Analysis of Rice Industry

Research Report

Analysis of Rice Industry

ACKNOWLEDGEMET The report is prepared by AMMAR, MUSSADIQ AND NAZIR. The entire research conducted under the guidance of MADAM 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 in the Economy of the PAKISTAN. One of the important crops of Pakistan is rice. Annually its production is about 3 million tons per year. This is recorded that as the highest foreign exchange earner of Pakistan. And it contributed almost 20% of the total foreign exchange 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 is consumed id local market. It is for this reason that the Government of Pakistan, through the rice export corporation of Pakistan LTD. (RECP), has completed an extensive quality assessment of exportable varieties of rice to keep up its status and distinction in the 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 rice producer on the world. About 5 million acres of Pakistan is covered by the rice and it produce 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 is produces in the province of sindh from an area of 0.544 million hectors with an average of 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 million tons. And rice is cultivated almost every area of the Punjab.

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Analysis of Rice Industry

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. Total Annual Sales Volume: US$10 Million - US$50 Million

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Analysis of Rice Industry

STRENGHT
The employees are highly motivated because the company has given much value to its employees to the interest of being motivated to them.

A company management approach is very progressive. The operational departments is strive for the betterment of convenient competing technology

The companys board of director committed to the performance in terms of innovation, quality, and completing the demand of the local and global market.

Weakness:
Highly trust to their employees. The electricity is owned by outsource. Electricity incurred additional cost.

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Analysis of Rice Industry

Opportunity:
The demand of rice is obviously increasing every year, that indicate the rising trend in the market , to competing the demand the company get max output through this trend. Being in a list of top 5 there is a big chance of capturing the market of entire sugar industries rapidly in the upcoming years. Supply of the raw materials is available in the go down/warehouses.

Threats:
The major threat for the rice companies has political issues in the country, in the export of the rice the duty rate is increased almost every year. In the export area the company faces losses in terms of profit, because of increase in taxes and duties, and internationally the rupee has been decreasing it comes beard so many losses

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Analysis of Rice Industry

BAHOO RICE (BRM) http://www.bahooricemills.com/ Bahoo Rice Mills (BRM), one of the leading Basmati Rice exporters of Pakistan, has grown into an organization which is recognized for its remarkable performance and supply of high quality rice to the customers. What sets us apart from other manufacturers is our emphasis on building strong relationship with our customers and targeting 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 Rice because the company believes in bringing premium quality rice for its customers. Our aromatic rice includes Super White Basmati Rice and Parboiled Super Basmati Rice.

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Analysis of Rice Industry

STRENGTH:
A professional management environment Good & new machinery provides competitive advantage. Friendly and cooperative working environment

WEAKNESSES
Lack of market survey Low exports. Transportation to the site is not available easily

Opportunities:
Opportunities for the online business are available here. Entering into new markets

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THREATS:
Invisible trade barriers. Strict government policies. Low sale price of rice in market. High raw material price.

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Analysis of Rice Industry

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. AFCjoins businesswithleadingriceimportersoftheworld. 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.

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STRENGTH:
A very good culture. There is an environment of learning that allows people to work in teams and learns from one and other. Being a new entrant the in the market the machineries are new and need less maintenance.

WEAKNESSES Lack of Entrepreneurship Company newly formed Co-ordination and communication gapes some time increases.

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OPPORTUNITIES
Entering into new markets New government and industrial projects

THREATS Manufacturing rice is a fast growing business. Local players are entering into the business so competition is increasing. So it will become difficult in future to maintain good profit margin.

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CURRENT SITUATION OF RICE INDUSTRY

