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Analysis of Rice IndustryResearch Report


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Analysis of Rice Industry

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ACKNOWLEDGEMET

The report is prepared by AMMAR, MUSSADIQ AND NAZIR. The entire research

conducted under the guidance ofMADAM QUARATULAIN KAZMI. We have take our

data from the internet and then interpreted in to own words.

Executive Summary

In this project we have collected the data the data of rice industry and its contribution inthe Economy of the PAKISTAN. One of the important crops of Pakistan is rice. Annuallyits production is about 3 million tons per year. This is recorded that as the highestforeign exchange earner of Pakistan. And it contributed almost 20% of the total foreignexchange of the Pakistan. Pakistan is the third biggest rice in the world after Thailand

and the USA .About 40% of total production of rice procured for the export and rest isconsumed id local market. It is for this reason that the Government of Pakistan, throughthe rice export corporation of Pakistan LTD. (RECP), has completed an extensivequality assessment of exportable varieties of rice to keep up its status and distinction inthe world market.

Introduction

Rice is the most widely consumed staple food at the global level and is an excellent

source of compound carbohydrates. Pakistan is 4th largest exporter and 11th largest riceproducer on the world. About 5 million acres of Pakistan is covered by the rice and itproduce almost 6.22 million tons per year. After cotton largest foreign exchange earner,rice is the second largest foreign exchange for the Pakistan. About 1.461 million tons isproduces in the province of sindh from an area of 0.544 million hectors with an averageof 2.686 tons rice per hector. In sindh rice is cultivated in Larkana , Shikarpur , Dadu ,Badin . Thatta and Jacobadad etc.In this year Punjab has produce about 19 milliontons. And rice is cultivated almost every area of the Punjab.


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Introduction & History Of Rice Companies:

Alfarid Corporation Limited (AFCL)

http://www.alfarid.org/about.html

Established as a trading agency in 1972 in Karachi, Pakistan, Alfarid Corporation

currently holds a premier and reputable position in promoting the agro produces of

Pakistan. Through our established relationships, vast resources and continued

dedication to set the industry standard, AFC is positioned to remain a leader in the

commercial exports of rice, spices, medicinal herbs, dried fruits, seeds, crude drugs,

botanical plants and various other agro-based products of Pakistan. Nonetheless,

importing medicinal herbs to support the inland requirements of the pharmaceutical and

the beverage industries also falls within the Companys profile.

At Alfarid, our pledge to excellence is unparalleled and our commitment to continually

exceed the expectations of our partners, clients, suppliers and employees is

unwavering. Our management is persistent with respect to the deals it undertakes and

gives every trading partner the individual attention required to build a successful trading

relationship. With over three decades of experience, we are confident that your

company will find Alfarid Corporation to be an ideal match for your operations supply

needs.

BAHOO RICE (BRM)

http://www.bahooricemills.com/

Bahoo Rice Mills (BRM), one of the leading Basmati Rice exporters of Pakistan, hasgrown into an organization which is recognized for its remarkable performance andsupply of high quality rice to the customers. What sets us apart from othermanufacturers is our emphasis on building strong relationship with our customers andtargeting our efforts around the customer need.

Bahoo Rice Mills brings you Basmati Rice from the lush green and water filled fields of(Punjab) Pakistan, which are best suited to grow pure and genuine Basmati Ricebecause the company believes in bringing premium quality rice for its customers. Ouraromatic rice includes Super White Basmati Rice and Parboiled Super Basmati Rice.


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We are serving international customers and exporting premium quality white Basmatiand Parboiled rice to European and Middle East countries.

AL FAIZAN

http://www.rice.pk/

AFC is the company designed to supply Best quality rice from Pakistan to the Rice

importers, distributors, and retailers around the world. AFC offers a selected range of

Basmati and non-Basmati rice varieties to create trust between rice vendors and their

customers, enabling businesses to sell more sustainable rice, more profitably. AFCjoinsbusiness with leading rice importers of the world.

Extremely delicate raw materials are processed in the Al-Faizan rice processing mill,

therefore the processes used are technologically very advanced, and their personnel

highly specialised. These are indispensable conditions to ensure that the quality of the

rice that come from AFC is of the highest level

Barkat Rice Mills

Barkat Rice Mills is a project of FSL Group of companies, a premier group involved inbusiness since 1913. The company is one of the leading exporters of Super BasmatiRice in Pakistan, because prime importance is given to quality as "Quality is our motto".Barkat Rice Mills is awarded the following Quality, Environmental and Food SafetyManagement Systems. Barkat Rice Mills is a Limited Company incorporated in the year1999 under Pakistan Companies Ordinance 198.Pak Rice Village

Our state of the art manufacturing plant is located at Karachi often referred to as the ricebowl of Karachi is known worldwide as high quality basmati rice producers and Indianrice exporters. The plant has the latest & most sophisticat machines incorporating worldclass technology for the production, inspection, quality control, storage & transportationof basmati rice. At present we have production capacity of 4 tonnes per hour i.e. 100tones per day of high quality basmati rice.


