NEW DELHI, 11March: Global rice prices may stabilise around the current levels as any further rally could force consumers to look for alternatives, a leading Pakistani rice exporter told Dow Jones Newswires late Tuesday.

“Rice prices have been on a bull run for the past six months. I don’t see any scope for a further rise in prices,” said Abdul Rahim Janoo, a member of Pakistan’s state-run Federal Export Board and owner of the Karachi-based Hina Exports.

He also cited a strong perception in the market that India will resume rice exports in the next few months, a move that would increase supplies and limit the scope for any further increases in prices.

Mr Janoo also said a fall in prices seems very unlikely, as global demand for rice still exceeds supply by seven percent to eight percent. Illustrating the extent of the rally in prices over the last six months, Mr Janoo said 25 percent broken rice is selling at $270 a metric ton, free on board, up from $185/ton in early November.

“Africa is a key demand driver for rice and Pakistan exports a lot to that continent, especially to East Africa,” Mr Janoo said.

Another big factor aiding the rally in global prices of rice is the absence of India from the export market since last August, he said. “Indian exporters stopped competing for fresh export bids since August, which helped the other major exporters such as Pakistan, Thailand and Vietnam increase their share of world exports,” said Mr Janoo.

The Indian government stopped selling rice to exporters Aug. 1, after stocks in state granaries dipped below the mandated minimum requirement. The move led to a virtual halt to Indian rice exports.

Recently, India started allowing exporters to procure rice directly from farmers. The country has been a major rice exporter for the last three years, exporting an average of 5 million-6 million tons every year. But the country’s rice exports for the current financial year ending March 31, 2004, are estimated much lower, around four million tons.

Pakistani rice competitive in the global market: Mr Janoo said Pakistani rice is competitive compared with Thai and Vietnamese rice. “Pakistani rice is cheaper than most Vietnam sorts, while we are at par with Thai rice.”

Mr Janoo said Pakistan was a consistent rice exporter over the past few years because of low domestic demand.

“Pakistanis don’t eat much rice, preferring traditional breads made of wheat flour. This enables the country to keep exporting rice without worrying about domestic supplies.”

Pakistan is expected to export two million tons rice in the current financial year ending June 30, 2004, up from 1.7 million tons last year, he said.

The country is estimated to produce 4.9 million tons of rice this financial year, compared with 4.3 million tons last financial year.

He added that in the next financial year, Pakistan may import 500,000 tons of rice from India and then re-export it.

“Pakistani traders may import rice from India in August for meeting their existing export obligations, as Pakistan may not have much rice left to export at that time of the year,” said Mr Janoo.

However, while Pakistan’s coarse rice exports are thriving, the country is faced with a crisis in the export of aromatic, brown rice, called basmati, to Europe. Basmati is grown only in India and Pakistan. The European Union, a major importer of basmati rice, will withdraw import duty concessions on hybrid basmati rice from March 31. The EU will only offer duty concessions to exporters offering traditional basmati rice.

Pakistan exports a number of hybrid basmati varieties to Europe, along with a few varieties of traditional basmati rice.

“The EU will impose an import duty of 264 euros a ton on hybrid basmati rice, instead of the current 14 euros/ton duty from March 31 which would make Pakistani basmati quite expensive in Europe,” said Mr Janoo.

Mr Janoo said Pakistani rice exporters want to join hands with Indian exporters, who will also be hit by the EU move, to lobby against withdrawal of the current duty concession. Middle Eastern countries are the biggest buyers of Indian and Pakistani basmati rice, with Europe being a close number two.

Daily Times