THE RICE INDUSTRY OF

PAKISTAN
ANALYSIS OF PAKISTANI INDUSTRIES
5/7/2013
Submitted to: Ms. Mehwish Ali
Submitted by: Maha Talha, Aaqib Nazim, Kanza Zulfiqar, Bilal Ahmed, Syeda Mahrukh Fatima
Naqvi, Komal Asim, Jitesh Jewani

TABLE OF CONTENTS
Executive Summary

Literature Review

Overview of the Economy

11

Introduction

13

Brief Overview

13

Current News about the Rice Sector

16

Market Share Distribution

17

Export details

21

Pest Model

25

SWOT Analysis

27

Porters Diamond Model

38

Advantages and Disadvantages

39

Factor Conditions

40

Demand Conditions

42

Related and Supporting Firms

44

Firm Structure, Strategy and Rivalry

47

Production cycle of rice

49

Role of the Government

52

Interview Analysis

54

Recommendations

60

Conclusion

63

Appendix

64

References

71

EXECUTIVE SUMMARY
Pakistan is the 4th largest producer and 11th largest exporter of Rice. It earns a significant
amount of foreign exchange revenue for Pakistan which helps our economy stay competitive.
Since the independence of Pakistan, our achievements in the rice industry have been
promising. Production has increased by a ratio of 2:1 compared to increase in land. This can be
credited to the variety of seeds present, improved facility for rice production and introduction
of various preventions for rice crop against diseases. Punjab is the major producer of rice,
followed by Sindh. This has also been the reason that Pakistan was able to stand the global
financial recession in 2008 comparatively better than the world, as it opened up new markets
for us to export rice.
The privatization of the industry has benefited us tremendously. It led to the introduction of
new technology, new ideas related to production and introduction of variety of seed and it
opened up new opportunities for employment. Two research institutes also exist within
Pakistan to help with the research for new seeds and techniques, and plans to establish
institutes to train farmers are also in the pipe line. The price of rice, and hence the revenue
generated in dependent on the demand and supply. Pakistan is known for the production of
basmati rice internationally, which is highly demanded too.
However, there are a number of problems faced by the rice industry of Pakistan. The rice
industry receives no support from the government of Pakistan in the form of subsidies or tax
incentives, whereas international competitors are known to be fully supported by their
government which leads to them being able to offer lower prices to their consumers. This
depicts that imports of rice in Pakistan can increase, because our farmers are prey to
inflationary pressure in the form of rising raw material costs; oil and the shortage of gas in
Pakistan which affects our ability to deliver and produce orders of parboiled rice at the required
time. The rice produced in Pakistan is 40 percent domestically consumed and 60 percent is
exported. This case will lead to a fall in our export level of rice, affecting the foreign revenue we
are from rice exports which is the backbone of the Pakistani economy. Currently, Pakistan is
facing a fall in exports of 53 percent; whereas rise is domestic demand is for 15 percent. Thus
we face a mismatch in demand and supply.
We are also affected by the failure to incorporate new technology in our production ways
which is a big deterrent for us as Pakistan Rice producers and sellers lose out on efficiency and
quality, as those employing the new technology take advantage of spread out costs, and
economies of scale. India is an example of this case. Numerous unregistered seeds also exist
and are used by the rice farmers, however because they are unregistered, the government is
not aware of them and so, the revenue earned by farmers in this aspect is lower than it should
3

be. There lack export incentives as well as lack of quality checks on the rice exported, which
ultimately affect our brand name in the international market because mixing of varieties exist.
To analyze the rice industry, we conducted the SWOT analysis, PEST analysis to fully analyze our
weaknesses and strength internally and externally, as well as in the local environment. The
climactic conditions of Pakistan are a major strength Pakistan should be proud of, as it allows
rice production and cultivation more than any other naturally endowed country. Pakistan also
produced variety of rice and seeds therefore allowing us to cater to different types of demands
internationally. The recent privatization of the rice industry of Pakistan has increased the
efficiency of this industry by allowing the employment of new and improved technology and
modern mechanized ways to cultivate rice. Pakistan also has the advantage of being blessed
with a population that works in the urban sector as well as population working the rural sector.
The hunger for employment can be used in our advantage by training those individuals to the
specifications of the rice industry, and such labor can be employed at cheaper rates.
However, weaknesses can be identified as the mixing of rice variety, ruining our name in the
international market and as no check and balance exists, there is no way to counter that
weakness. Pakistani rice is internationally known and demanded, however black markets exist
for its sales which again make us lose out on the revenue that could have been earned. There
exists lack of value addition and lack of trained labor too. On the other hand, Pakistan is open
to take advantage of opportunities like TDAP, collaborations with REAP, tender with Philippines,
new market with China, but international competition from Bangladesh, India, and Vietnam can
work against our leverage in those opportunities. The climate is also unpredictable, and floods;
unexpected, bring along with it diseases that ruin the crops and thus hamper the total yield.
Economic and political problems of Pakistan also pose as a major threat.
We also conducted a diamond model analysis to understand the different factors affecting the
rice industry. Factor conditions affecting the rice industry are that it is a staple food, and
employs a lot of labor and earns considerable foreign exchange revenue. Pakistan is renowned
for producing Basmati because we have an absolute advantage in this arena owing to our fertile
soil and favorable climate. It is also an ideal industry for FDI. However, limited water, untimely
rain, lack of proper storage of rice stock, backward in technology, law and order situation of
Pakistan and transport costs all are factors working against our farmers and thus, the yield and
our competitiveness. Moreover, majority of our farmers are of the export view affecting
domestic quality of rice and increase in imports.
Role of government is merely present in the rice industry owing to the recent privatization. No
tax exemptions or tax holidays exist. Lack of subsidies also play a negative role as it reduces our
competitiveness. Suggestions for the government sector include training the rural population to
our countries agricultures advantage, mixing the urban and rural population to improve the
4

rice industry and production techniques, holding seminars, helping with procurement of seeds,
pesticides and raw materials like DAP and Urea. Other than that, checks to ensure the superior
quality of rice should be made compulsory. Methods to increase the fertility of soil should be
employed because that would ensure rice production for the future, even if more land is not
taken up for rice production. More improved varieties should be developed, and lastly, ways for
the easy disbursement of credit for the small farmers should be put in play, to encourage
investment and business, ultimately aiding to our foreign exchange and economy.

LITERATURE REVIEW
Rice is not only a food crop, but is also considered an essential cash crop in Pakistan. Also, rice
is one of the main export items of our country. Pakistan grows high quality rice to meet both
domestic demand and for exports. According the business recorder of December 2012, the
grand success of Pakistans rice exports was it diversified marketing strategy. Pakistan is one of
the largest exporters of rice. Rice is a monsoon crop and is mostly sown in the Irrigated area
next to Indus River and its tributaries. Around 11% of the total agricultural land is used in rice
production.
The rice crop has always been an essential part of the economic planning of Pakistan. It is the
second biggest source of foreign exchange for Pakistan and is second staple food after wheat.
Rice contributes for 6.7% in value addition to agriculture and accounts for 1.6% in the GDP of
Pakistan. Pakistan's production of rice is enough to meet the domestic requirement, as well as,
export rice of up to one million ton per annum. Pakistan trends in growing a wide variety of rice
for example, Basmati PK-385, IRRI-6, IRRI-9 and Super Basmati, the most prominent of which
are Super Basmati and Basmati PK-385. The two varieties which dominate the market share are
Basmati and IRRI. Basmati is grown, mainly, in Punjab whereas Punjab and Sindh both boast
wide cultivation of IRRI rice. Basmati, alone, accounts for 2% of the exports.
Furthermore, rice trade in Pakistan was initially under the government control. The industry
was liberalized in the 1990s after disbandment of the state run Rice Export Corporation of
Pakistan (RECP). Pakistans rice traders have responded well to market liberalization and have
taken a leading role in rice market. In 2009, however, in the wake of a record harvest and
concerns over a slump in market prices the government intervened in the rice market and
started procurement from farmers through PASSCO and Trading Corporation of Pakistan (TCP).
As far as production is concerned, Pakistan would experience a growth in its rice exports in MY
2010/11 at 28 percent to 3.2 million tons mainly due to increased demand and better prices in
the world market. Rice exports in MY 2012/13 are projected at 4.0 million tons based on a good
harvest. However reduced water availability during this period would have a greater impact on
the crop prospects. Pakistans rice exports also benefited from the Indian government ban on
rice exports earlier in the marketing year. MY 2011/12 rice exports are estimated at 3.7 million
tons, three percent higher than last year exports estimate.
Pakistans MY 2011/2012 rice production is now estimated at 6.5 million tons, thirty percent
higher than the 2010/11 flood affected production level of 5.0 million tons. The average
production of rice for the last five years is 5.97 million tons. But unlike 2010 disastrous floods,
6

2011 flooding was localized and restricted to lower Sindh.

Rice exports make the Pakistani economy stronger. The major importers of rice from Pakistan
are KSA, UAE, Oman, Bahrain, Malaysia and Mauritius. UAE being the largest importer of rice
from Pakistan despite the unfair practices mentioned above. From June 2012 to December
2012, UAE imported $53,312,158.54 worth of rice from Pakistan. Estimates of Economic
efficiency implies that with the amount of globalization going on, growers of basmati rice can
gain significantly by increasing the production level. Also because of a fall in domestic support
of other rice producing countries and a rise in international prices, Pakistan could benefit even
more by exporting more Rice.
Out of $81 million in Pakistani agricultural exports to the United States during 2011, rice
exports comprised of $17 million (21 percent) of the total. Pakistan produces about 2/3 of the
worlds Basmati rice crop, while the rest is grown in India. In case of Basmati rice the only
competing country is India. However unlike other South and South Asian countries, rice is not
considered to be a staple crop in Pakistan.
A sharp decline of 30 percent in quantity of rice exports has been noticed from the months July
to September of fiscal year 2012. The price of these exports has also undergone a tremendous
downfall of 35 percent, resulting in a deteriorated quarterly export objective or target
amounting to $500 million. As per the official figures, the month of September has recorded a
significant fall of 51 percent in export of Basmati rice quantifying to 128,278 tons in contrast to
July where the exports were relatively higher, amounting to 260,466 tons. Likewise, a
decreasing trend has been noticed in the export of non-Basmati rice during the month of
October FY2012.
According to the chairman of Rice Export Association of Pakistan (REAP), the major reason for
falling exports has been the elevated price of Pakistans rice. The stocks in rice industry are
predominantly held by the growers or exporters rather than investors, and this has had a
detrimental effect on the export trade. India has removed any kind of trade barriers previously
imposed but unfortunately the machinery in Pakistan is incapable of catering to the demand
which has caused a drop in exports of rice.
The Trade Development Authority of Pakistan (TDAP) needs to determine the root cause of
falling exports which it has failed to do so. As per our research, Pakistan is required to take
initiatives in reacquiring its lost markets pertaining to Middle East and Gulf, while also
expanding into big markets such as US, UK and Canada where Indian Basmati is primarily being
used. There is also a need to give Export Credit Guarantee Insurance (ECGI) to the exporters of
7

rice so as to penetrate into third world countries.