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Hassan Ali Rice Export Company

Hassan Ali Rice Export Company is an affiliate of Hashwani Group Of Companies,which is one the leading and oldest business houses in Pakistan with interacts in miningcommodities, real estate, agriculture, textiles, and industrial mining of chrome ore, iron

ore, marble, and onyx.

The Company has been in the Rice business since late 1960's and has remained one ofthe largest Rice exporter from the country shipping upto Four hundred and Fiftythousand (450,000) M. Tons annually.

RiceVareies

although there are more than 4000 varieties of rice that are growing every year, the

most famous varieties of Basmati & non-basmati rice in Pakistan are:

Types of Pakistani Basmati Rice:

1. Super Kernel Basmati.

2. PK-385 Basmati.

3. PK-198 or D-98 Basmati.

Basmati rice is highly valued for its unique characteristics such as its aroma, flavor, andlong-grained quality. It gains many of its special distinctive qualities due to a complexcombination of factors including its inherent genetic characteristics, the environmentalconditions specific to the soil, climate in the foothills of the Himalayas and the sowingpractices that farmers developed over the centuries. Consequently, there has beenlimited success in the efforts to cultivate Basmati rice outside of South Asia because ofthe need for many geographically specific conditions. Sub continent has the best soil forcultivation of Basmati rice. Fortunately the premium quality of rice i.e. Basmati ricecultivate only in Pakistan and India.

Types of Pakistani Non-basmati Rice:

1. Long Grain Rice PK-386

2. Long Grain Rice Irri-9

3. Long Grain Rice Irri-6


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4. These kind of rice is having excellent source of fiber, niacin, vitamin B6,

magnesium and thiamin. Globally it is popular for its fine quality and reasonable

price. In order to categorize the best non-basmati rice, it is essential to notice the

thin shape and sharp edges of rice it is not only demanded for its size but also forits taste.

Brown Rice

All of the above given varieties can be supplied in there brown form means the rice has

been husked, graded, cleaned, sorted but not gone through the polisher. This kind of

rice is hard to cook but has more vitamins than the white rice because of having 8%

bran layers on the top. It remains short after cooking, the outer bran layers of rice do not

allow it to elongates compare to white form of rice does.

Parboil Rice

It is easy to cook and can be made in any variety Basmati, non-basmati or long grain.

It is an ancient way to boil the paddy to obtain parboil rice. Parboil rice color is likegolden because during the paddy boiling, rice absorbs the husk color.

White Rice

It is defined as that form of rice whose husk and bran have been removed completely

during the milling process. Because the white rice undergoes this process, it is also

known as polished rice.


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SWOT ANALYSIS:

Strength :

Most Important Crop Grown

Since rice is a staple of diets for large populations of people, it creates long-term

demand for the products associated with rice, include rice itself. High demand will

increase the price of the commodity over time. Important crops have few substitutes,

therefore, any supply of demand changes will immediate change the price of the

commodity. This is a strength for the commodity, because suppliers need to be quickly

and accurately compensated for demand of the product.

Large supply

"Second highest worldwide production after maize ("corn").The rice is cultivated in the

many countries of the world.So there is large number of suppler in the global market

those produce in large quality and sell it the lesser price as compare to the Pakistan.but

as there is increasing in the demand the rice pirces are also increasing.

Weakness

Unproductive Technology

In the Pakistan there is less productive per acer of rice.The farmer are not educated

there force they are still using the old machine and fertilizer for the cultivation as

compare to other countries there productive is much more then Pakistan.

Top Two Producers Consume The Most

"China and India are the top two largest producers of rice in the world. Both countries


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Consume the majority of the rice produced domestically leaving little to be traded

internationally."These both countries produce the much more rice then the Pakistan and

as these are bigger countries then Pakistan. The demand of the rice is more. In the

world the demand of rice is increasing day by day and these countries are largestproducers of rice in the world as well largest consumer of the rice in the world.

Opportunities

World's Population Increasing

"At the moment, the world's population is 6.7 billion and 750m people are born each

year. Though the rate of increase is declining, inertia means the total will go on rising

until 2050, when Ethiopia, for example, 18m children are born every year, rising to 24m

a year by 2040. That wills double its population by 80m to 160m."

