Concern on non-competitiveness of small rice exporters

Karachi: The Union of Small and Medium Enterprises (UNISAME) has invited the attention of the Competitive Commission of Pakistan (CCoP) to the non competitiveness of the small to medium sized (SME) rice exporters due to control of rice export business by what he called big players.

The SME rice exporters are disabled due to non financing by the commercial banks and hoarding and speculation by the big exporters.

President UNISAME Zulfikar Thaver said the SME rice exporters are thrown out of business by the big exporters who are operating a cartel from the farms till the exports by obtaining huge pre-shipment finances from the banks and controlling and manipulating the supply chain. The big exporters have their purchase points in the rural rice growing areas and have contractual arrangements with the millers and start lifting the grains from the millers. The big rice exporters, millers and processors have formed a cartel and have their own brokerage houses and financiers. They even have their own delegations going abroad for selling their brands, he said.

He said it is becoming increasingly difficult for the SME to run rice export business and the rice export business has gradually slipped into the hands of the big exporters. The SME rice exporters have been thrown out of the mainstream with well planned manoeuvrings of the big players.

It is reported that the big rice exporters procure huge quantities of the crop on arrival on low prices and hoard the rice till the demand increases and the rice matures, they then dispose the rice on handsome profits. The big exporters are enjoying big export refinance facilities from the commercial banks and pledge the stocks against heavy borrowings at subsidized export refinance rates.

The rice exports are in the hands of only about 25 big exporters out of which 5 or so are exporting ship loads and the other 20 who are exporting huge quantities of different varieties of basmati and non basmati rice to global destinations.

The SME rice exporters are unable to stock the rice as they are not enjoying the export refinance facilities from the commercial banks and secondly they are not in a position to procure the goods as they first sell and then buy and by the time they book the order and receive the letter of credit the prices tend to rise and they suffer losses.

The big rice exporters are also enjoying the blessings of the Quality Review Committee (QRC) and are allowed to ship their own brands which are not subjected to strict pre-shipment inspection whereas the SME rice exporters have to abide by the rules and specifications laid down by the authorities.

The union has also invited the attention of the CCoP to the border trade with Afghanistan and Iran and the under invoicing by the big exporters who are facilitating the importers across the border by providing lower value invoices to enable the buyer save on duties and importing more value of goods under license for less quantities to earn double profits.

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