The month of January FY2013 has recorded an increase in basmati exports by 15%. This has
regained the confidence of traders as they are now optimistic about the rice reacquiring its
nominal level before the FY2013 ends. This is predominantly because of the narrowing or
declining gap between Pakistani and Indian Basmati rice. India has tried to offset Pakistans
Basmati by reducing its price below than that of Pakistan.
Moreover, the Pakistani Rice sector is well suited to meet the growing demand of rice from
around the world due to it being the third largest cultivated crop in Pakistan after wheat and
cotton. Also there is increasing demand of rice in the EU based on per capita consumption of
rice. Rice industry is growing over the last three decades with an increasing demand in
processed rice in export market. The rice mills have increased from 170 units in 1986 to 500 in
2010. All these statistics suggest dynamic growth in the rice sector and this is because of the
increasing foreign and domestic demand of rice. Much of our foreign demand comes from
Europe which consumes a much greater quantum of rice and thus relies on imports to meet its
consumption requirements. The quantity imported into Europe jumped over 700% within 7
years. (SBI report) Further Investments are required in Rice Technologies to facilitate the
growth of the sector. Such high demand has encouraged the rice industry to innovate actively
in terms of packaging processing etc. However much research conducted up till now continues
to emphasize the strong need for rice industries to innovate continuously and thus sustain their
competitive advantage.
Currently the local demand for rice is easily met hence there is great export potential. Of the
total production of rice 40% is locally consumed and 60% is exported. There is immense
potential to produce more rice and easily double exports. Therefore a majority of rice millers
and producers are export-oriented, as they obtain far better profits from abroad than locally.
Pakistanis, in general, prefer the higher priced Basmati rice which is mainly consumed by the
more affluent. Exporters made huge investments in rice processing equipment installing stateof-the-art imported machinery to improve the quality of rice. International as well as local
consumers are now more quality conscious and demand high quality rice. Demand for
parboiled rice is also increasing due to its nutritional value.
However the industry is not perfect and has sufficient problems of its own. Even though rice
has been a major export for Pakistan, it has become more and more inefficient over the years.
The yield has been decreasing continuously, the farmers are in turmoil of the high costs of input
and there has not been much support from the government side or from Rice Exporters
8

Association of Pakistan (REAP). This was highlighted by Mubarik Ali and John Finn in their article
in 1989, that the demands were increasing but the yields remained constant. Seeds, fertilizer,
tube wells, tractor etc. are the variables which help to produce good quality rice. The farmers
were not provided with these especially with the growing technology, Farmers in Pakistan were
using the traditional techniques. They lacked technical, as well as allocative efficiency.
Therefore the export of basmati rice has suffered a setback and non basmati rice is not fetching
a good price. The milling plants have old machinery and banned varieties are also being
cultivated. Unless and until exports pick up, the exporters liabilities will keep increasing. Thus
the exporters need more time to adjust their export refinance loans and a reduction in the
finance rate due to the lowering of the discount rate.
Varieties of rice are subdivided into grades based mainly in the proportion of broken rice on a
consignment. Khapra beetle was detected in some rice consignment from Pakistan to United
States and if effective measures are not taken, this can cause significant problems for the future
Pakistan rice exports to US as rice is a major Pakistani export to United States.
Pakistan produces one of the best varieties of rice in the world due to the rich soil and humid
climate found here. However due to traditional and outdated post-harvest practices there are
substantial losses in the output and quality of rice which in turn affect the farmers profits.
Pakistan may face a decrease in export demand as it faces intense competition from India in the
Basmati rice segment. Also the industry has suffered a loss of competitiveness brought about
by producers shift towards cultivation of hybrid rice rather than fragrant rice. Furthermore
increasing rice production in Asia means that the region that consumes the most rice will not
need to import so much of it
Like most agricultural commodity markets, the rice market also suffers from the cobweb
phenomenon, where price fluctuations are caused by the time lag between making the decision
to cultivate the crop and the ultimate selling of the crop. To decrease the risk faced by farmers
from fluctuating prices, the government has set support prices for various varieties of rice
(Ahmed, et al., 2000).
According to an article published on 8th February, 2012, in Express Tribune, Pakistan has the
capacity to increase its rice exports to up to four billion dollars but barely reaches up to one
billion dollars worth of rice export. The reason being that farmer interest has declined in the
cultivation of rice due to stagnancy of prices since 2008 and a downward trend is expected to
be seen in 2012-13. BGA President, Hamid Malhi, also pointed out the lack of innovation that
persists in the sector. He said that the only available type of rice is Super Basmati which was
brought under use in 1996. Since then, public sector institutions have failed to invent
9

something new. He also claimed that urea prices have hiked up to Rs 2,000 from Rs850 in a
matter of 3 years. These factors fail to attract farmers attention towards the cultivation of
rice and stops the sector from reaching the benchmark.
Furthermore something that needs to be focused on is investment in the rice industry. Private
sector investment in milling improved the quality of rice available for exports and so improving
the competitiveness of Pakistans rice in the world market. The potential for foreign investment
in this sector is very high due the limited global avenues for investment in other countries world
over. This investment is much needed as the standard agrarian infrastructure present in major
rice exporting industries is missing in Pakistan. The members of the rice export industry realize
the potential of this sector and thus are also investing heavily in rice paddy processing facilities
and their expansion. However billions of dollars of investment are needed to modernize
Pakistani rice industry so that there is minimum wastage.
An article on Matco, one of the biggest rice firms in the industry, states that Match has
investing in the most modern agro-processing infrastructure that addresses the post-harvest
losses problem in Pakistan. Matco's plant is located in Sadhoke. With the collaboration of the
latest Japanese and American technologies, this plant will include the most modern paddy
dryers, rice parboiling units, and silos that monitor humidity, temperature, moisture of the rice
paddy amongst other things. This shows that the rice industry realizes the need to invest in
technology and infrastructure thus we might see an increase in production in the coming years.
According to an article published in Express Tribune on the 5th of February, 2013, Pakistan has
started reaping benefits from the System of Rice Intensification (SRI) method that was
introduced in the Sheikhupura district by Lok Sanjh Foundation (non-profit organization) back in
2005. But now, as many as 65 villages and 300 farmers are using this technique for rice
cultivation. 80% of the farmers who are using the SRI method have reported multiple
advantages, such as the development of strong roots in order to fight lodging and crop loss and
the use of less water for cultivation. As said by the CEO of Lok Sanjh, Shahid Zia, use of SRI
cultivation method produces five to ten tons more in contrast to the usage of orthodox
cultivation methods. He stated that due to SRI being a more tedious and tiring job, NGOs tend
to neglect of introducing this method. He also asserted that due to the water crises and
pollution of wetlands, it is necessary to introduce such measures.

10

OVERVIEW OF THE ECONOMY

Pakistans economy can be called a semi-industrialized economy. Our industrial sector makes
up only 24.3% of our GDP. Pakistan has a total labor force of 55.88 million (as of 2009). The
largest industries of the country are textile, cement, agriculture, fertilizer, steel, tobacco, edible
oil, pharmaceuticals, construction materials, shrimp, sugar, food processing, chemicals and
machinery. Net foreign investment in Pakistani industries contributes a mere 2.5% to the
countrys GDP.
Any government or economy has three goals. These are:
1. Sustained growth
2. Low and stable prices
3. Decreased unemployment
Over here high growth and low unemployment are complimentary to one another as achieving
one can result in achieving the other. On the other hand low unemployment and inflation are
contradictory.
In the economic survey of 2012 we saw that consumption has increased to 88%. Private
investment has decreased and public investment has increased. Government expenditures have
also increased. Exports are up by 0.1% and imports are up by 14.5%. This means that we have
negative net exports which mean that our trade deficit has increased.
The increased law and order situations have decreased our foreign investments and reduced
our growth and development. Agriculture accounts for more than 20% of our output and 40%
of the total employment. Textiles account for most of our foreign exchange earnings. Pakistans
lack of value addition has made it fall behind with regards to this sector. Textile exports have
fallen to $1.09 billion in July 2012. Our total exports stood at $2.057 billion in July 2012, which
is 4.84% lower from $2.157 billion in the corresponding month of the last fiscal year.
Moreover, the official unemployment figure is 6% but this figure might not capture the true
essence of unemployment because the informal sector in Pakistan is pretty big and that is not
accounted for here.
Furthermore low growth and high inflation have increased poverty in the country. According to
UN Human Development Report poverty levels in Pakistan were 50% of the population.
Inflation has worsened the case as due to political and economic instability the Pakistani rupee
has depreciated by more than 40% since 2007.

11

A bright spot in the economy is the amount of foreign remittances that Pakistan receives daily.
However due to high oil prices and lower cotton export prices, Pakistan is stuck in a low income
and low growth trap with its growth averaging at 2.8% per year from 2008-2011.
Pakistan must address government spending and revenues along with energy production in
order to increase economic growth and employ its growing population. Investment in
education, healthcare and infrastructure also needs to be increased for long term benefits.
Borrowing needs to reduce as our foreign debt totals up to $130 billion. Foreign aid needs to be
diminished as well as this has done nothing but make the economy more dependent on
external factors for growth and survival.

12

INTRODUCTION
BRIEF OVERVIEW OF THE SECTOR
Rice is not only the third largest crop which is grown but it also earns a lot of foreign reserves
for Pakistan. Production of Rice is grown by 10% in last five years. Pakistans achievement, over
the past 50 years, has been phenomenal in reference to the rice industry. Pakistan had around
856,000 hectares of rice cultivation land back in 1947, which increased to 2.4 million hectares
by 1998. The production of rice, during this period, showed a significant increase by
approximately 6 times (from 737,000 to 4.6 million tons) whereas the increase in area was half
of this. Apart from increase in area of cultivation, production increased due to introduction of
high yielding variety seeds, improved facilities to the farmers and different methods to protect
the crop. Punjab is the leading producer of rice in the country. It accounts for 59.5 percent of
the total production. The next leading province is Sindh. It accounts 29.5 percent. The
remaining provinces NWFP and Baluchistan contribute 11 percent of the total production.
Many of the rice processing units are traditional huller type and are inefficient. Therefore, there
is a dire need to establish modern rice mills through which entrepreneurs of rice mills can be
able to produce the high capacity production.
Rice is an important food and cash crop. It has been the third largest crop of Pakistan falling
behind wheat and cotton. Its plantation takes an area of approximately 2.5 million ha (11% of
the total cropped area) and adds up to 27% of the cereals produced annually in Pakistan.
Production of milled rice, on an annual basis, has increased from 5.5 million tons to 11.7 million
tons posing a share of 8.1% in agriculture sector and 2.1% in GDP. Long grain aromatic Basmati
rice is the main product over which Pakistan has gained popularity as a rice exporter. Around
4.1 million ton per annum, of exported rice, has accounted for 7.3% of the foreign exchange
from exports of food based goods. The rice export increased manifold during the recent years
and a record export of 4.7million tons of worth about Rs.100 billion was made. The country
ranks 11th in terms of rice production and 4th in rice export in the world.
Despite the global recession of 2008, Pakistan was able to succeed in exporting rice because of
its diversified marketing approach and by trying to take new market share in Middle Eastern,
African and other Asian countries. One other reason is that wheat is majorly consumed as a
staple food item in Pakistan rather than rice.
The pivot point for the rice industry was back in 1988 when government decided to fully
privatize it, after that our export earnings increased from 300 Million dollars to 2200 million
dollars. Currently Rice is the second highest export earner for Pakistan as it earns 11% of total
foreign earnings. There is a lot of demand for Pakistani Basmati rice. Pakistan grows the best
basmati of the world.
13

PK-385 (famous for their aroma), Basmati 2000 and basmati KS-282 (equivalent to Thai rice) are
found in the Punjab province. Sindh accounts for 41% of the rice population. IRRI 6 and IRRI 9
are found in Sindh. Some Basmati is grown in Sindh but at a very low level. Overall the Basmati
yield is lower than that of IRRI in Pakistan.
We have two rice research institutes of rice in Pakistan, one at Punjab and the other at Sindh.
Prices of rice are not determined by farmers instead they are determined by market forces. The
rice sector is deregulated but the government intervenes in exports of rice. However it does not
provide any subsidies and does not determine prices as well.
Punjab is a Basmati growing area and so it needs more efforts for sowing, plantation and taking
care of required water, harvesting, milling and ageing etc. Due to all this Punjabi rice captures
more value in the international markets.
The value addition of farm products in Punjab encourages potential investors to reinvest in
modernizing the agro industry of Pakistan. New financial instruments are also merging
industries and agriculture together. Pakistan markets are ready for expansion in next five years
and that will determine not only local but international prices.
Due to ease in economic policies and investment policies now Pakistan will be going for
mergers with international players and this sector is gaining a lot of attention and investment
by foreign markets. Due to sufficient domestic demand in Pakistan for rice, there is a lot of
chance for this sector to grow and expand. Basmati is always a leading player from the demand
side of international players and due to shoulder to shoulder competition with India, Pakistan is
also becoming more competitive and is introducing new breeds of good quality basmati.

