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October 15, 2020

Rice exporters slam abrupt freight rate hike

Business

October 15, 2020

LAHORE: Rice exporters on Wednesday urged the government to operate low-cost shipping service en-route to China, a major consumer of Pakistani rice, as high fright charges by private companies made it challenging and costly for them to meet export orders this year.

Rice exporters have made deals with Chinese buyers on good rates, which need to be completed during October to December.

“However, shipping companies suddenly increased container charges by almost three times,” said a spokesman of the Rice Exporters Association of Pakistan (Reap).

Exporters demanded of the government to operate ships of Pakistan National Shipping Corporation on China route as they face abnormally high freight rates and shortage of containers.

Amid some progress in rice export, traders said high cost of shipping consignments and non-availability of containers are posing a serious challenge to the outbound shipments.

“Abrupt and steep rise in freight cost and non-availability of containers create an uncertain and risky environment, which will make it hard for exporters to meet delivery commitments of foreign buyers,” said the spokesman.

Rice exports grew 5.1 percent during the last fiscal year of 2019/20. About 4.2 million tons of rice worth $2.2 billion was exported during the year, according to the data of Pakistan Bureau of Statistics.

The country earned $791 million by exporting about 890,207 tons of basmati rice as against exports of 659,571 tons valuing $635 million a year earlier. Besides, 3.3 million tons of non-basmati rice worth $1.4 billion was also exported during the last fiscal year as against the exports of 3.5 tons valuing $1.4 billion.

“Exporters will not be able to compete in international markets and as they are afraid of cancellation of export orders, which ultimately result in loss of huge foreign exchange to our country,” said the Reap spokesman.

The association asked the minister for maritime affairs in particular and government in general to take notice and intervene in the matter and play their vital role for the relief of rice export sector, which is the second largest source of foreign exchange earner.

The spokesperson said the Pakistan National Shipping Corporation should operate ships on Chinese route to enable “us to finalise shipments on time”.

An upswing in rice exports have been seen in recent years due to multiple factors. And most importantly, this trend is likely to continue in near future at least. Demand of Pakistani coarse and fine rice varieties have particularly sown upward trend from regional countries like China, Iran and Sri Lanka lately.

Sri Lanka’s cabinet of ministers recently approved a proposal to import 6,000 tons of basmati rice annually under the provision of the Pakistan-Sri Lanka free trade agreement.

Reap said the government should also explore other opportunities, including growth in demand in Iran.