countries would be affected by falling oil prices, while rice production in many countries would be unpredictable because of drought.

“Thailand’s rice shipment this year will not increase. Although world rice production and stockpiles will decrease from the drought impact and more trading, the falling oil price will hit the purchasing power of many rice-importing countries, mainly in Africa and the Middle East,” he said.

Charoen said the price of rice would also be unpredictable, but should not go lower than it is now, as the end of the harvest season is approaching next month.

From the current level, the price could gradually increase by 10 per cent on a lower supply of rice in the world market, including Thailand, as expected production from the second crop will be down by 40-50 per cent or 2 million tonnes because of drought, the association predicts.

However, the price will not be able to increase a lot as the baht is expected to weaken further, and the world market has acknowledged that Thailand has large stockpiles of rice remaining.

The average domestic price of paddy white rice is expected to be about Bt8,000 per tonne, while the price of paddy jasmine rice is expected at Bt10,000-12,000 a tonne.

The average export price of white rice is now $365 a tonne, while the price of jasmine rice is $700-$720 a tonne.

Stockplies

Thailand’s high stockpiles of rice, about 13.5 million tonnes, will continue to pressure the price of rice in the world market, and the price of Thai rice will not increase much this year, Charoen said.

Moreover, as Vietnam is expected to be hit only slightly by drought, rice trading in the world market will still face tough competition.

To reduce pressure on the price of Thai rice, the TREA suggested that the government gradually sell rice from its stocks soon in small lots so that Thailand could clear out its stockpile within two years.

Charoen said Thailand could negotiate with many countries for government-to-government (G2G) deals to sell rice from the stockpiles. About 4 million to 5 million tonnes of rice are expected to be released from the government’s warehouses this year.

Chookiat Ophaswongse, honorary president of the TREA, said there was still high demand for rice in many countries in Asia, mainly China, for about 4.5 million tonnes, and about 2 million tonnes each for the Philippines and Indonesia. Rice is also in demand in countries in the Middle East.

The government’s trade mission to Iran late this month should also open an opportunity for Thailand to sell about 300,000 tonnes of rice to that country under a G2G contract this year, he added.

However, some countries in Africa, mainly Nigeria, could lower imports of rice this year as the falling global oil price affects their purchasing power.

Normally, Nigeria is expected to import about 2 million to 3 million tonnes of rice a year. However, with its economy relying mainly on oil trading, the falling oil price could decrease its ability to import rice this year.

According to the US Department of Agriculture’s estimates, world rice trading is expected to increase slightly, by 0.3 per cent this year, from 41.95 million tonnes in 2015 to 42.1 million tonnes.

World rice production will decrease by 1.9 per cent from 478.19 million tonnes to 469.32 million tonnes, while demand will improve by only 0.5 per cent from 482 million tonnes to 484.64 million tonnes.

Because of drought, total rice stocks will decrease by 14.8 per cent from 103.74 million at the end of last year to 88.42 million tonnes at the end of this year, the first time in eight years that the world’s rice stockpiles have dropped lower than 100 million tonnes.

China will still be the world’s largest importer, buying about 4.7 million tonnes of rice this year from overseas, up by 4.4 per cent from 4.5 million tonnes last year.

Will Vietnam have to compete with Lao rice in China?

Vietnam has been warned that China will import rice from Laos instead of Vietnam, but many Vietnamese in the industry do not believe this will occur in the near future.

Rice HQ

Shenzhen officials on January 10 announced that the first consignment of rice imports from Laos, 87.8 tons, worth $746 million, passed quarantine procedures at the Shenzhen port in the southern part of China.

China, which has been mostly importing rice from Vietnam, Thailand and Pakistan, has added Laos to the list of rice suppliers.

Meanwhile, Vietnam has reported a decrease in rice exports. The General Statistics Office (GSO) showed that Vietnam had exported 6.07 million tons of rice by the end of November, worth $2.58 billion, a 7.4 percent decrease from the same period of 2014.

China remains the biggest export market for Vietnam, which consumed 33.4 percent of the total rice exports.

However, Nguyen Trung Kien from Ipsard, an institute on agriculture development, noted that Vietnam rice’s market share in China is on the decrease.

Sixty five percent of Chinese rice imports were from Vietnam in 2012-2013, while the figure dropped to 53 percent in 2014 and 47 percent in the first fourth months of 2015.

Experts say Vietnamese want to export to China because it is an easy-to-please market, which has high demand for rice. Meanwhile, China wants Vietnam’s rice because it is cheap thanks to geographical conditions.

However, Vietnam no longer has the advantage as its 25 percent and 5 percent broken rice prices are near prices offered by Thailand and India.

Therefore, experts have warned that Vietnam, in the future, would have to compete with a lot of rivals to penetrate the Chinese market.

They said the volume of rice from Laos and Cambodia remains modest, but the rice has higher quality than Vietnam’s and therefore, has a competitive edge in the Chinese market.
Minister of Planning and Investment Bui Quang Vinh warned that if Vietnam cannot reform the way it organizes production, processing and trading, Laos, Cambodia and Myanmar would become formidable rivals.