CURRENT PROBLEMS

Many unregistered seeds are available in the market at quite a low rate which results in low
yields.
Lack of awareness about mechanical transplantation, use of fertilizers, use of technology
and maintenance of plant population which results in low yield and quality.
Use of old technology, like use of tractor, increases the ratio of broken rice.
Low feasibility and no incentives to import.
Paddy dealers are also not using moisture meters or other upgraded technology which
again results in huge losses.
ISSUES WITH EXPORTS:
1) No proper refinement of exporting rice giving rise to quality issues
2) No checking of quality by any authority at different levels of the supply chain

14

3) Though Sindh is perfect for IRRI only but farmers do produce Basmati which causes not
only lower yields and lower profits but disparity in quality between Sindh and Punjab
Basmati as well
4) Inferior quality seeds available
5) No pre-shipment check of exporting rice

15

CURRENT NEWS ABOUT THE RICE SECTOR

1. Rice export orders may not be accomplished due to shortage of natural gas to produce
'parboiling rice' which has the potential to increase 15% foreign earnings in value
addition.
2. India is a big threat to Pakistan due to high quality Basmati and lower prices and recent
trade ease between both countries have given Indian rice exporters a chance to explore
domestic market and to find opportunities.
3. Due to some judiciary actions against one of the rice exporter of Pakistan by Iranian
Government, Pakistan lost one of its potential markets.
4. Export Finance Scheme rate cuts for refinancing has supported rice industry a lot in
flourishing.
5. A steep fall of around 53 per cent was registered in export of basmati rice during the
first six months (July-Dec) of the current fiscal year as exports stood at 239,764 tons as
against 506,904 tons recorded in the corresponding period last year due to increased
market capitalization by India and increased domestic demand by 15%.
6. Globally price falls of rice by approximately $5 per one ton.
7. REAP pressuring government for currency swap with Iran and settling issues for gaining
a giant market again.
8. India taking share of Iran Rice Market by using financial instruments and diplomatic
tactics from Pakistan.
9. China becomes the major market for Pakistan rice export.
10. Gas and other energy shortage resulting in 60% decline of export of Basmati and other
value added rice.
Sr.#

Title

Estimated cost

Evaluating suitability of exotic rice varieties and elite germplasm for par- Rs.5.193 million
boiling

PSDP (RADP)

Incorporation of resistance against BLB from wild into cultivated rice

PSDP (RADP)

Development and dissemination of water saving rice technologies in South US$ 63000/
Asia

ADB (through
IRRI)

Aflatoxin contamination in rice

PSF

Marker assisted selection and genomic studies for stress tolerance in wheat Rs.71.785 million
and rice

Rs.5.26 million

Rs.1.889 million

Funded by

PSDP (RADP)

16

MARKET SHARE DISTRIBUTION

COMPANY ANALYSIS
ENGRO CORPORATION
Overview
Engro EXIMP AgriProducts Ltd is a subsidiary of Engro EXIMP. It is primarily operating the
Basmati rice Procurement, Processing and Export business. The business is growing on a fast
pace and has a visionary approach of being amongst the top and leading Basmati rice
businesses worldwide.
The aim of Engro EXIMP is to develop strong relationship with the farmers who grow Basmati,
by ensuring those services with viable value addition as well as procurement of superior
Basmati paddy. Alongside this, the company also provides supreme quality registered seed to
these growers of Basmati. To further enhance the workability of the business, Engro EXIMP has
also kept advisory as well as procurement team which is directly working on field with the
farmers. The company has also invested in research and development pertaining to
technologies that are desirable for the proficiency of farmers in areas of water conservation;
yield growth, management of crop etc.
Operations
Engro EXIMP Agri-Products not only owns but also operates a massive and modernized
integrated processing complex, situated close to Muridke. The area covered by this facility
accounts for 67 acres, and is undoubtedly present in the core of Basmati growing area. The
equipment is imported from USA, Germany and Japan, and seeks commission in 2011. This
facility has the capacity to dry as much as 150 tons of paddies on an hourly basis, and store
66,000 tons of clean and dried out paddy, while processing the rice at a speed of 24 tons per
hour.
Capacity
The company has the capacity and capability to procure 150,000 tons or more of paddy while
the season for Basmati is present. As the next step, they ensure that it is stored in stacks or silos
after undergoing the procedure of being dried and cleaned.
Revenues
The rice trading business of Engro EXIMP Agri-Products reaped revenue worth Rs.3.7 billion for
FY 2012, as opposed to Rs. 1.6 billion for FY 2011. The business has recorded higher revenue
than the previous year but it has been limited due to excess of capacity over production. The
plant operations had to undergo curtailment during paddy season of 2012 which led to a lower
17

procurement of paddy for the year. The International Basmati prices were lower in first half of
2012 due to prevalence of Indian Basmati, however they started improving by the second half,
and Pakistani Basmati was able to trade with Indian Basmati at a premium. By cutting down on
the energy costs, the business is aiming to achieve an improved margin.
Sales
39kT of finished rice equivalent accounted for the total sales during FY 2012 out of which 25kT
were catered to the local market while the remaining 14kt were exported.

MATCO RICE PROCESSING (PVT) LTD.

Overview
Founded in 1990, Matco is the leading exporter of rice from Pakistan, with the premium variety
of rice reaping the highest proportion of sales being Basmati. The companys international
presence extends to 65 countries, with their prominent brand Falak having an edge in more
than 35 countries.
Operations
Matco is currently operating 4 rice processing plus milling plants, and also has pertinent storage
facilities. The company also has the privilege of being the greatest rice exporter from Pakistan.
With effectively vertically integrated paddy-drying, storage, husking, and processing facilities
existent in Karachi (Sindh) and Sadhoke (Punjab), the export of the flagship brand Falak Rice, as
well as other private brands are exported to as many as 65 or more countries.
Sales and Capacity
A greater proportion of Matcos sales encompass premium Basmati rice, taking into account
that Matco is the largest exporter from Pakistan. The capacity in terms of the total processing
reaches 40 MT per hour, along with the investment of the company in plant and property
crossing beyond US$25M.
Growth
A number of incidences support the fundamental growth of Matco

Processed above 95000 MT raw rice in the year 2010

State-of-the-art facilities are used in processing
For the FY 2012 the existing production facilities have been enhanced by 35%, hence
increasing total production capacity to 150,000 MT of raw rice per year.
A latest paddy husking facility has been built in Sadhoke (Punjab) with the facility
covering an area of 15 acre.

18

Private Labeling
Matco is involved in private labeling of brands to cater to customers worldwide. Presently, the
private labels are being exported to over 60 countries. Few of the varieties of rice available in
private labeling include Super Basmati, Super Basmati Brown, Super Basmati Sella, Super Fine,
Pure Basmati, and so on.

GUARD GROUP
Overview
Established in 1989, Guard Agri is the very first company in the private sector which has its own
Rice Research and Development (R&D) facility. Ever since its inception, the business has
progressed dramatically and currently owns five divisions-- R&D, Crop Agronomy, Food, Seed
and Agriculture Machinery. Guard Rice Mills is a subsidiary of Guard Group, with a history of 50
years in manufacturing, trading and distributing variety of products not only in Pakistan but
across the globe.
Production Capacity
The company has latest rice mills located in Lahore, with the production capacity ranging to
12.5 ton/hour.
Quality Control
Within Pakistan, the company has the honour of being the first rice mill that has been awarded
ISO 9001:2000 Quality Management System certification in the year 1998. In 2006, it was again
the first rice mill to be certified ISO 22000:2005 Food Safety Management System certification.
It has the supreme standard of ensuring food safety along the entire food chain, until it reaches
the point of consumption.
Market Share
As a symbol of its quality strength, Guard is supplying to predominant rice brands, along with
owning labels with an export range of up to 36 countries. Aside from export markets, Guard
Rice is the National Market Leader, and has a massive distribution network country wide.
Products
The product range includes Supreme Basmati-Easy cook Sella-Super Kernel-Super Kernel SellaBrown Rice-Tibar Basmati-Guard Awami-Longrain rice.
The most preferred choice of people worldwide is Super Kernel Basmati, and is perceived as the
highest quality basmati. Guard rice is known for procuring and processing very high quality of
Basmati Rice, and is positioned for sale in big markets such as hyper marts and super marts.

19

GARIBSONS (PVT) LIMITED

Overview

Garibsons is one of the leading rice processors and exporters. The companys infrastructure
comprises of five state-of-the-art rice processing mills. The warehousing space exceeds 400,000
square feet and is situated near pertinent locations of Karachi Port and Port Qasim. The
company also devotes 35 acres of land to Basmati rice growing areas in Punjab housing, and
above 100 acres of industrial land in different industrial estates.
Main Markets

The predominant markets where Garibsons is present include the following:

South America
North America
Eastern Asia
Western Europe
Eastern Europe

Africa
Mid East
Oceania
Southeast Asia

Sales Volume and Exports

The total sales volume amounts to US$50 Million - US$100 Million. Since July 2001 till present, the

company has exported goods worth US$41 Million.

Growth

Keeping into consideration the customer's high quality expectations, Garibsons (Pvt.) Ltd., has
installed the Sortex Series 90,000, which uses the most up-to-date CCD technology, and
encompasses state-of-the-art optical sensing, data-processing plus ejector technology. The
Product yield increases by the resorting capabilities of the Sortex Series 90,000. Garibsons
assures "absolute" quality on the basis of employing the latest equipment installed.
Quality Control

Garibsons has been granted the ISO 9000 certification.

Fauji Foundation
Fauji Foundation initiated the rice category under its subsidiary Fauji Cereals. They introduced
rice flakes in the year 1960, while Basmati rice has been recently introduced in 2011. Fauji
started its journey in 1954, and has the vision of creating a stronger and smarter Pakistan. Fauji
Cereals products are produced using latest state of the art Swiss plant that was installed
recently in 2012. Fauji has also achieved ISO 9001-2008 Certification for producing superior
quality food products. The company has established itself in the international market and
exports to numerous countries. It also supplies to UNICEF and World Food Program.
20

EXPORT DETAILS
PAKISTANS EXPORTS of RICE.

As you can see here Pakistan exports a high quantity of rice to a number of different countries.
QRC RICE INSPECTION CELL
KARACHI,LAHORE,QUETTA & TCP
COUNTRY WISE POSITION OF EXPORT OF BASMATI RICE
S.NO NAME OF
COUNTRY
1 Aergentina
2 Afghanistan
3
Algeria
4
Angola
5 Australia
6 Azerbaijan
7 Bahrain
8 Bangladesh
9 Belgium
10
Brazil
11
Brunei
12 Canada
13 Cape Town
14
China
15 Comoros
16
Congo
17 Cyprus
18 Denmark
19 Djibouti
20
Egypt
21 Estonia
22 Finland
23 France
24 Germany
25 Gerogia
26 Gothenburg
27 Greece
28
Haiti

SUPER BASMATI
QTY(MT)
VALUE($)

JULY, 2012 TO DECEMBER, 2012

PARBOILED RICE
BASMATI RICE
QTY(MT)
VALUE($) QTY(MT) VALUE($)
24.08
16,350.32
114.
114,000.
39.6
48,114.

10.
67.

11,217.5
79,372.

704.48
7,907.79
5,328.81
506.
1,120.11
50.
25.
1,481.38

936,620.52
3,985,869.
6,081,724.64
629,775.
1,116,174.7
58,000.
35,500.
1,765,291.95

347.38

466,965.62

239.6

166,121.

50.46

50,169.68

581.52

788,143.28

263.41
130.8
25.

311,833.83
141,855.8
26,250.

8.92

7,183.82

329.96
489.76
15.
44.
48.
348.56
652.03

438,776.09
590,596.28
15,015.
58,215.3
55,944.38
424,305.98
777,465.04

46.

39,514.

25.

16,950.

523.14

546,098.11

72.5
540.44
17.81
25.
53.5

98,422.6
755,615.83
26,817.34
19,000.
30,768.39

BROWN RICE
QTY(MT) VALUE($)

22.
14,520.
7,471.71 6,111,798.13
1,449.97 1,218,635.8
21.
16,324.98
52.5
57,460.

484.31
20.
18.
115.3
34.

519,825.06
16,280.
16,650.
98,007.8
18,055.

26.
24.08
101.63
12.

22,880.
19,260.
87,044.16
12,060.

