MOHAMMAD YAWAR IRFAN KHAN
Pakistan is one of the best basmati rice producers of the world yet it has failed to capture the big markets. During the last decade or so, Pakistan has shown regression in every progressing rice market as the overall rice market grew, but Pakistan has been staggering with uncertain ups and downs while the Indian Basmati rice has achieved a tangible growth.
The Indian product is in greater demand than the Pakistani one because the former has established its goodwill and reliability in the market. On the whole, this scenario demands focus on Pakistani performance in the global market.
Initially, the Rice Export Corporation of Pakistan (RECP) has been exporting rice of all varieties in bulk quantities. The private sector was a late entrant in rice exports. The RECP followed a specific strategy for export of rice to the Gulf. During the 80s it started appointing sole agents and distributors.
This was the start of the downfall of Pakistani position in the market. These Pakistani agents remained interested in maximising their own profits, who imported rice in bulk and controlled the supply to create more demand and increase in price. In such a scenario, the importers and buyers were forced to turn towards India. This was the time when India adopted targeted marketing of the product and Pakistani rice was left behind.
Once the role of the RECP fizzled out and the private sector was allowed to export the product then every registered exporter thought it very easy to export rice from the country. Unscrupulous exporters played havoc with the market. They cut the feet of their own Pakistani brethren. If one Pakistani exporter was supplying Basmati rice at the rate of $600 per tonne, the other offered it at a much lesser price. They entered into contracts for one type of rice and supplied the other one or wriggled out of the contractual obligations. Both the importers and consumers, therefore, lost their trust in the Pakistani exporters.
The fact is that Pakistan has been losing Basmati market except with small fluctuations, to India and in most of the Middle East markets, it is still giving up to India which hardly mattered in any counting during the 70s. India entered in the market with aggressive marketing strategies and grabbed the Pakistani Basmati market.
The Pakistan Government and exporters realised the need to take measures to salvage the situation. Hence, the Rice Exporters Association of Pakistan was formed years back and assigned the task to stem the downfall of rice export. Similarly, Bench Mark System was introduced to check outflow of inferior rice to the world market. The measures showed some positive impact, yet more aggressive strategy needs to be applied in a bid to make Pakistan competitive in the world market.
The urgently required steps include: Branding and packaging: There were few brands of Pakistani Basmati. What immediately requires is that Pakistan should create a large variety of distinctive value-added brands of rice as is the case with India.
According to unconfirmed market intelligence, a certain quantity of Pakistani Basmati rice is being imported in the UAE and is being repacked over there under the Indian brand names, which subsequently is marketed accordingly. There does exist a possibility that inferior quality Indian rice is being marketed as Pakistani rice, and the prime quality Pakistani rice is retailed as an Indian product.
This all is being done clandestinely. Such practices can only be eliminated if Pakistan realised the need for branding and packaging. Rather it would not be a bad idea if Pakistan clamps a ban on export of basmati rice without proper branding and packaging. The REAP is the best forum that can educate its members in this regard. Moreover, the proper branding and packaging of rice would also help the rice exporters meet challenges of the fast approaching WTO regime.
The quality-related benchmark measures for export of rice from Pakistan has definitely produced results but it will take time. The Government of Pakistan should widely publicise and propagate for information of the importers as well as consumers of rice. This will improve the dwindling of Pakistani export image and may stem the declining tend in exports, particularly exports of rice.
Aggressive marketing: The essence of Pakistani failure in this market is the outcome of bad marketing. This drawback needs to be seriously curbed. Marketing and aggressive marketing is the call of the moment. Unless Pakistani exporters run after the importers to sell their products they will not be able to make any breakthrough. This has extensively been pointed out as to how rival Indian importers have been operating in this market. Utmost efforts are required to build up the lost credibility in the market. The Indian exporters are cashing in on their credibility and fetching extra premium of their goodwill in the market. This image-rebuilding can be geared up by the leading exporters of rice.
Research and development: The sector and product specific research and development has proved instrumental in every successful model of economy. The need for extensive research, has been felt here in Pakistan as well. Hence, the REAP must initiate preparation of market intelligence report and should extensively monitor world market. The market behaviour/commercial intelligence would lend support to conclude about consumption of rice in the Middle East or Europe and continuous vigilance would determine the future trends towards the demand and consumption of rice. The consumption of white Basmati, which occupies a prime position in Pakistan, shall remain relegated to a marginal consumption. There is strong need to develop a large variety of brands, which should be introduced in the international markets by the Pakistani exporters.
The following steps are warranted on war footings: Production of that type of rice which is required by the consumers.
b) (i)Understanding the buyer’s psyche to finalise business deals.
ii) Confidence-building measures by strict adherence to the contractual obligations.
iii) Increased interaction with the business partners.
iv) No exports without proper branding and packaging
v) No compromise on price and quality, come what may.
vi) Targeted monitoring of the market for taking timely decisions enhance the sales quantum up to $1 billion.