Nguyen Van Ngai from the HCM City Agriculture and Forestry Agriculture pointed out that while Vietnam has exploited nearly all the advantages it has, Laos and Cambodia still have great natural advantages.

Meanwhile, Vo Thanh Do from the Ministry of Agriculture and Rural Development said there was no need to be too worried about this.

Do said that China’s actual rice demand was much higher than 4 million tons that it had announced before. China would still need Vietnam’s rice, and this will not change in the short term.

India overtakes Thailand as world’s largest rice exporter

India has overtaken Thailand as the world’s largest rice exporter in 2015, shipping 10.23 million tonnes, a top Thai rice exporters body said on Wednesday. Thai Rice Exporters Association Chairman Charoen Laodhammatas said that Thailand exported 9.8 million tonnes of rice in 2015, down 10.8 percent year-on-year. He attributed the downturn to the global economy’s contraction, especially among countries with high rice demand, noting that the falling price of oil also impacted the buying power of such countries, National News Bureau Of Thailand reported. Thailand ended 2015 behind India for rice exports. India sold 10.23 million tonnes of rice. Vietnam was third globally while China remained the number one importer of rice.
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NFA may not import additional rice for Q1 of 2016

With figures from the Food Security Committee showing sufficient rice supply until the end of June, the National Food Authority (NFA) Council unanimously decided in its 106th regular meeting on Tuesday, 26 January, that the country may not need to import rice for the first quarter of this year.

The decision took into consideration the projected effects of El Niño.

NFA rice stock inventory currently stands at 944,500 MT, good for 29 days to last. It is 80 percent higher compared to stocks during the same period last year.

NFA is mandated to maintain rice stock inventory that is good for 30 days at the start of the lean month season, particularly in the month of July. Daily national rice consumption rate is at 31,000 MT.

The entire rice industry inventory, including household and commercial stocks, is also sufficient and good for 110 days to last.

Total rice importation contracted for this year is conservative at 500,000 MT thru a government-to-government procurement with Vietnam and Thailand. It was contracted last year, with arrivals scheduled this year, to get the lowest possible price.

The Council is composed of representatives from NFA, National Economic Development Authority (NEDA), Land Bank of the Philippines (LBP), Bangko Sentral ng Pilipinas (BSP), Development Bank of the Philippines (DBP), Department of Finance (DOF), Department of Trade and Industry (DTI), and is chaired by the Secretary of the Office of the Presidential Assistant for Food Security and Agricultural Modernization (OPAFSAM). (NFA)

Demand lifts Thai rice prices; Vietnam prices ease

Thai rice prices picked up this week on loading demand and ahead of an expected deal with Iran, while thin buying demand pushed Vietnamese prices down slightly, traders said on Wednesday.
Last week, rice prices in Vietnam, the world’s third-biggest exporter of the grain after India and Thailand, slipped below those offered in Thailand for the first time in three months.

Thai 5-percent broken rice jumped to $365-$372 a ton this week, free-on-board (FOB) Bangkok, from $355-$360 a week ago, while Vietnam’s 5-percent broken rice narrowed to $350-$355 a ton.

Thai rice prices rose on Monday and have been stable since after several ships arrived for loading under previous deals, a trader in Bangkok said.

Thailand plans to export 9 million tons of rice this year, down 8 percent from 2015 due to damages by a drought, Thai Rice Exporters’ Association honorary president Chookiat Opaswong said on Wednesday.

The annual forecast included 4.9 million tons of white rice, a fall of 6.8 percent from last year, given competition from Vietnam’s fresh winter-spring crop, Opaswong told reporters.

“Vietnam’s winter-spring crop will see about 3.5 million tons that can be exported,” he said. “That’s worrisome. That makes Vietnam our main competitor.”

Thailand plans to sell 300,000 tons of rice to Iran and will send a delegation to the Middle East nation for negotiations next week, he added.

Rice prices in Vietnam could drop further when harvesting peaks from late next month and in case Vietnam fails to secure any major deal with key buyers such as the Philippines and Indonesia, traders said.

The Philippines, one of the world’s top rice importers, could delay its planned additional purchase of up to 400,000 tons of the staple food as local supply remains adequate, the state grains stockpiler said on Wednesday.

“Buyers are waiting for prices to fall so they have yet to buy anything now,” a Vietnamese trader in Ho Chi Minh City said.

Harvesting of the winter-spring crop, Vietnam’s biggest among its three crops a year, will peak from late February.

Lower rice exports anticipated

The Thai Rice Exporters Association expects a decrease in the volume of rice exports this year.

Charoen Laothamatas, president of the association, said that the volume could fall to 9 million tonnes this year, a decrease of 8 per cent from last year. The exports are expected to generate US$4.3 billion, or $439 per tonne on average.

In 2015, export volume also dropped by 10.7 per cent to 9.8 million tonnes. In the year, Thailand was the world’s second largest rice exporter, following India which exported 10.23 million tonnes. Vietnam’s rice exports hit 6.6 million tonnes.