23.
182.36

28,350.03
188,685.34

25.
185.5

25,000.
103,148.53

25.

19,946.

226.68

180,854.37

25.

19,946.

TOTAL
FOB PER
QTY(MT) VALUE($) M/TON ($)
24.08
16,350.32
679
124.
125,217.5
1010
106.6
127,486.
1196
22.
8,523.57
7,907.79
7,018.38
527.
1,248.07
50.
25.
2,547.21
20.
290.33
246.1
59.

14,520.
7,515,384.27
3,985,869.
7,466,481.44
646,099.98
1,243,750.38
58,000.
35,500.
3,073,260.28
16,280.
335,667.65
239,863.6
44,305.

660
882
504
1064
1226
997
1160
1420
1207
814
1156
975
751

26.
22,880.
400.03 497,550.09
591.39 677,640.44
52.
44,025.
44.
58,215.3
48.
55,944.38
444.06 551,078.61
1,601.51 1,902,620.58
17.81
26,817.34
25.
19,000.
626.64 621,812.5
185.5 103,148.53

880
1244
1146
847
1323
1166
1241
1188
1506
760
992
556

21

S.NO

NAME OF COUNTRY

29
30
31
32
33
34
35
36
37

Helsinburg
Hong Kong
Indonesia
Iran
Iraq
Ireland
Italy
Ivory Coast
Johannesburg

38
39
40
41
42
43
44
45
46
47
48
49
50

Jordan
Kenya
Korea
KSA
Kuwait
Labnon
Liberia
Libya
Lithuania
Madagascar
Madagscar
Malawai
Malaysia

51
52
53
54
55
56
57
58
59
60

Maldives
Malta
Matadi
Mauritius
Maurtius
Monorivia
Mozambique
Muara Daru
Netherlands
New Zaeland

SUPER BASMATI
QTY(MT) VALUE($)
170.83
13,862.38
458.66
250.26
572.06
575.
11.5

PARBOILED RICE
BASMATI RICE
BROWN RICE
TOTAL
FOB PER
QTY(MT) VALUE($) QTY(MT) VALUE($) QTY(MT) VALUE($) QTY(MT) VALUE($) M/TON ($)
22. 21,340.
22.
21,340. 970
214,743.57
7.46 8,788.02
3.52 3,829.76
181.81 227,361.35 1251
12. 15,600.
12.
15,600. 1300
12,057,304.48 9,914.4 5,320,792.11 6,362.7 3,721,830.78
30,139.48 21,099,927.36 700
241,255.49
458.66 241,255.49 526
286,826.23
250.26 286,826.23 1146
656,546.49 436.24 364,979.9
94. 66,670. 514.77 449,437.7 1,617.07 1,537,634.09 951
705,525.
575. 705,525. 1227
16,560.
6. 8,940.
2. 2,900.
19.5
28,400. 1456
71.5 56,874.5

1,406.82 1,521,461.8
1,653.33 955,004.46
4.
5,200.
2.27 2,549.21
11,536.32 13,334,474.8 3,076.98 2,603,512.1 8,628.92 6,957,707.52
908.78 1,059,213.55
194.9 223,791.49 778.08 720,747.13
163.97 206,506.1
900.92 743,454.23
275. 347,825.
42. 59,823.96
18.7 17,834.26
163. 185,265.
74. 74,836.
2. 2,200.
24.
28,680.
20.
25,600.
173. 163,205.
50. 64,950. 3,400. 2,798,200.
241. 273,186.98
18.
16,038.
24.
24,000.
2,174.99 2,761,142.19
75.
211.7
23.
209.2

93,075.
282,131.8
28,402.93
252,721.85

878.88 773,272.05
15. 12,482.
24. 12,000.
296. 252,764.
25. 16,250.
2.

3,400.

28.2

40,250.

91.9 85,040.5
67.22 62,370.
195.71 230,480.68 1,310.23 1,278,962.92

71.5 56,874.5 795

3,060.14 2,476,466.26 809
6.27 7,749.21 1236
23,242.22 22,895,694.42 985
1,881.77 2,003,752.17 1065
1,064.89 949,960.33 892
275. 347,825. 1265
60.7 77,658.22 1279
237. 260,101. 1097
2.
2,200. 1100
24.
28,680. 1195
20.
25,600. 1280
3,623. 3,026,355. 835
1,119.88 1,046,459.03 934
33.
28,520. 864
48.
36,000. 750
2,470.99 3,013,906.19 1220
25.
16,250. 650
75.
93,075. 1241
241.9 325,781.8 1347
23. 28,402.93 1235
159.12 147,410.5 926
1,715.14 1,762,165.45 1027

22

S.NO
61
62
63
64
65
66
67
68
69

SUPER BASMATI
PARBOILED RICE
BASMATI RICE
BROWN RICE
NAME OF COUNTRY QTY(MT) VALUE($)
QTY(MT) VALUE($) QTY(MT) VALUE($) QTY(MT) VALUE($)
New Zealand
8.44
12,655.56
7.
10,745.
121.35 123,856.9
Nigeria
75.
45,000.
Norway
214.95 259,870.44
157.62 224,745.24
12.
13,500.
Oman
23,990.27 27,870,598.67
174.42 221,924.87
4,084.72 3,544,262.4
Parague
21.
32,004.
Philippines
68.8
88,599.56
Piraeus
24.
24,696.
Pireaus
48.
50,784.
9.
5,760.
Poland
50.
57,500.

70
71
72
73
74
75
76
77
78
79
80
81
82

Port Au Prince
Qatar
Reuinon
Reunion
Romania
Russia
Seychelles
Seychells
Singapore
Sir Lanka
South Africa
Spain
Sri Lanka

83
84
85
86
87
88
89
90
91
92

Sudan
Sweden
Switzerland
Tanzaina
Tanzania
Thailand
Thessaloniki
Trinidad & Tobago
Tunisia
Turkey

S.NO

NAME OF
SUPER BASMATI
PARBOILED RICE
BASMATI RICE
BROWN RICE
TOTAL
FOB PER
COUNTRY QTY(MT) VALUE($) QTY(MT) VALUE($) QTY(MT) VALUE($) QTY(MT) VALUE($) QTY(MT) VALUE($) M/TON ($)
U.K.
1,339.77 1,506,641.77
668.85 833,728.34
151.6 151,092.2 8,355.35 7,450,994.4 10,515.57 9,942,456.72 945
UAE
47,245.07 49,545,906.04
431.81 416,576.27 4,056.73 3,344,032.23
4.35
5,644. 51,737.96 53,312,158.54 1030
Ugenda
40.
21,200.
40.
21,200. 530
Ukraine
301. 333,830.38
52.
54,600.
353. 388,430.38 1100
USA
1,895.04 2,448,692.77 2,488.65 3,424,953.95
422.65 459,769.33
222.77 228,474. 5,029.11 6,561,890.06 1305
Wellington
7.49 6,102.72
12.26 9,987.83
19.74 16,090.55 815
West Indies
19.16 24,572.36
19.16 24,572.36 1282
Yemen
7,512.03 8,367,974.23
168. 171,024.
9,570.8 9,081,372.99
17,250.83 17,620,371.22 1021
Zambabwe
1.
800.
1.
800. 800

93
94
95
96
97
98
99
100
101

TOTAL

145778

5,091.5 6,410,808.38
20.
18,600.
288.
239,400.
7.9
11,114.
347.
377,033.
208.
210,080.
312.
319,280.
455.49 612,305.09
315.8
429.87
377.04

393,122.84
533,626.84
433,555.04

928.2
124.94
20.
163.
24.
28.
24.
19.79
22.
708.

1,248,179.1
144,772.27
38,600.
191,921.66
24,000.
32,200.
25,632.
31,020.5
26,422.
360,868.

154780654

21060

TOTAL
FOB PER
QTY(MT) VALUE($)
M/TON ($)
136.79 147,257.46 1077
75.
45,000. 600
384.57 498,115.68 1295
28,249.41 31,636,785.93 1120
21.
32,004. 1524
68.8
88,599.56 1288
24.
24,696. 1029
57.
56,544. 992
50.
57,500. 1150

14.5
7,540.
3,415.66 2,584,727.03
93.

82,635.

217. 245,189.58

370.23 401,949.33

11.5

11,960.

10.
7.

6,750.
8,708.

158.2 151,482.42
72.
38,736.
274.73 233,565.4
104.69 100,600.69
3,111.2 2,442,265.39

371.98

426,848.

2.

2,500.

100.

112,875.

24.

12,000.

17745777 61955

138.
13.
11.62
87.88
24.05

167,118.
15,549.91
13,653.5
50,751.25
25,589.2

32.

38,552.

50793356 10971

72.

57,442.09

350.

319,784.

1,175.

937,462.

9669985

14.5
7,540. 520
8,507.17 8,995,535.41 1057
20.
18,600. 930
453. 379,477.09 838
7.9
11,114. 1407
934.23 1,024,171.91 1096
208.
210,080. 1010
312.
319,280. 1023
625.19 775,747.51 1241
72.
38,736. 538
600.52 633,438.24 1055
891.56 962,719.53 1080
3,488.24 2,875,820.43 824
1,066.2 1,415,297.1 1327
1,684.92 1,524,632.18 905
31.62
52,253.5 1653
252.88 245,172.91 970
48.05
49,589.2 1032
128.
145,075. 1133
24.
25,632. 1068
19.79
31,020.5 1567
22.
26,422. 1201
764.
411,420. 539

239765

232998772

23

Rice Export Prices are as follows:

RICE EXPORT PRICES
Thai
White
100% B

U.S.

Second
grade
2007
2008
2009
2010
2011
2011

Thai

Thai
Parboiled Long
Grain
100.% 2,4%

335
695
587
518
565

332
722
619
532
563

Thai

Viet
5.%

436
782
545
510
577

325
682
555
492
549

Argentina
5.% max 10%

313
614
432
416
505

Pak
25.%

(US $/tonne, f.o.b.)

338
289
584 ...
459 ...
499 ...
475
409

July
548
548
549
532
505
August
582
588
605
566
564
September
618
625
650
601
555
October
620
610
639
604
576
November
649
624
597
632
560
December
620
598
569
603
492
2012
January
548
531
546
531
446
February
563
570
535
547
431
March
567
614
524
551
428
April
569
608
514
552
431
May
613
622
544
602
434
June
619
615
565
609
413
July
600
584
572
597
411
2011
Jan.-Jul.
528
530
552
511
473
2012
Jan.-Jul.
583
592
543
570
428
% Change
10.4
11.7
-1.7
11.6
-9.6
Sources
: Jackson Son & Co. (London) Ltd., Thai Department of Foreign Trade (DFT) and other public sources.
1/ White broken rice. 2/ No. 1, maximum 4-percent brokens, sacked, California mill.
Note

India

450 ...
450 ...
450
450
450
468
475
475
472
470
470
470
470
491
472
-3.9

437
419
396
384
390
395
379
384
379
382
394
386

Thai
25.%

Viet
25.%

U.S.
California
Medium

A1
25.% Super
1/

Grain
2/

Pak
Basmati

Thai
Fragrant

Ordinary

100.%

290
498
351
372
433

305
603
460
444
511

294
553
384
387
467

275
506
329
386
464

557
913
1019
764
855

677
1077
937
881
1008

550
914
954
1045
1054

467
466
455
418
405
391

490
520
550
556
594
587

466
530
515
524
515
464

445
471
497
505
553
560

871
866
860
860
816
764

910
875
950
962
950
890

1062
1096
1110
1140
1141
1125

379
379
415
411
412
411
404
437
402
-8

529
542
551
553
580
579
570
474
558
17.6

410
395
387
384
388
369
379
437
387
-11.3

515
530
543
546
554
545
536
426
538
26.4

816
816
788
772
780
783
788
871
792
-9.1

950
950
950
825
881
931
931
1068
917
-14.1

1087
1110
1120
1091
1078
1062
1062
1004
1087
8.2

: Please note that data may have been subject to revision due to temporary unavailability and/or late publishing of weekly price quotations.