Orangic Farming

Organic farming is rising in popularity among consumers who are willing to pay a little

extra money for these types of crops. Although its more costly to grow organic crops,

they are sold at higher prices, which provides a net benefit in profits.

Asian Cuisine Influence

Asian restaurant and food are gaining popularity in other parts of the world. Asian

recipes rely heavily on rice as their stable ingredient. As Asian food becomes more

popular, the demand for rice will also increase.

New Diet Studies Being Produced:

If rice is more nutritious than previously expected, demand for rice will increase as

people substitute to rice from other foods.

Threats:


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Global Warming Threat:

Global warming holds a threat to crop production making agriculture unsuitable in someparts of the planet. If supplies lessen and the demand stays the same price willincrease.

Farming Cost Increased

The cost of harvesting crops has been rising over time. This will allow for prices toincrease gaining profitability.

Plant Disease:

Plants are strain to diseases, which slow down production rates. Diseases have alasting effect on production of many types of food and plants. Diseases spread quicklyin dense production conditions. This will cause the density of production to decreaseand the demand for other growth regions to increase. Spreading out production is lessefficient; therefore, the growth of diseases is harmful.

CURRENT SITUATION OF RICE INDUSTRY

November marks the end of crop harvesting activities in Pakistan, and the productionoutlook for the country remains positive, as rice production is expected to expand to 9.4million tons paddy or 6.3 million tons milled rice.

According to the monitor, the anticipated growth is expected to rely mostly on anexpanded area, as farmers switched to cultivation of rice from other crops.

However, limited water availability for irrigation, due to a slow melting of glaciers,

followed by precipitation shortfalls for much of July, slowed the progress of plantingactivities in Sindh, Punjab and Baluchistan, observes the FAO rice monitor.

An upturn of monsoon rains in August provided much relief, although ensuring floodsare also estimated to have damaged nearly 400,000 tones of paddy, mostly in Sindhand Balochistan, the report estimates.


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The Rice Monitor forecast that rice shipments from the country may increase and agood crop and competitive pricing may enable exports by Pakistan to recover by 10 percent to 3.3 million tones in 2013.

However in 2012, the export outlook has deteriorated further in Pakistan, which is now

expected to deliver 3.0 million tones, 300,000 tones less than the previously reportedand 2 percent below 2011 consignments. Much of the retrenchment reflects a poorperformance in the Basmati rice segment, where the country has faced intensecompetition from India, particularly in Near Eastern markets.

The industry in Pakistan has also attributed loss of competitiveness to tighteravailabilities of fragrant rice supplies, brought about by producers shift towardscultivation of hybrid rice.

FAO has upgraded its July forecast of paddy production in Asia by 3.1 million tons to660.6 million tons (440.6 million tones, milled basis). Much of the revision reflects an

improved outlook for India, where a revival of the rains on the latter part of the monsoonseason boosted production prospects. At 660.6 million tons (440.6 million tones, milledbasis), 2012 production in Asia would top the 2011 record outcome by 5.0 million tones.

Increasing rice production in Asia means that the region that consumes the most ricewill not need to import so much of it. FAO forecasts that global rice trade in 2013 willreach 37.5 million tonnes (milled basis), marginally above the estimate for 2012, whichwas recently raised by more than 3 million tons to 37.3 million tons (milled), 2 percentmore than in 2011 and an all-time record.

CONTRIBUTION OF RICE IN PAK ECONOMY

Pakistan has tremendous capacity to expand rice production but if proper measures aretake the total output can be increased drastically and the assets contribution ineconomy will reach the $ 4 billion mark, which currently stands at about $ 1 billion.

Rice has the potential to become a high value asset for Pakistans economy but nothinghas been done to increase production. Production ranges between two to 2.6 milliontons, while we export around one million tons.

Due to negligence the production capacity hasnt increased in last few years, in fact ifthe trend continues the output may eventually start falling. TheFarmer interest in cultivation is also low as prices have remained stagnant since 2008and a downward trend is expected in 2012-13.

The downfall in production is because of lack of research and innovation. Referring tothe only available variety in extra-long grain super basmati, which was introduced in


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1996,since then No new high-yielding, extra-long grain variety has been introduced bypublic sector institutions.

Pakistan is one of the largest producers of rice in the world. The country is the thirdbiggest exporter of rice, to western countries. The Basmati rice of Pakistan is of the

finest quality that is produced but the country is not utilizing its full capacity at present.

