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  • Nov 5th, 2017
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Pakistan has not yet established banking channels with Iran for formal trade due to which exporters use third party or informal ways to export their goods. Background interviews with rice exporters reveal that Pakistani rice is being exported through informal channels (smuggling) at the border or via Dubai where Iranian companies purchase rice and dispatch it to Iran by using small ferries.

Shahjahan Malik, Member Managing Committee, Rice Exporters Association of Pakistan (REAP) told Business Recorder that rice exports have posted a 32 percent growth during the first quarter of current fiscal year in terms of quantity and value. In reply to a question, he said Pakistan Central Bank has not yet established channels with Iranian Central Bank because of US restrictions. "Pakistan may not start trade with Iran through banking channels due to US pressure," he added.

He said that most of the rice is being exported through Dubai. However, one Dubai-based Iranian party namely Mohsin has defaulted with a number of Pakistani parties which is why Iranian purchases are much less compared to previous years. Another rice exporter told this correspondent that Mohsin has left Dubai after the default. Pakistan's key rice buyers of Basmati are Gulf States and Europe. Shahjahan Malik further revealed that the European Union (EU) has further increased the limits on the use of pesticide (pesticide namely tricyclazole) which is found in substantial quantities in Indian rice. After the new pesticide limits are implemented from January next year, export of Indian Basmati will decline which will certainly be beneficial for Pakistani Basmati exports.

Samee Ullah Naeem, Chairman Managing Committee REAP said that Pakistan is facing three issue key issues in rice production and export: high cost of production as compared to neighbouring countries, low yield vis-à-vis India and artificially locked currency value.

Rice exports from the country during the first three months of the current financial year grew by 31.91 percent as compared to exports of the corresponding period of last year.

During the period from July-September, 2017-18 around 621,094 metric tons of rice was exported worth $ 320.242 million as compared to 482,445 metric tons of an estimated value of $ 242.694 million in the same period last year. Meanwhile, exports of "Basmati "rice grew by 2.43 percent and reached 86,672 tons valued at $ 90.31 million in the last three months of the current fiscal year against 92,321 metric tons worth $ 88.772 million tons in the same period last year.

In the first quarter of current financial year, about 534,442 metric tons of rice other then basmati worth $ 299.321 million was exported against exports of 390,124 metric tons valued at $ 153,922 million in the same period last year. REAP has urged the government to declare rice as an industry and to extend similar incentives that are being given to other export industries of the country.

A senior official of Commerce Ministry told BR that October 2017 is the first after many months when not only Pakistan's exports continued to rise but imports have also gone down. "The monthly trade deficit for October is expected to be within manageable limits. This is what is evident from initial data for October which will be confirmed next week," he continued.

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