FAO Rice Market Monitor July 2012

24

PEST MODEL
PEST analysis is an analysis tool employed by companies for their product to judge the
environment they are going to operate in. PEST analysis gives a good view of the external
factors that can affect the product, locally and internationally. It evolves around four major
pointers; Political conditions, Economic conditions, Social conditions and Technological
conditions. It gives a birds eye view of the whole environment, and allows the analysis of the
industries to be done easily. It helps companies and industries identify what issues they will be
facing if they launch into that particular environment and make the decision of countering
those issues easier by forming effective strategies. PEST takes into account four important
factors:
1. Political: These factors determine the extent of government intervention in the industry and
how it affects the industry. Government intervention can be via strict regulatory checks, fiscal
policy implementation, trade tariffs and its affect on exports and the business environment.
The political conditions affecting the Rice Industry are majorly the weak law and order situation
of Pakistan that deters foreign and local investment within this industry. It also affects the
demand and supply of the rice farmers by negatively affecting the procurement of raw
materials because of transport strikes, and delays the shipment of orders. Moreover, the
presence of feudal lords with strong alliances with political leaders work against the favor of a
common farmer as their stocks are at time left behind until the stocks of the influential people
are sold. However, government has employed field advisors who help the farmers with respect
to their education, the ways that can be used to farming, sowing and harvesting. Other than
that, no government intervention with respect to taxes and subsidies is present.
2. Economic: These factors try to understand the position of the industry economically and the
reasons for it being so. For example, inflation rate prevalent in the economy and how it would
affect the rice industry by affecting price, cost of raw materials. Other than that, interest rate,
foreign exchange rate also fall in this category. Foreign exchange has affected the rice industry
as due to the fall of the value of Vietnamese currency, their exports in the international market
have become cheaper, giving them an edge over the Pakistani rice products in the market.
Thus, Vietnamese variety has been able to claim the international market share of Pakistan.
Inflationary pressure domestically in Pakistan has led to rising oil prices and raw material cost
for the farmers. This has then led to higher prices as the farmers are not allotted any subsidies.
Higher domestic prices pave way for lower international competition, affecting the revenue of
the farmers.
3. Technological: These facts deal with the introduction of new technology that may affect the
25

competitiveness of the industry and its efficiency and how, ultimately demand and supply
would be affected. Research and development, and automation fall in this category. Pakistan
has been an agriculture based industry since the time of its inception in 1947. The farmers from
that time have only learnt the traditional ways of farmers, and those ways are which they are
comfortable with. With the developments in technology on a daily basis globally, this has acted
in our disadvantage because international rice producers have attained efficient and cheaper
ways of producing rice, exporting them at cheaper price, hence we face competition and are
susceptible to losing out our market share in the international market. The farmers in Pakistan
are also reluctant to learn these ways. Moreover, they even lack the awareness of new and
efficient technologys existence. This is our disadvantage. However, newer firms like Eximp
Engro are now a part of the rice market because they found a gap in the rice market of Pakistan
which they saw as one they could cover. Such firms are also investing in the modern technology
now available. They also hold seminars for the education of rice farmers. Research institutes
are also now establishing themselves in Pakistan with the help of REAP, and so Pakistan can
have the technological factors work in its favor.
4. Social: These facts deal with the social environment and take into account trends of the
industry, demographics, population. The population of Pakistan is growing in a geometric trend.
This assures demand of rice for the future, hence promising good revenue to the farmers.
Furthermore, diet trends claiming rice to be nutritious are an attractive factor for the demand
of rice to rise in the future. The increasing popularity of the Asian Cuisine worldwide is also
aiding rice consumption because these are based on rice as the main ingredient. Example; Black
Rice and Chinese food. Rice is also considered to be eaten in a hurry and in a cleaner method
than curry with chapatti; therefore the social pattern depicts an increase in the rice
consumption and is a positive sign for the rice industry.

26

SWOT ANALYSIS
Strengths:
1.
2.
3.
4.
5.
6.

Climate/edaphic conditions
Variety of rice produced
Exposure to export markets
Privatization
Competiveness
Pakistan is the 4th largest exporter and
11th largest producer of rice
7. Availability of labor

Opportunities:
1. Agriculture based Economy of Pakistan
with high export and investment
potential
2. High demand
3. Export opportunities with China and
Philippines
4. Role of TDAP
5. Organic farming
6. Asian cuisine influence
7. New diet studies
8. Minimum export price
9. Introduction of new technology

Weaknesses:
1.
2.
3.
4.
5.
6.
7.
8.

Mixing of Rice
Technology
Selling without brand names
Lack of value addition
Seeds yield
Lack of facility with cluster
Black market (Punjab and Sindh)
Labor issues

Threats:
1. Competition in rice exports
2. Unpredictable Climate and Global
warming
3. Shortage of gas in Pakistan
4. Soil erosion
5. Water issues
6. Increase in small farmers
7. Feudal Lords
8. Lack of infrastructure in rural areas
9. Economic and Political situation of
Pakistan
10. Role of Urbanization
11. Falling value of the Pakistani rupee and
role of Vietnamese currency
12. No government support
13. Various duties and taxes imposed.

27

STRENGTHS:
1. Climate and edaphic conditions:
Rice is best grown in a hot climate with a lot of humidity. The required temperature is a little
above 25C and about 150-200mm of rainfall is required during the sowing period. Clayell land
and alluvial soil is also required. All this is present in Pakistan hence it acts as a major strength
for the industry. Pakistan is divided into 4 rice zones according to the climatic and edaphic
conditions for the different varieties of rice.
Zone 1- Sub humid monsoon, 750-1000mm of rainfall and flat valleys. High quality Basmati not
grown in this zone. Northern mountainous areas
Zone 2- Sub humid and sub-tropical climate. 400-700mm of rainfall. For better quality of rice.
Lies between the river Ravi and Chenab. Basmati rice is grown in this zone.
Zone 3- West bank of the Indus River. Arid subtropical climate with 100mm of rainfall. Has a
long and extremely hot summer. Good for many coarse of rice varieties.
Zone 4- In the Indus Delta. Arid tropical marine climate. Not much rain. Rice grown with
rotation.
2. Variety of rice produced
As stated by Mr. Naveed (BD manager Engro Eximp) that there are two major types of rice in
Pakistan Basmati and Non-Basmati (e.g., IRRI). Pakistan specializes in and is very famous for
exporting long and long grain which is aromatic basmati rice. This quality is exported to UAE,
Australia and European Union. Super Basmati is considered one of the best around the world by
the Agriculture Department of the Government. Others are:
1) Cargo Rice: (BROWN RICE, HUSKED RICE) is the kind of rice obtained from the paddy, the only
process implemented on it is Husk removal. This includes whole grain, head rice.
2) Plain or White Rice: is rice obtained from the paddy and it has been husked, milled resulting
in removal of bran layers. This includes whole grain, head rice.
3) Parboiled Rice: It can be husked and milled rice or husked rice having been subjected to heat
treatment after being soaked in water so that the starch is fully gelatinized. This is followed by a
drying process.
Pakistan produces varieties of rice, the popular ones being:
Basmati:
1) Basmati 2000
28

2) Basmati 385
3) Basmati 198
4) Super Basmati
5) Basmati 370
6) Kernal
7) Shaheen ( Basmati)
Other Rice Varieties:
1) IRRI 6
2) IRRI 9
3) PG (IRRI)
4) KS 282
These various varieties cater to various demands in different countries and because Pakistan
produces all these, Pakistan has an edge as it can cater to demands from various countries and
not be dependent on one quality.
3. Exposure to foreign markets (Exports)
The quality of rice which Pakistan grows gives it an edge over many other countries and helps
us export rice. Pakistan is the 4th largest exporter of rice in the world. There was an indirect
subsidy on tractors and bags of rice recently which helped Pakistan export more. REAP (rice
exporters association of Pakistan) was set up to assist the exporters.
4. Privatization
After the reign of Bhutto, all industries were privatized and so was the rice industry. We all
know that privatization of industries leads to more efficiency and productivity which leads to
lower prices, higher variety and more exports. There has been a 27.7% increase of rice
production in the country since the past year. The government sector mentioned themselves
about the issues a nationalized industry faces which are over employment and political
pressure which doesnt exist in the rice industry in Pakistan after it was privatized.
5. Competitiveness

29

Since we all know that the rice industry is privatized, there are numerous players in the market.
Engro Eximp entered the market recently and added to the competition which already existed
among the major players. Competitiveness has its own advantages. Each Company will want to
have an edge over the other hence they will produce the better quality with lesser costs. What
Engro did is it is using its brand name to capture the market. Whereas Guard being a company
with Chinese affiliation is using its low cost to compete.
6. Pakistan is the 4th largest exporter and 11th largest producer of rice:
Asian countries have 80 million hectares of land, able to cater to 75% of the total demand of
rice. Pakistan achieved phenomenal increase in rice production in Ayub Khans era. Pakistan
produces 6.22 million tons of rice on 5 million acres of land. Rice export has remained the
second largest foreign exchange earning commodity for Pakistan. Pakistan exports 80% of
Super Basmati to European countries and has the potential to export more.
7. Availability of labor:
Pakistan being an agro based economy has an ample supply of labor. The rice industry being a
labor intensive industry has access to all this labor. Therefore there is a chance of high
production.

30

WEAKNESSES:
1. Mixing of Rice.
We all know about the instability of pricing of Pakistani products in the foreign markets when
exported. Basmati rice has been mixed with non-basmati rice skillfully retaining the cooking
ability of rice and labeling it under basmati rice when it is not 100% basmati rice. There are two
drawbacks of this, people who do not know about the mixing, they label Pakistans basmati as
not as good as Thailands or any other countries. Also when found out that it has been mixed
with non-basmati rice, the customer feels cheated decreasing goodwill.
2. Technology
Although Pakistan has started using technology in the rice industry, it is still far behind a few
countries. According to the Bahoori Mills in Punjab, the inconsistent quality and quantity of rice
produced in Pakistan is because of the lack of technology. The traditional technologies arent
able to cope with the rising demand. According to Iftekhar Ahmed Khoso Sindh has two major
zones of rice production and none have ever achieved the desired per acre result because of
lack of technology. The rice goes through various processes until its a finished good. The rice
mills located in Sindh are outdated and thats why China and India always had a lead in the
industry due to the up gradation of technology in their industry. This is also why Pakistan
experiences a lot of grains of broken rice after the final process.
3. Selling without Brand names
A major weakness of the Pakistani rice exports is that they sell without any brand names. This
was also highlighted by the Engro BD manager that despite the major players and high exports
the packaging exported are known as Basmati rice, Pakistan. This has changed a little with
GUARD into the industry and Engro is trying to change it while trading rice. This has had a
drawback as each company differs in their quality of rice. When consumers buy Pakistani
exported goods, they are bound to get a different variety every time. Because of this the
exporters do not even get a good price for the rice exported.
4. Lack of value addition
Talking about exports specifically in this case. Pakistan exports rice in bulk quantity and rarely in
1kg, 2kg and 5kg packets. Again with the help of Engro and GUARD it has just started but not
on a very large scale. The majority is in bulk. The consequences of this are that it loses its
foreign markets as other countries sell in every possible quantity.
5. Seed yields
31

Although new seeds have been developed but due to lack of technology and use of good quality
fertilizers, the seed yield of rice has been falling. Because of this rice seeds have to be imported
into Pakistan. Hybrid seeds are being imported; Hybrid seeds have a much higher yield than
Basmati in Pakistan. The Kissan Food spokesman said that the government should invest more
into the rice industry rather than companies importing seeds.
6. Lack of facility within culture
The rice industry is privatized in Pakistan and the government of Pakistan does not provide any
direct subsidies. The farmers arent very well trained and equipped. Most of the processes are
mishandled by them which results in lack of crop. They have been learning from their
forefathers and the experience they have received. The farmers need to be educated more to
help produce more rice. REAP has been conducting workshops but its understood that they
cannot cater to entire Pakistan with a few individuals. The government sector proposed
themselves that the private sector has better schemes to facilitate the industry then what the
government does.
7. Black Market
In the past 2 years, many issues have threatened Pakistans ability to feed itself may it be rice,
wheat or any other crop. Pakistan has faced black marketing in wheat and sugar extensively.
However black marketing of Urea has given a rise in price of rice from Rs. 635 to Rs. 850 in
interior Sindh. Urea consumption has been increasing due to bumper crops hence the
marketers started taking advantage of this situation. Other than that, the rice is cheaper in
Punjab than in Sindh, so traders buy rice from Punjab and sell it in Sindh. This is how they
exploit the market and earn a higher profit in Sindh.
8. Labor Issues
Most of the labor employed in the rice industry is not educated and there is little training
provided especially regarding rice processing. This has led to increased losses in the yield
because proper knowledge and training is not available to the farmers.

