The secret behind the grand success of Pakistan in exporting rice despite the recent global recession is our diversified marketing approach. We have never depended on US and Europe as our leading trade partners in rice, rather our coverage has always been to Asia, Africa & Middle East. Secondly Pakistani nation is not primarily rice consuming nation, as our annual consumption is almost static since many years from 2.3 to 2.50 MMT. The staple food in Pakistan has always been Wheat, where we have attained record production of more than 24 MMT this year.
The driving force behind this tremendous leap is the privatisation of rice trade, way back in 1988, since then we have increased the country's rice exports from mere US $300 Million to $2200 Million last year, and this year we have crossed our set target of US $2.00 Billion, although the production quantum had fallen due to last year's floods but increase in unit value helped Pakistan to reach higher receipts.
The rice exports contributed about 11% of total Pakistan export receipts and also as such is the 2nd highest foreign exchange earner for the total external trade of our country. We have the heritage of Basmati in Punjab, one of the most fertile lands in the world, growing finest pure Basmati Rice varieties, namely Super Kernel Basmati Rice with Extra Grain Length exceeding 7 MM.
Then we have PK-385 Basmati Rice, having unique taste and aroma, beside Basmati 2000 with smaller production in quantum, Punjab also produces a course variety named as KS-282, equivalent of finest Thai Rice grade. Sind province accounts for 41% of total rice production in Pakistan, having world renowned Long Grain Rice of IRRI-6, IRRI-9, Pk-198 Basmati Rice, popularly in Persian Gulf known as D-98 Basmati Rice, and smaller quantities of Super Basmati is also grown in Sind at very smaller area.
In Pakistan we have two Rice Research Institutes, one in Punjab at Kala Shah Kaku and the other in Dhokri in Sind, both owned and run by the Government. An agriculture account for 21% of Pakistan's GDP and is the main source of livelihood for 66% of the country's population living in rural areas. Rice is Pakistan's second major food crop after wheat and contributes 5.5% to total value added in agriculture.
There has been 44% growth in milled rice production in the last 6 years; part of the reason for growth has been increased area being brought under rice cultivation since rice is a very high value cash crop especially the Basmati variety. Last year 3.5 million tones were exported from production of 5.6 million tones. The two main rice growing provinces in Pakistan are Punjab where Basmati is grown and Sindh where mostly IRRI variety is grown. Rice growing is fragmented and farmers do not have price setting power. At the same time, buying power is not concentrated either which means that market forces determine price levels.
Yield for Basmati however is quite low when compared to non-basmati varieties. There are some areas in northern Sindh contiguous to Punjab where Basmati is also being grown. Sialkot, Gujranwala, Lahore, Multan and Faisalabad are the main rice growing divisions in Punjab. Jacobabad, Larkana, Shikarpur and Kamber Shahdat Kot are the main rice growing divisions in Sindh. Basically Pakistan Rice has two different cultures; one is Basmati Rice which is in Punjab, and the Non Basmati Rice in Sind.
Before I elaborate both these market segments, it would be prudent to clarify the distinctive features which makes a total difference of culture within the country, however the ultimate outcome is production and selling of Rice, but both segments carry a different approach in attaining the values.
Punjab mainly being the Basmati growing area, which needs more hard work and efforts for sowing, plantation, taking care of more required water, harvesting, storage of paddy, husking, milling and then ageing, all these have made the people of Punjab more enthusiastic and tough effort makers, which has given them an extra reward and benefits in the shape of higher agriculture values of their produce. The higher value addition in farm sector has created larger re-investment opportunities in modernising agro industry in Punjab, and there exists a vast potential for a prospective investor in corporate farming and milling sector, with an aim to buy back the much needed produce at a stable price throughout the year, giving overseas consumer a smooth price of what they pay for consumption, nullifying the anticipatory demand of the international community, which has created a spiral price hike last year.
In a nutshell, Pakistan is heading for big rice trade expansion in the next five years, and we see crossing U S$5 Billion mark by the year 2014. Vision is there, potential exists, funds are lying, all we need a focus and attention of international players in commodities and a link to be uploaded with a ground for new ways of trade relations by offering a conducive environment with attractive and secured investment plans, whereby examples can be set for others to follow the path of joint collaboration.
Asia, Africa, Middle East are always Pakistan's leading rice trade partners, and we shall continue our concentration in these regions and my personal vision is to explore and tap each and every country, and every food outlet should have a Produce of Pakistan labelled Rice in shelves, and consumer demands for Pakistani Rice by name and brand.
This can only be achieved if Pakistani Exporter goes one step forward in establishing offices abroad and buyers come up with investment in industry through joint ventures for an increased production of rice and expanded foreign rice trade, with a natural phenomenon of adding value to the product through branding.
The flare for consumer with the exquisite taste of Basmati Rice has always tempted many investors to enter the field of esteemed agro industry of rice, but now all is so open in Pakistan economy that we don't see any hurdles and bottlenecks in promotion of investment climate through disciplined long term foreign investors.
Pakistan alone is 2.5 MMT consumption market, this gives us an ample opportunity to explore the heights of volumes left for exports, and at the same time, the size of 2.5 MMT consumers also provides a big market locally as well. International companies can also penetrate through local sales and distribution.