India in comparison with Pakistan has seen their exports increased considerably. Thereason behind Indias success, he said, India has been able to produce Basmati inareas that are categorized as non-Basmati areas. Four per cent of Indias total

Basmati production is carried out in Punjab while the rest is grown in areas that are notnaturally conducive for Basmati production.

ANALYSIS OF INDUSTRY.

The above table shows that the quantity of rice decreased to 2.7 million MT in financialyear 2008-09 from 2.9 million MT in 2007-08 showing a decrease 79,788 metric tons.On the other hand, the export value increased to US$ 1983 million in financial year2008-09 from US$ 1836 million in 2007-08. The Average Unit Price per Metric tonincreased to US$ 726.63 in 2008-09 from US$ 653.60.

The quantity of basmati rice decreased to 0.974 million MT in financial year2008-09

from 1.138 million MT in 2007-08 showing a decrease of 163,819 metric tons. Theexport value of basmati rice increased to US$ 1070 million in year 2008-09 from US$1068 million in 2007-08. The Average Unit Price per Metric ton of basmati riceincreased from US$ 939 to US$ 1098.The quantity of rice (other varieties) increasedfrom 1.67 million MT in 2007-08to 1.755 million MT in 2008-09 showing an increase by84,031 metric tons. The export value of rice (other varieties) witnessed an increase toUS$ 912 million in 2008-09 from US$ 767 million in 2007-08.The Average Unit Price perMetric ton also showed an increase from US$ 459 to US$ 520.

Recommendation

Rice crop is of great economic importance for Pakistan, as it is second staple food afterwheat, and is second to cotton as foreign exchange earner In 1997-98, Pakistanexported rice worth over US$550 million and there is a great potential of increasingforeign exchange earnings badly needed for the country Necessarily, all-out efforts


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should be made to increase the export to $700 million and first then to one billion. It isnot difficult to achieve these targets provided we increase per acre yield and improvethe quality of exportable rice.

Rice crop is of great economic importance for Pakistan, as it is second staple food afterwheat, and is second to cotton as foreign exchange earner In 1997-98, Pakistan

exported rice worth over US$550 million and there is a great potential of increasing

foreign exchange earnings badly needed for the country Necessarily, all-out efforts

should be made to increase the export to $700 million and first then to one billion. It is

not difficult to achieve these targets provided we increase per acre yield and improve

the quality of exportable rice. To improve the quality and sale at high price per unit, the

Government has made some structural and administrative changes in monitoring the

purity of exportable rice. These changes involve analysis of rice of different varieties by

the Rice Exporters Association of Pakistan (REACP) and fixing the minimum export

price. The REAP has proved its performance by checking the quality of brown riceexported to Europe in 1996-97. The confidence of rice importers in quality of Pakistani

rice is gradually building up and exports are steadily increasing.

In the last 50 years, Pakistan achieved phenomenal increase in rice production. In

1947, the area under rice in Pakistan was around 8, 56,000 hectares which in 1998

reached or 2.4 million hectares. The rice production during this period increased from

737,000 to 4.6 million tone. Thus area increased by 3 times, but the production

increased by 6 times. Although, increased area contributed to increased production but

significant increase in per acre yield was brought about by the development of high

yielding varieties, improved agronomic practices supported with fertilizers and plant

protection measures.To improve further the per acre yield and overall rice production, some suggestions are

given below:

1. Reclamation of Saline Alkaline Soils: Pakistan is located in semi-arid region where

the evaporation of subsoil water brings up the salts to the soil surface. Therefore

rescuing the soils from the ill-effects of salts remain a continuous process and the

already salt-ridden areas need special reclamation measures by using good quality

irrigation water and soil amendments such as gypsum and sulfuric acid. The

government help is solicited in making available the gypsum at cheaper price affordable

by the growers.

2. Shortage of Irrigation Water: Satisfactory yields cannot be obtained without assuredwater supply throughout the rice season. Our canal supplies depend on rains. The

farmers sow rice nurseries in time but for land preparation they have to wait for man

soon rains which are erratic with regard to amount, time and distribution The optimum

age for sowing nurseries is 30-40 days, but as the nursery gets older the tillering

capacity of plant is badly affected and the result is a serious decline in per acre yields.

The alternate source of irrigation water is tubewells. Along with the adequate supply of

irrigation water the quality of water is no less important. The Soil Fertility Wing of


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the Agriculture Department Punjab made a survey of the tube wells and analyzed the

quality of water. The report showed that the water of 1/3 of the tube wells is quite unfit

for irrigation, 1/3 have partially fit water (can be used by mixing with canal water) and

only the remaining 1/3 have water fit for irrigation. These results prove the at about 2/3

tube wells are continuously adding salts to soils. Once can imagine the catastrophic

effect on field productivity where such faulty water are used on the already salt affectedsoils. This is one of the main reasons that now our yields are almost stationery.