32

OPPORTUNITIES:
1. Agro-based economy with high export and investment potential:
Pakistan is an agriculture based economy, with the majority of population living in rural areas
and using agriculture as their source of income. This is an opportunity because as more farmers
are present in agriculture, there is a greater chance of human investment in this sector. Even at
the high political level, most of the leaders have lands in their name used for the purpose of
agriculture. Rice is produced in Pakistan in Sindh and Punjab. Despite the demand of rice in
South Africa, Senegal, Saudi Arabia, Kuwait, USA, Turkey, Sri Lanka, Australia, Malaysia,
Indonesia, Philippines, Pakistan has a small share in these markets. Immense potential for
investment is present in the Rice sector via development of Silos, Parboiled rice processing
plants, quality polishing and processing. Saudi Arab and USA are major demanders of parboiled
rice (70%) therefore investment in this sector is an opportunity for Pakistan.
2. High Demand
Population growth in Pakistan is quite visible. Rice being the 2nd staple food of Pakistan is
required in large quantities. This helps the industry to produce more with lower prices and
provide ample rice for the entire country.
3. Export opportunities with China and Philippines:
Punjab Governor Makhdoom Ahmad Mehmood said that our rice exporters have been able to
attract the interest of the Chinese buyers into buying the rice we produce (04-04-2013,
Business Daily Recorder). Tanzania and China have become major rice exporting importing
companies from and for Pakistan resulting in them being a sure source of our demand for the
variety of rice that Pakistan produces. This is because of the efforts of Rice Exports Corporation
to encourage export of Pakistani rice. As of January 2013, Pakistans rice export to China has
recorded an increase as the volume of non-basmati rice (72,623 MT) to China worth $30 million
in just one month was exported. (DAILY TIMES (14-03-2013)).
Pakistan has won a tender for supply of 50,000 MT rice to Philippines as a result of bidding held
on December 2, 2009. Philippines have also announced another tender for purchase of 600,000
MT rice. Pakistan can avail this opportunity.
4. Role of TDAP:
Trade Development authority of Pakistan (TDAP) has announced to strategize with a detailed
program focused on the promotion of rice export to Central Asian States. Exhibitions such as
Expos are planned to be arranged in collaboration with the rice exporters to market Pakistans
33

rice. As it would help exporters to earn more foreign exchange for the country, this is good sign
by TDAP. Punjab Government will sign 5 acres of land for the establishment and development
of Rice Technical Training Institute, where skilled manpower for the rice industry would be
trained. (THE NATION (29-03-2013))
5. Organic Farming:
Sales of organic food have increased in comparison to the production of organic food at the
ratio of 1:3. It shows an increasing demand supply gap. This is an opportunity for agriculture
economy of Pakistan. If the rice farmers shift towards Organic farming and production for rice,
this could be sold at higher prices meaning higher profits for farmers. This will attract more
farmers, convince them to improve their ways or farming and ultimately, increase international
demand.
6. Asian cuisine influence:
Asian restaurant and food are gaining popularity all over the world. Asian recipes rely heavily
on rice as their stable ingredient example Chinese food, porridge, black rice of Valencia. As
Asian food becomes more popular, the demand for rice will also increase.
7. New diet studies:
The new diet studies have shown rice to be more nutritious than any other food. These
researches for the health conscious people lead to an increase in demand for rice, which is
again a window of opportunity for the farmers, promising future stable demand.
8. Minimum Export Price for Rice:
Rice Export Association of Pakistan(REAP)s role in fixing a minimum export price for rice is an
opportunity because it promises for the farmers, a stable price for rice, and hence promises a
steady amount of profits too. Therefore, it is also an incentive for farmers to increase their
supply of rice and earn higher revenue.
9. Introduction of Technology
There have been glimpses of Pakistan rice industry using technology in the recent years which
have helped the industry go in a very positive manner. Dr. Fida Abbasi developed a technology
that happened to increase the number of grains per panicle of a rice plant from 250 to 700. The
technology Super NPT has helped increase rice production from 5 ton per hectare to 15 tons
per hectare. According to Dr. Abbasi this kind of rice wasnt produced anywhere in the world.

34

Threats:
1. Competition in rice exports:
India is currently producing 1121 variety of rice which is of better quality than Pakistans
basmati rice. Due to this, it is highly demanded by the international market at a higher price as
well becoming a major competitor for Pakistan.
Bangladeshs farmers are expected to produce a new variety of rice seeds in the coming year
that will speed the maturity of the rice crops process in 105 days, which is the fastest of all the
varieties ever produced and tested. This seed was developed by Bangladesh Rice Research
Institute (BRRI) via hybridization or cross mixing of a local rice variety with the high-yielding
BRRI Dhan-39. Bangladeshs government will also aid the farmers by the provision of free seeds
and fertilizers to boost the cultivation of rice watered by rain and hence, protect the
environment as a result. Bangladesh is the worlds fourth biggest producer of the grain and this
would lead to an increase in its exports.
2. Unpredictable Climate and Global warming:
Global warming is an international concern as it leads to higher temperature globally. That
leads to melting of glacial in the seas and rivers, leading to floods. Pakistan has been known to
be badly affected by floods in the Pakistan. Lower Sindh is a major producer of rice and is also
the area most affected by floods, which affect the crops harvested in those areas. Rice needs a
constant and specific supply of water. Too much water, caused by floods cause water logging
and also brings with it various diseases. Unexpected climate also brings about droughts and
famines, and as Sindh is a major producer of rice, it needs water supply constantly.
3. Shortage of gas in Pakistan:
The export orders of parboiling rice are at a verge of being not completed because of
unavailability of natural gas which is a main raw material in the production, Parboiled rice have
a great demand in the international market to the extent that can fetch 15% of our foreign
exchange with value addition. Rice Exporters Association of Pakistan (Reap) Vice Chairman
Chaudhry Samee Ullah urged the Sui Northern Gas Pipelines Limited (SNGPL) authorities to
ensure uninterrupted gas supply to rice millers and exporters as the top priority because export
make up a high percentage of our economys revenue.
4. Soil Erosion
To counter to soil erosion, no mode has been adopted to bring back the fertility to soil after
harvesting rice crops leading to the soil becoming infertile. The thickness of fertile layer of soil
35

in Pakistan is more than 6 inches whereas that of other countries is 4 inches. Despite that, the
yield of our soil is lower compared to those of other countries.
5. Water issues:
Water wastage is very high in our country. The traditional method of flood irrigation is still in
practice throughout the country which wastes almost 50 percent of water. Water is needed for
rice production. This wastage of water leads to water logging in some areas, and the other
areas being completely deprived of water, affecting the supply of rice.
6. Increase in small farmers:
The small farmers are increasing in our country as with succeeding generations, land gets
divided. These small farmers are unable to avail their credit facilities to purchase seeds,
pesticides, fertilizers because of lack of credibility. Additionally, a large area of land for rice is
owned by feudal employing the farmers as workers or tenants. This uncertain situation of
occupancy neither creates incentive of work nor does attract capital investment by the farmer
or by international investors either.
7. Feudal Lords:
The existence of feudal lords and their connections with the leading political parties of Pakistan
are a threat as they force up the prices of rice stock by using influence and making sure their
stock is sold before that of the small farmers. This is a threat as it negatively affects the small
farmers and their supply. The feudal landlords are also in possession f very large land, and
because they do not know the ways of farming, much of the land is left to waste.
8. Lack of infrastructure in rural areas:
The only means of communication in rural areas is television or radio. Via government
expenditure in this sector, programs related to rice sowing, germination and planting can be
aired so that the farmers can learn of them. However, these programs would need to be cast in
local and regional levels. Lack of guidance is the main reason of farmers backwardness. This is
because of communication gap between well qualified experts and simple farmers. The experts
are unwilling to travel to such areas because of lack of infrastructure. Due to this, the farmers
have not learnt the best techniques, which affect their output.
9. Economic and Political situation of Pakistan:
The political situation of Pakistan deters foreign investment. Also, this situation causes strikes
affecting the output and sales of farmers and their profits. This has led to farmers willing to
shift to Bangladesh. Lack of electricity and gas adds to the pressure.
36

10. Role of Urbanization:

Urbanization is leading to rural farmers shifting to urban areas and moving away from
traditional practices such as farming and rice production. This is a threat because Pakistan is an
agro based country and our major export revenue comes from there.
11. Falling value of the Pakistani rupee and role of Vietnamese currency and prices:
The devaluation of Vietnamese currency may affect the price of rice in international market.
Vietnamese rice price is expected to fall as the government has stopped its intervention by
fixing a higher price. This will make Vietnam able to compete in the rice market with India and
Pakistan due to their lower priced rice.
12. No government support:
Lack of government support in the case of provision of subsidies and tax incentives and
reduction of duties lead to increased price for rice exporters ultimately increasing their cost of
production, lowering profits or leading to higher prices. Other countries, aided by the
government can sell internationally at lower prices, again affecting our share in the
international market.
13. Various duties and taxes imposed:
These pose a threat because duties and taxes increase the cost for farmers, again affecting their
profits and the prices rice is sold and exported at, giving way for internationally competitors to
sweep the market share.

37

PORTERS DIAMOND MODEL

Porters Diamond Model helps us understand the position of a nation with regard to global
competition. According to Porter productivity is the major contributing factor to
competitiveness which in turn helps to improve a nations standard of living. The model
suggests that there are some basic reasons why some nations and some industries within
particular nations are more competitive than others on a global scale.
When we think about the fact that why do nations compete, the first and foremost reason that
we need to consider is the standard of living. All nations compete essentially to increase their
standard of living. An increased standard of living makes sure that the citizens of any country
have factors such as widespread education, access to health facilities and employment
opportunities amongst many others.
Porters Diamond Model for the comparative advantage of nations consists of four main
attributes which shape the national environment in which domestic firms compete.
1. Factor Conditions:
These include factors such as skilled workforce, technological advancements, natural
resources etc.
2. Demand Conditions:
These conditions describe the nature of the demand of the local market with respect to
the foreign demand.
3. Related and Supporting Industries:
Local competition between related and supporting industries creates innovations and
cost effectiveness within the industry which drives up productivity
4. Firm Strategy, Structure and Rivalry:
This includes how companies are created, organized and managed. In addition to this it
talks about the nature and extent of local rivalry.

These four factors promote the competitive advantages of firms, industries and nations.
Business leaders can use this model to determine competitive factors and create benchmarks
for their firms and industries. Furthermore the model can be used to analyze which countries to
invest in and which countries have more potential for development.

38

ADVANTAGES & DISADVANTAGES OF PORTERS MODEL:

The Porter Model has several advantages. They are as follows:
1.
2.
3.
4.
5.
6.

It helps a nation or a firm to utilize its resources to the best of its abilities
It helps a nation or a firm to be competitive
It helps a nation or a firm to streamline its natural capabilities and improve upon them
It brings about innovation and technology
It helps nations build up on their competitive advantage
It helps to open up nations and firms to global market and opportunities

The disadvantages of the model are as follows:

1.
2.
3.
4.

It makes the firms concentrate too much on particular resources

Diversification is promoted at a much later stage
Many implications depend on the element of luck
There is no guarantee that the application of the model will be successful as every
nation has a different case.
5. The model does not take culture history into account

Porters model can be applied to nations across the globe provided that the nation
concentrates on converting its basic resources into advanced ones. Pakistan can well focus on
its agricultural products as it has an advantage here. However the focus should be on making
the sector more technology and innovation savvy. Pakistan is still struggling in this aspect.
However according to recent research the industry has moved in a positive direction albeit
slowly.

