THE benefits of the boom in the international commodity prices have started trickling down to peasants and farm labour located in dusty hutments in the countryside, many oceans away from bustling trading centres in the West. Such are the linkages and dynamics of the modern global trade.

The surge in demand for commodities from prospering China and its growing appetite for edibles such as rice has sent prices of these commodities spiraling in the international market, tilting the terms of trade, after long last, in favour of commodity producing developing world.

As rice prices touched historical highs rising by over 50 per cent in the last two weeks in global markets, Asian and African importers (the grain is a staple food in the region) revisited their strategies of securing supplies, to head off social unrest in case of shortages. This added to the demand pressure on supplies and sent prices skyrocketing.

Currently coarse rice is traded at $600 to $650 a tonne. Thai medium quality rice, a global benchmark at $850 up from $760 a tonne last week, while the price of less representative top-quality rice broke the $1,000 tonne level for the first time, international wire services reported quoting traders.

The commodity analysts expect the trend to persist in the international market in the short to medium- term.

Is Pakistan’s rice economy strong enough to join the band of nations benefiting form rising prices? How is the benefit shared along the rice value chain? These and related questions were posed to stakeholders in rice trade to understand the impact of the phenomenon, its affects and lessons for a country struggling to cope with multi-faceted issues.

“Pakistan produces approximately 5.5 million tonnes of rice against 2.5 million tonnes of local demand with about three million tonnes available for exports each year. This year shorter supply of Indian rice in international market opened up more avenues for Pakistan and the country with export channels capitalised on the situation”, Dr Qadir Bux Baloch, Executive Agriculture Commissioner, ministry of agriculture and livestock told Dawn from Islamabad.

The rice belts in Sindh and Punjab, though distinct from each other, have consistently been managing the crop for decades. Punjab produces finer quality rice with huge domestic market but comparatively limited scope in international market. The finer Basmati rice market is almost monopolised by India. Sindh produces lower quality coarse rice that is priced lower but has bigger market overseas.

An informal survey by Dawn to determine the share in the export price premium across the value chain of the rice trade revealed that gains were proportional to scales and weightage of each segment with commercial exporters in the lead and actual grower at the other extreme. As there was no integrated company controlling sizeable proportion of the rice trade, the gains seem to be widely shared.

“Everyone along the value chain of rice trade benefited over the last one year. However, the share of stockists, transporters and exporters is probably more than others. Right from the tillers to the feudals, from Arthis (wholesaler) to exporters, from loaders to transporters, from local godown owners to those who operate huge warehouses in cities, from those operating manual husking petty machines to modern husking plant owners mostly situated in Punjab, from truckers to operators of shipping lines all got a piece from the price premium pie”, a local dealer in commodities at the wholesale in Hyderabad told Dawn.

He said that in Sindh the unit of weight for paddy is Kharar that is constituted of 20 lots of 40kg of paddy. He said that last year June crop fetched Rs4,800 to Rs5,000 per Kharar, Nov-Dec paddy was picked up at Rs10,000 to Rs11,000 and farming community of Sindh is expecting to sell the current crop that will hit the market in May-June at Rs13,000 to Rs15,000 per Kharar.

He said that it was difficult to estimate the gain to the tillers in percentage term as the land along the rice belt is fragmented with a huge variety of arrangements between the land owners and sharecroppers. In the harvesting season, there is movement of labour from the Saraiki belt of Punjab towards rice-growing areas. “There is no labour shortage in Sindh still contractors managing harvesting of the crop prefer to bring in farm labour from outside for they find them to be more productive than natives”.

Interestingly the crop is moved by big transporters from upcountry. These traders through their agents pick up the crop to be stored in warehouses in urban areas predominantly situated in Karachi, from where chunk of the produce is moved to Punjab for processing that include husking and polishing of the grain.

The location of processing units in central Punjab has increased the movement of crop to Punjab and back to Karachi for export by sea to the Middle East and African markets.

According to the people involved in the rice business, the heightened activity of rice exporters to make most of the situation has created a situation where there are fears of shortage of supply of rice seeds for the next season as windfalls from the current season encourage more people to switch to paddy or encourage traditional growers to concentrate in improving the quality of inputs to get a better yield.

The responsible officials in the ministry of agriculture termed the fears regarding any bottlenecks in supply of seed for the next rice crop baseless. “We have recently allowed entry of eight new hybrid varieties of Chinese origin to improve yield and production of rice in the country,” Dr Qadir explained.

As to why facilities have not been developed in Sindh closer to the crop growing areas despite good margin and almost captive demand was not clear. Independent experts blamed private sector which in Sindh is more inclined towards short- term investment in real estate and stocks than playing its role in industrial development. Others blamed the government for failing to devise a policy framework to divert the flow of capital to investment in industry that could have complimented its agrarian base and led to improvement in productivity levels.

The office of secretary agriculture did not respond to queries of Dawn. Dr Qadir, however, blamed it on the law and order situation that has kept people from investing in even small projects such as rice husking plants in rural Sindh.

The rural areas have a sizeable population comprising poorest of the poor. The lot was almost forgotten over decades of focus on urban-based industrial and business activity.

In the past, while the agriculture sector continued to feed the population and domestic industry, no effort was made to reorient/ modernise it in a most suitable fashion.

With the result that 60 years after gaining independence, the agriculture economy slogs at the mercy of nature and the country has failed to capitalise on the comparative advantage of agricultural produce. Take production chart of any crop over the last 30 years, the erratic movement tells the sorry tale of almost gross negligence. Many earned millions at the cost of the development of the rural economy.

How well an elected government is capable of managing economy and balancing competing interests will become clear over the next few months as details of economic programme reflecting the opted direction are revealed.