3. Plant Population: Low plant population is a chronic problem. The Agri. Department

recommenced 80,000 plants per acre, but the actual population hardly reaches or

50,000-55,000. This low plant population is due to harsh weather. At the time of

transplanting the ambient temperature is over 40[degrees]C. On account of high

temperature, the field-water temperature also goes higher. In this situation the laborers

are sandwiched between the high temperature on their head and hot water under their

feet. In these circumstances it is virtually impossible to expect from laborers to

comfortably accomplish the transplanting operation and achieve the recommended

plant population Lot of work has already been done in successful demonstration ofJapanese rice translators. On an average, a 30 per cent increase in per acre yield has

been obtained with machine-planted crop in comparison with the manual transplanted

crop. Similarly, Japanese combine harvester have proved their superiority in harvesting

rice crop in muddy fields. The machines performed equally well in harvesting/threshing

of wheat crop in our rice-wheat cropping pattern, such dual purpose machines can play

a significant role in rice economy. The harvested paddy is broken-free and is of high

quality, which in turn gives high milling recovery and good quality rice for exports. A

saving of 8-10 per cent paddy generally lost with manual harvesting/threshing is also a

big advantage both for the growers and the country.

4. Development of New Rice Varieties: We are growing long grain basmati varieties (Av.Grain length 6.5mm) and the extra long grain basmati varieties (Av. Grain length 7.0

mm). In the long grain group, the dominant variety is basmati-385, and in the extra-long

grain group is Super Basmati. The rice of Super Basmati fetches higher price in the

local and export markets and is competing with the extra-long grain rice exported by

other countries. In the local and foreign countries there is a demand of both the groups

of rice. The long grain rice sells at price lower than the extra long grain rice and suit the

pockets of a large number of consumers. We should therefore, continue working on

developing better varieties in both the groups. In the medium grain group, a variety

IRRI-9 (NIAB-6) is cultivated. We should redouble our efforts to develop in this group a

chalky-free variety which will fetch better price in the international markets.5. Milling: The export quality of rice cannot be obtained with the old Sheller types.

Efforts should be made to modernize these sellers. More modern mills should be

installed to produce high quality rice for export. The Government help by way of

abolishing the custom duties etc. will definitely expedite the installation of modern mills.


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1. Conclusion

Rice production in Pakistan exceeds 6 million tons annually, out of which around 40%is consumed domestically while the rest is exported. Rice is a staple food for thePakistani people, and stands at number two after wheat in consumption. Pakistanproduces one of the best varieties of the grain in the world. The strain is known as

basmati rice, and it is cultivated in Punjab.

Sadly, traditional and outdated post-harvest practices have resulted in substantiallosses in the output and quality of basmatiaffecting the value of produce and farmersprofit margins.

A majority of consumers usually buy unbranded rice. Given unhealthy market practices,more efforts are made, therefore, in mixing varieties to lower the net price of the foodthan in transforming the value chain to ensure good quality at a lower price. This hurtsthe market for this variety of rice.

A majority of rice millers and producers are export-oriented, as they obtain far bettermargins from abroad. Only a few companies have brought branded rice to the domestic

market in a sustained manner. Matco Rice Processing sells basmati under the brand ofFalak; we have Guard basmati, by Guard Rice; and the Mughal basmati brand fromGaribsons.

These brands, which have cemented their presence in the domestic market over theyears, have, however, not been growing at a healthy pace. It is certainly a bitter fact toconsider that branded rice holds a mere 2.1% share in total rice consumption in thecountry.

It would be productive to ask why the branded rice industry has not been able to createa space for itself, as the branded tea and oil sector has. In this regard, a few thingscome to light.

None of the companies have actually built brands, to the extent that they enjoy distinctrecognition and market share in the domestic market, and for which consumers wouldbe willing to pay a premium. In this context, unbranded rice is sold at much cheaperrates in the local market, which knocks out demand for branded rice even before it is puton the shelves.

Furthermore, rice marketers distribution network is still at an immature state, leading toirregular supply. Meanwhile, companies compete on prices rather than building a namebased on the quality of their product. This erodes margins and hurts customer loyaltytowards brands that are already present in the market.

Dr Tariq Ghori, who is the marketing director at Matco, accepts these shortcomings.

The rice industry has a huge potential for branded products to penetrate and grow, butso far we have not been able to fully tap this potential, he says.

It remains to be seen if the situation will be remedied by an enterprising entrepreneur.


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