39

THE DIAMOND MODEL FOR THE PAKISTANI RICE INDUSTRY

FACTOR CONDITIONS
Factor conditions in the diamond model can be categorized under human resources, material
resources, knowledge resources, capital resources and infrastructure. According to Porter it is
not necessary that these factors are naturally present in a country or inherited. They can
develop and change. Factor conditions provide initial advantages to the nation and industry
which are then built upon. Each nation has its own particular set of factor conditions hence the
development of each nation differs.
Pakistan is an agro based economy where rice plays a major role. Rice is a very important crop
for Pakistan for several reasons. Firstly, rice is second staple food and contributes more than 2
million tons to our national food requirement. Secondly, rice industry is a significant source of
employment and income for rural people. Thirdly, it contributes to the countrys foreign
exchange earnings.
Research shows that rice is grown in three stages in Pakistan. The first stage is that the rice is
shelled when it is grown. This means that the eatable rice is taken out from the shell and the
shell is used as a by-product. Then it is re-processed to remove the bran from the rice making it
rough rice. Bran itself is a very useful byproduct. In the third stage the rice is transported to the
city and then polished after which it is exported.
Pakistan has been blessed with abundant natural resources that work in its favor where rice
production is concerned. These resources allow Pakistan to produce Basmati rice which is one
of the finest qualities of rice in the world. It is a non replicable variety and is grown in high
quantities in Pakistan due to the fertile Pakistani soil, humid climate and slit forming deltas
carrying high level of nutrients to the rice plains. Another high quality breed of rice that is
produced in Pakistan is the IRRI rice. This is hybrid rice and it is grown in Pakistan because of its
heat and salt tolerance. Rice growing season is fairly long and suitable for cultivating fine
aromatic Basmati as well as some IRRI varieties.
However limited water availability plays an adversary role to rice production as water is a major
component for production. When monsoon rains do come they bring much relief but they also
bring floods at time which ended up damaging 400,000 tons of rice paddies in 2011. When rice
is harvested it needs a proper storage place which unfortunately is not a concept developed in
Pakistan. If the rice is harvested and rainfall occurs then the whole crop is destroyed.
Technology is an important factor in todays world. Technology contributes heavily towards
productivity and efficiency. In Pakistan the technology, with respect to the rice industry, is not
40

as progressed as it should be. Traditional and outdated post harvest practices have resulted in
substantial losses of output and quality of Basmati rice. However, big brands in Pakistani rice,
like Matco, are trying to solve this problem. Matco recently invested in the most modern agro
processing infrastructure that aims to correct the post harvest losses problem in the rice
industry. With the collaboration of the new Japanese and American technologies the Sadhoke
project of Matco contains the latest technology such as modern paddy dryers, rice parboiling
units etc.
There is also a transportation issue associated with the rice industry. USA uses cargo trains to
transport rice. However in Pakistan trucking is mainly used for transporting rice although its
much cheaper to use trains. Even though train transport will benefit farmers more, it is still not
done in Pakistan. Another factor to consider is the law and order conditions of Pakistan. This
factor along with rapidly changing governments and their policies can hinder development of
any industry, the rice industry included.
Agriculture is the major industry for Pakistan and thus this sector provides employment to a
large number of the population. This applies to the rice industry as well thus we can confidently
say that the rice industry is highly labor intensive. However just like most other agricultural
sectors of Pakistan, the workforce in the rice industry is also largely unskilled. Only workers
hired in big rice mills have the appropriate training to function the machines. The workforce is
highly underutilized as a lot of potential exists for training and development. However as the
rice industry is a labor intensive industry, it is suited to Pakistans high population as more
employment is generated through this sector.
As far as investment is concerned, the Pakistan rice industry seems to be an ideal place to
attract foreign direct investment. This is because of limited avenues of investment in the global
arena. The investment in infrastructure and technology is much needed as both these things
are traditional and outdated still in Pakistan. This is contributing to a decrease in the
competitiveness of the rice industry of Pakistan. There is huge untapped potential in this sector
but millions of dollars are required to modernize this industry.
As local demand is easily met rice millers and producers tend to be export oriented because this
reaps them higher profits than local markets. Good crop and competitive pricing is expected to
increase exports. International competition from India with regard to Basmati rice decreased
Pakistani Basmati exports in 2012. Even though Pakistan has better quality rice than India,
Indias promotion, marketing and finishing is better which results in higher exports. However
this competition should be used to further develop the industry so that Pakistan surpasses its
competitors.

41

DEMAND CONDITIONS
Demand conditions are the second element in the diamond model. Porter defines the demand
conditions as: The nature of home demand for industrys product or service demand
conditions describe the level of domestic demand that a firm faces. Thus demand conditions
depend on not only the quantity of the demand but also the nature or sophistication of
demand. Porter points out that the primary source of competition between firms is due to local
demand. A high and sophisticated domestic demand drives firms within a nation to have higher
productivity and efficiency which further drives these firms to be competitive on a global basis.
The nature of local demand also makes domestic firms aware of the new and emerging trends
in the in international markets. It also helps in shaping a firms responsiveness towards buyer
needs.
According to Michael Porter, the local demand should be anticipatory of the foreign demand
and it should be sophisticated. Competition at local level can lead to national productivity and
innovation. It also means that a country can achieve national advantages in an industry or
market segment, if the local demand provides clearer and earlier signals of demand trends to
domestic suppliers than to foreign competitors. Normally, local markets have a much higher
influence on an organization's ability to recognize customers needs than foreign markets do.
Pakistan grows high quality rice for local as well as international demand. Rice is a very
important crop for Pakistan. It stands second after wheat in crop production in Pakistan and is a
staple food for the Pakistani people. Rice is also an important source of foreign exchange
ratings. Foreign and local demand for rice is increasing and the rice industry has the potential to
produce more so production is expected to expand to 6.3 million tons of milled rice. There are a
number of associations such as REAP (Rice Exporters Association of Pakistan) that are
promoting Rice industry in the international arena.
Local demand for rice is easily met as production is very high due to favorable edaphic
conditions. From all the rice produced In Pakistan only 40% is locally consumed whereas 60% is
exported. The domestic demand for rice in Pakistan measured up to be 2.5 million tons in 2012.
As far as brands of rice are concerned, there is few branded rice present in the Pakistani
market. The three most well know are Falak rice, Guard rice and Mughal rice. However research
shows that recently the brand awareness has increased and the consumer base has widened
very significantly due to brand promotion in the local markets. This trend is seen in the
international market for rice as well.
Moreover as we have seen there is little investment in the rice industry but a huge potential for
development exists. Recently only there have been investments in modern agro processing
42

infrastructure and technologies which will result in higher quality rice to be produced which is
now being demanded locally. It will also lead to reduced post harvest losses. When we
interviewed Mr. Naveed from Engro, he even stated that the reason Engro entered the Basmati
rice industry is because they saw huge potential in the industry and a huge gap where there
were not many known firms present for trading. He stated that there is a need for more big
firms in the industry because investment is desperately needed.
Initially after the rice industry was privatized, the competition used to be on price rather than
quality. However, now a shift is seen in the local market towards quality. Now buyers in the
local as well as international markets are demanding high quality rice. Demand for parboiled
rice is also increasing day by day due to its nutritional value and high quality. Furthermore, the
price of rice in the local market has increased despite higher production. This is because there
has been an increase in the cost of cultivation as well as strong local demand for high quality
rice.
The demand for rice is also affected by the way our consumers market is segmented. According
to buying power of consumers, the market for rice can be divided into three broad groups.
These are:
1. Lower Income groups: This segment is the major market of broken rice and IRRI rice
2. Middle income group: This segment purchases good quality rice which is polished rice as
well as semi-polished rice
3. Upper income group: This segment prefers to buy high quality branded rice

Furthermore unethical practices also exist in the local market that affects demand. Firms in the
rice industry usually mix different varieties of rice to lower the net price rather than
transforming the value chain to ensure good quality rice at a lower price thus having a negative
impact on the market.
There are several possibilities through which we can achieve the targets of demand conditions.
Firstly, our local buyers are progressing towards the point where they display sophisticated
demand and responsive behavior. Secondly, the base for innovation, product improvement and
quality maintenance is coming from Foreign Markets. Many exporting companies have been
barred because of their sub-standard products. For them, getting a quality assurance certificate
is the first step and maintaining it is another. Pakistan has now become aware of the need for
such credible quality assurances.

43

RELATED AND SUPPORTING INDUSTRIES

As suggested by the Diamond Model, one internationally successful industry may lead to
advantages in other related industries. Competitive supplying industries promote innovation
and worldwide recognition in industries in the value system later on. Apart from suppliers,
related industries are also of equal importance. These are industries that use and work in
harmony with particular activities in the value chain, or those that are concerned to the
complementary products.
When national supporting industries tend to be competitive, home based companies will
automatically get more efficient, cost wise, and receive more innovative ideas and focus on
implementing them. This will eventually lead to an increased competition for national firms. For
example, the Italian shoe industry reaps benefits from a highly skilled pool of related businesses
and industries, which has increased competitiveness of the Italian shoe industry drastically in
the whole word.
Moreover spatial proximity of upstream and downstream industries helps in the exchange of
information and encourages a continuous exchange of ideas. Industries that are supporting
tend to form agglomerates where all the industries are close by in order to benefit from
interconnected and ancillary firms. Furthermore, there are other highly important benefits that
are availed by the horizontal and vertical linkages subsequently being formed among related
industries.
Shifting over to the related and supporting industries for the rice industry of Pakistan, there are
two major by-products of rice: Rice bran and Rice Husk. We shall focus on these two byproducts and their advantages and cons, if any, to the rice industry. We will also talk about how
Pakistan can take advantage of these raw materials as they are easily available in the country.
We also talk about the related and supported industries that can benefit from rice. The
information we collected was mainly from our empirical research.
BY-PRODUCTS OF RICE:
1.
RICE BRAN:
Being termed as a high end source of edible oil, protein and allied micronutrients, rice bran is a
major by-product of rice industry. In our nation, its capabilities are under estimated and it is
used as poultry feed or for fuel purposes. Its content comprises of about 20% edible oil. From a
research, it was concluded that rice bran has the capability of being used as a high source of oil
and has the capacity of value addition. This will not only fulfill the countrys edible oil needs but
will also help in coping with protein deficiency problem that persists in our community.
44

2.

RICE HUSK:

One more important by-product of rice is the rice hulls or rice husks. Many rice-producing
countries, inclusive of Pakistan, are currently proceeding with research on vast, industrial uses
of rice husks. Rice husks are the outermost coating of the rice grain and come as organic rice
husks and natural rice husks. Rice husks are an inexpensive byproduct of food processing,
serving as a high source of fiber that is used as a filler component in cheap pet foods. It excels
in maintaining body temperature according to the need. Rice husks are used as pillow filling and
have a high lignin content which makes composting them a tedious and expensive process.
RELATED INDUSTRIES:
These industries are involved, some way or the other, with the rice industry and with proper
planning and R&D we can make an international market for these industries as well.
1.

Fertilizer:

We cannot neglect the role of the fertilizer industry. The objective behind fertilizer research
and development is to improve the efficiency which would result in an increased crop
productivity and minimization of effects on the environment.
Rice is the most suitable crop for alkaline soils for it being fairly tolerant to alkalinity in the soil.
On large areas of moderate alkaline soil, rice mono-cropping is a routine practice during wet
part of the year. But the productivity of rice is very poor due to the deficiency of basic nutrients
or fixation of applied nutrients.
Fertilizer cost has a direct relationship with gross revenue but in case of rice, it is statistically
unimportant whereas chemicals cost is highly important in case of rice crop. One percent
increase in the cost of chemical leads to an increase in the rice crop gross income by 0.02
percent and it is significant at 99 percent confidence level. One percent increase in the cost of
irrigation used shoots the rice crop income by 0.26 percent.
2.

Rice Bran Oil - Refined

Rice bran, which is formed in the milling process, is that part of rice that has high fat content.
This form of natural oil, which is pressed, has anti-oxidants which make it a suitable ingredient
for food and food-related products. It is suitable for high temperature cooking as the antioxidants are unaffected by high temperatures. It is not just delicate and flavorful but it also
helps to lower cholesterol, fight diseases and boost the immune system. Rice Bran Oil is
extremely delicious and low on cholesterol. It functions as a raw material to be converted to
several forms such as oil and wax. Rice Bran Oil is quickly gaining popularity in commercial users
as well.
45

3.