November marks the end of crop harvesting activities in Pakistan, and the production outlook for the country remains positive, as rice production is expected to expand to 9.4 million tons paddy or 6.3 million tons milled rice. According to the monitor, the anticipated growth is expected to rely mostly on an expanded 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 planting activities in Sindh, Punjab and Baluchistan, observes the FAO rice monitor. An upturn of monsoon rains in August provided much relief, although ensuring floods are also estimated to have damaged nearly 400,000 tones of paddy, mostly in Sindh and Balochistan, the report estimates. The Rice Monitor forecast that rice shipments from the country may increase and a good crop and competitive pricing may enable exports by Pakistan to recover by 10 per cent 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 reported and 2 percent below 2011 consignments. Much of the retrenchment reflects a poor performance in the Basmati rice segment, where the country has faced intense competition from India, particularly in Near Eastern markets. The industry in Pakistan has also attributed loss of competitiveness to tighter availabilities of fragrant rice supplies, brought about by producers shift towards cultivation of hybrid rice. FAO has upgraded its July forecast of paddy production in Asia by 3.1 million tons to 660.6 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 monsoon season boosted production prospects. At 660.6 million tons (440.6 million tones, milled basis), 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 rice will not need to import so much of it. FAO forecasts that global rice trade in 2013 will reach 37.5 million tonnes (milled basis), marginally above the estimate for 2012, which was recently raised by more than 3 million tons to 37.3 million tons (milled), 2 percent more than in 2011 and an all-time record.

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CONTRIBUTION OF RICE IN PAK ECONOMY Pakistan has tremendous capacity to expand rice production but if proper measures are take the total output can be increased drastically and the assets contribution in economy 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 nothing has been done to increase production. Production ranges between two to 2.6 million tons, while we export around one million tons. Due to negligence the production capacity hasnt increased in last few years, in fact if the trend continues the output may eventually start falling. The Farmer interest in cultivation is also low as prices have remained stagnant since 2008 and a downward trend is expected in 2012-13. The downfall in production is because of lack of research and innovation. Referring to the only available variety in extra-long grain super basmati, which was introduced in 1996,since then No new high-yielding, extra-long grain variety has been introduced by public sector institutions. Pakistan is one of the largest producers of rice in the world. The country is the third biggest 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. The reason behind Indias success, he said, India has been able to produce Basmati in areas 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 not naturally conducive for Basmati production.

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ANALYSIS OF INDUSTRY The quantity of rice decreased to 2.7 million MT in financial year 2011-12 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 year 2011-12 from US$ 1836 million in 2007-08. The Average Unit Price per Metric ton increased to US$ 726.63 in 2008-09 from US$ 653.60.

The quantity of basmati rice decreased to 0.974 million MT in financial year 2011-12 from 1.138 million MT in 2011-12 showing a decrease of 163,819 metric tons. The export value of basmati rice increased to US$ 1070 million in year 2011-12 from US$ 1068 million in 2007-08. The Average Unit Price per Metric ton of basmati rice increased from US$ 939 to US$ 1098.The quantity of rice (other varieties) increased from 1.67 million MT in 2011-12 to 1.755 million MT in 2011-12 showing an increase by 84,031 metric tons. The export value of rice (other varieties) witnessed an increase to US$ 912 million in 2011-12 from US$ 767 million in 2011-12.The Average Unit Price per Metric 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 after wheat, 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.

Rice crop is of great economic importance for Pakistan, as it is second staple food after wheat, 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
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price. The REAP has proved its performance by checking the quality of brown rice exported 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 assured water 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 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 affected soils. 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
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plant population Lot of work has already been done in successful demonstration of Japanese 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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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 the Pakistani people, and stands at number two after wheat in consumption. Pakistan produces 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 substantial losses in the output and quality of basmati affecting the value of produce and farmers profit 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 food than in transforming the value chain to ensure good quality at a lower price. This hurts the market for this variety of rice. A majority of rice millers and producers are export-oriented, as they obtain far better margins 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 of Falak; we have Guard basmati, by Guard Rice; and the Mughal basmati brand from Garibsons. These brands, which have cemented their presence in the domestic market over the years, have, however, not been growing at a healthy pace. It is certainly a bitter fact to consider that branded rice holds a mere 2.1% share in total rice consumption in the country. It would be productive to ask why the branded rice industry has not been able to create a space for itself, as the branded tea and oil sector has. In this regard, a few things come to light. None of the companies have actually built brands, to the extent that they enjoy distinct recognition and market share in the domestic market, and for which consumers would be willing to pay a premium. In this context, unbranded rice is sold at much cheaper rates in the local market, which knocks out demand for branded rice even before it is put on the shelves. Furthermore, rice marketers distribution network is still at an immature state, leading to irregular supply. Meanwhile, companies compete on prices rather than building a name based on the quality of their product. This erodes margins and hurts customer loyalty towards brands that are already present in the market.

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