ISLAMABAD, Aug 31: The Asian Development Bank will assist the Punjab government with a project to overcoming the major problems affecting the province’s basmati rice in order to regain and sustain its world competitiveness and improve foreign exchange earnings, Dawn learnt here on Saturday.

The major bottleneck in the basmati value chain is at the upstream segment, or farm production. Other serious issues are high production costs and declining yield of current basmati varieties are making its cultivation a less profitable venture to Punjab rice farmers, resulting in some farmers shifting to non-basmati varieties for better yields.

An ADB fact-finding mission has just completed its work through wide-ranging stakeholders consultation with agencies of the federal and Punjab governments, public and private agriculture research institutions, basmati rice farmers, traders, exporters, private associations, and the International Rice Research Institute (IRRI).

According to official sources, the ADB will spend $1 million on the technical assistance which will focus on measures that meet the criteria of achieving tangible results within two to three years; complementing and adding value to ongoing activities of public and private sector stakeholders, and having the potential to significantly increase the yields of basmati rice, improve the efficiency of the upstream segment of the basmati value chain and integrate the upstream more effectively with the midstream and downstream segments of the value chain.

Basmati rice famous for its aroma, long grain, better cooking and eating quality is a leading foreign exchange earner of Pakistan, which captures more than two-thirds of the world’s basmati production.

Official statistics show that Pakistan earned about $1 billion from basmati exports of 1.5 million tonnes in 2012. Basmati is grown mainly in Punjab province, and in fiscal year 2012, 65 per cent of Punjab’s total rice area, or 1.1 million hectare, was devoted to basmati with a production of about two million tonnes.

However, the country’s competitive edge in the basmati world market has been eroding in the recent years because of productivity and quality constraints. Historically, Pakistan has been the world’s leading and major supplier of basmati rice.

During the July December 2012 period, basmati exports declined by 31pc (from 349,970 tonnes to 239,765 tonnes) compared to the same period in the previous years.

This came after India lifted a ban on its rice exports in 2012 and sold the commodity at a price lower than Pakistan’s about $100 cheaper per tonne against Pakistan’s $1,100-1,150 per tonne.

Meanwhile, demand for basmati has been increasing worldwide, and Pakistan’s basmati value chain needs to be strengthened to meet rising international demand and maintain its premier lead status.

Sources say the government felt that overcoming the major problems affecting Punjab’s basmati rice was urgently needed for Pakistan to regain and sustain its competitiveness in the world market, improve the sub-sector’s foreign exchange earnings, and ensure higher incomes for basmati farmers and other stakeholders in the value chain.

ADB hopes that the project impact would lead to higher incomes of basmati rice farmers in Punjab and higher export earnings from this commodity. The technical assistance will help improve basmati seed varieties, farming and post-harvest practices, and service capabilities.