ISLAMABAD: The price of Pakistani rice in domestic and international markets was nearly identical, a new Asian Development Bank report has said as it called for an export tax on the commodity.

India has imposed a tax on the export of non-basmati and non-

parboiled rice as well as a ban on exports of broken rice implemented in September last year. This led to a lower domestic price relative to the world.

Three of the world’s five largest rice exporters — Pakistan, Thailand and Vietnam — have nearly identical changes in global and domestic prices because they do not have policies in place, according to the report titled ‘Mitigating Emerging Food Security Risks in Rice Markets’.

This was largely led by price increases in the aromatic and Japonica — two of the major rice varieties — submarkets. From August 2022 to March 2023, the FAO price index for the indica rice variety increased by 14.3pc, while the wheat and maize prices declined slightly during this time.

New report says cost almost same as global market; seeks bigger role for private sector in trade of commodity

The price of rice has substantially increased in some countries, especially in Pakistan (51 per cent) and Uzbekistan (50pc). In many of these countries, wheat was an important staple food but its rising prices encouraged consumers to shift to rice, putting upward pressure on domestic rice prices.

The report said that since the beginning of the pandemic, consumers were benefiting from a relatively stable rice price. However, the international rice price index rose almost continuously in 2022 and reached its highest level in the last 11 years in January 2023.

The Indica prices increased due to weather shocks, such as drought in China, severe floods in Pakistan and substantial uncertainty over the monsoon season in India.

A continued uptrend in prices could pose a serious threat to food security in the region, especially with more frequent extreme weather events and other impacts of climate change. This will also pose a significant economic challenge as approximately 90pc of rice is produced and consumed in Asia. The livelihood of hundreds of millions of Asian farmers depends on growing this crop.

During the 1970s, rice prices were highly volatile, giving the rice market a reputation for being highly unstable rather than a force for stabilisation.

More involvement of private sector

The report called for an increased role of the private sector in the rice market as a more market-oriented rice trade — with permissions to the private sector to import — can supplement the domestic production loss and improve access to affordable rice in the importing countries.

Greater private sector engagement in food reserve systems can support government efforts to ensure more resilient food supply chains.

The world rice market can offset fluctuations in domestic production and help to stabilise domestic prices. However, it has a flip side as well because fluctuations in the world can be a source of price shocks in domestic markets.The ADB suggested policymakers to increase the role of the private sector, strengthen regional cooperation, and increase investment in sustainable production to build a resilient rice market.

Published in Dawn, May 27TH, 2023