DIETARY FIBRE:

Although bran fills a tiny corner of baking ingredient usage, it serves the purpose of an
important nutritional function. Grain's outermost coating is rich in dietary fiber, protein and
minerals depending from where the bran has been obtained. Bran is an ingredient in all types
of cereal grains, inclusive of wheat, corn, oats and rice. It helps to provide a whole grain identity
to baked products.
There is one problem linked to Dietary Fiber as well. Due to refined flour being more readily
available and changes in dietary habits, consumption of dietary fiber has reduced by at least
half during the past two eras. Various studies link fiber consumption with a reduced risk of
cardiovascular disease. To further add on, fiber can cut down blood sugar levels for people with
type 2 diabetes.
So clearly the importance of this industry cannot be negated as it is highly nutritious and also
used in confectionary purposes.
4.

PADDY:

The main raw material, which is paddy, is normally purchased from local cultivators and some
time from wholesalers. Both these raw material suppliers are located within a cluster at Larkin,
which is famous for its paddy production. The millers, within the cluster, purchase raw
materials directly from the respective suppliers on cash which is loaned by the banks during the
season.
AVERAGE RETAIL PRICES OF FERTILIZERS- PAKISTAN (rs.50/bag)
2007-2008
2008-2009
2009-2010
UREA
581
751
799
DIAMOMIUM
1934
2578
2267
PHOSPHATE
NITROPHOSPHATE 1267
1700
1452

2010-2011
1035
3236

2011-2012
1705
4118

2108

2768

46

FIRM STRATEGY, STRUCTURE AND RIVALRY

Today's active markets and technological advancements have brought into question the
sustainability of competition on a global basis. Under the pressure to work upon productivity,
efficiency, and effectiveness, managers have entwined in using tools such as TQM and
benchmarking. Dramatic operational improvements have caused gains. But rarely can these be
translated into sustainable profitability. And subsequently, the tools have taken over the usage
of strategies. As managers struggle to improve on all lines, they tend to deviate from viable
competitive positions. Michael Porter states that operational effectiveness, although necessary,
is not sufficient for an industry. This is because the techniques involved are easily imitable. In
comparison, the basic focus of strategy is choosing an exclusive and valuable post rooted in
systems of activities that are more tedious to resemble.
In the Pakistani rice industry in order to increase the rice quality and thus sale at higher prices,
the Government has made changes, both administrative and structural, in order to closely
inspect the quality of exported rice. In order to make this possible, Rice Exporters Association of
Pakistan (REAP) have been experimenting with different seed varieties and trying to fix export
prices to a minimum. REAP has proved its capability back in 1996 when it assured the quality of
brown rice exported to Europe. Rice importers have started trusting the quality of Pakistani rice
and the exports seem to be going on an increasing trend.
One of the largest agro based processing industry in Pakistan is Rice milling industry which is
located in Sindh province of Pakistan. Rice crop in Sindh has been growing since centuries.
Sindh Province produces about 1.461 million tons from an area of 0.544 million hectors with an
average yield of 2.686 tons rice per hector. The quality of seed was not certified on the
international standard. The growers and millers were upset about the availability of quality
seed. If this position of seed would be continued in the Sindh, it will not only affect on
marketing of rice in Sindh but per acre yield will be declined. It has also found that the most of
rice industries in Sindh are using out-dated technology such as steel hullers or old rubber
shellers for de-husking around 54 percent amongst 850 rice mills of Larkana district. The most
of the owners of these rice industries became defaulters of various commercial banks.
COMPETITORS:
Due to commercial risks and brand to brand transportation differences, quality of rice can
differentiate allowing price differentials to inculcate. Keeping in mind the high demand in the
coming days, improvement in production techniques and appropriate post-harvesting
techniques are essential in order to reap benefits from the increase in demands. Nutritional
value of rice grain also needs to be increased as there is an increased need of it. Communities
that dwell in Asia and Africa can, as a result, reap benefits from rice grains which are enriched
47

with nutrients like Iron and Zinc. With this increase in sales, maintaining export levels would
also become tedious due to extensive marketing and technological involvement. It is essential
to perform analyses on rice production and marketing at world-wide level for both short as well
as the long term. This would in turn help develop a strategy that would not only stabilize the
present export levels but would also add to the value of Pakistani rice.
India, being the second largest producer of paddy rice in the world, has always been
competition for Pakistan. In 2009 it produced over 132 million ton of paddy rice. Bangladesh
also adds up to the list of being one of the most highly producing countries, growing over 38
million ton whereas Pakistan is subject to producing a little over 6 million tons. Together these
three countries contribute to about 30% in the total production of rice world-wide.
About 92% of Pakistan's rice production is concentrated in the Punjab and Sindh provinces and
nearly all the rice is grown on irrigated land. Punjab is the leading rice growing province with
about 61% rice area and concentrates on Basmati-rice for export, while Sindh produces high
yielding varieties and traditional varieties mostly for domestic consumption covering about 31%
of total rice area. Of the remaining 8% area under rice, 5% lies in the North-West Frontier and
3% in the Balochistan provinces, respectively. On the whole, Basmati-rice accounts for about
52% of the total rice area under cultivation.
Punjab is the largest rice-producing province and the Kalar tract -the bowl of the world
famous Basmati rice is located between the Ravi and Chenab rivers. B.Natha Singh Karam Singh
(Pvt.) Ltd., incepted in the year 1895, laid the first rice mill at kamoki (Karachi), now in Pakistan.
They are the Pioneers in creating the brand. There are a total of 373 rice mills listed in Pakistan.
The government protects the farmer by setting a minimum price. However, the final price of
rice is not fixed by the government. Cost of oil amounts to 25% or less of the cost of rice
cultivation. Machinery is not imported, it is locally produced. Pakistan imports mainly from
China, Switzerland and Thailand. No licenses are required for importing, you need to be a
member of REAP (Rice Exporters Association of Pakistan) to import. REAP operates in Karachi
and Lahore.

48

PRODUCTION CYCLE OF RICE

To undergo the production of rice, it has to go through 8 stages. This completes the cycle of the
production of rice. The steps are as follows:
1.
2.
3.
4.
5.
6.
7.
8.

Seed Selection
Land preparation
Crop establishment
Water Management
Nutrient Management
Crop Health
Harvesting
Postharvest

The 8 processes above complete the Rice production cycle in Pakistan.

They are explained in detail below:
Seed Selection
It is a difficult task to choose a seed which suits the environment and will maximize the yield.
Choosing the right is seed is the most essential part of the process. This is because if the seed is
not wisely chosen, the entire other 7 stages cannot be put to effective use then. A good quality
seed can enhance the yield by 5%-20% if properly harvested; it also needs to be free of weed,
pests and diseases. Using good seeds leads to lower seeding rates, higher crop development,
reduced replanting, more constant plant stands, and more vigorous early crop growth.
Land Preparation
The seed should be placed in the best possible conditions to maximize the yield. For this the
land has to compliment the seeds. Land preparation involves plowing, harrowing, overturning
the soil and also to level it. The land preparation can differ from a lowland area to a high land
area. This is because of the soil fertility and the altitude of the land. Its easier in a low land as
none of the hard features of the Earth are much affected e.g. Forests. Uneven lands results in
wastage of irrigation and more paddy being required.
Crop Establishment
There are two ways of establishing a crop; Transplanting and direct seeding. The one mostly
practiced in Pakistan is direct seeding of Rice. Direct seeding is when the seed is pre
germinated in the soil either by machines or by hand itself. It is incorporated in the soil and

49

then the land is ploughed. The soil is still kept dry. Transplating however is when seeds a re kept
in a nursery for 20-80 days (depending in the seeds) and then broadcasted into the soil.
Water Management
A necessity for rice production. Rice requires a large amount and a constant amount of
irrigation. When water levels in the soil fall, so does the quality of rice. Hence you will find rice
zones near rivers of in areas which receive ample of rainfall. Irrigation methods used in Pakistan
are handpumps, tubewells, Sprinklers (rarely) and raised water beds of the agriculture land.
Farmers keep their land flooded throughout the production period. This is very beneficial for
lowland areas which do not experience much of the rain.
Nutrient Management
This is not much taken into account in the rice production of Pakistan specifically. This is
insuring that he rice requires all the nutrients that it requires to grow in an effective manner.
The flooded soils have unique attributes each which differ from land to land. A targeted higher
yield would mean more nutrients. This relies on many scientific specific purposes. Because of
the prolong flooding, farmers can extract soil organic matter and it can be used for other crops
aswell. UREA and DAP are major nutrient providers for rice in Pakistan
Crop Health
The rice plant has a number of enemies on the field. These may include pests, weeds, rodents
and diseases. The farmers have to protect the crop from all these viruses. The best case
practice would be pest management, but this can be harmful for the crops if the doze of
pesticide exceeds its limit. Farmers fare weeds through water controlling and land preparation,
by hand weeding, and in specific cases herbicide application.
Harvesting
Harvesting is done around 115-120 days later the seed is sowed into the ground. It is picking of
the mature rice grains from the field. There are 2 ways of harvesting, either mechanically or
through the use of hands. Manual harvesting is very common in Pakistan and it also takes a lot
of time and labour. Mechanical harvesting can be done though harvesters. These are very costly
but also save time. Harvesting activities include cutting, stacking, handling, threshing and
cleaning.
Post-Harvest
Drying, storing, milling and processes, these are 4 stages of the post-harvest of rice. Drying
reduces grain moisture; if this process is delayed the grain loses its quality as the moisture
50

seeps through the grain. Storing is done when theres bumper crop or chances of production
reducing in the near future or because of excess moisture. Most of the rice in Pakistan goes
through Milling. The husk and bran layers a removed. All impurities are also removed and the
grain is then polished and ready to be used.
The above stated stages complete the rice cycle.

51

ROLE OF THE GOVERNMENT

Pakistan is the 11th largest producer of rice and the 4th largest exporter of rice in the world
according to the 2011 survey. In the 1970s the industry was privatized. Rice contributes to
1.6% of the GDP of the country. Rice Exporters Association of Pakistan (REAP) was set up in
1988 to help exporters and monitor export prices. The mills are independently linked with
REAP.
A major issue faced by the exporters is the tariffs and export policies. When we interviewed
Engro Eximps what they had to say was that government had no major activity involved where
it came to exports. In 2010 REAP had come up with a new regulation regarding the export of
IRRI 6 after it is polished and refined by the government to increase exports but there have not
been any major contributions. The government has set a tax rate of 8% on exporters whereas
other rice producers have to pay 14% on their earnings.
The government provides indirect subsidies to the industry. In recent years they reduced the
price of tractors by giving a 0.2million subsidy on tractors. This was done to reduce the manual
work of farmers. Other than that there has also been a subsidy in fertilizers (urea and DAP) by
the government, which is PKR 2000 per 40kg bag. Other cash payments are only made when
Pakistan experiences a natural calamity and the rice production is affected. In this case the
farmers and the companies are helped to stabilize production.
We can say that the government is somehow involved in the growth of the rice production. It
contributes to seed development.
1. Breeder seeds
2. Pre basic seeds
3. Certified seeds
Other than that they have field managers for a certain area of land who ensure that the farmers
are receiving the seeds and they are being used and not sold.
Another key focusing area for the government is the cultivating area for rice in other areas of
the country. Earlier the government just focused in Sindh and Punjab but now it has stretched
its boundaries to Balochistan and even Khyber Pakhtunkhwa. The government is trying to
provide subsidies to farmers of these regions to help expand production.
It is the responsibility of the government to train the farmers and facilitate them to grow more
rice and use new technologies. The government has taken the initiative to assign a field advisor
to every region in Sindh to not only help and advise the farmers but also keep a regular check
on them. However a better task is done by the private sector in this regard. The government
52

has tried to take up responsibility and set up workshops but the private sector holds more
effective seminars that provide education, feedback and recommendations to farmers.
Moreover, there is a lack of price regulation from the side of the government. There is no
minimum price set and the mill owners keep their margin and the farmers are exploited and
not given their share of rights.
For the government sector I would conclude by saying that it has no direct connection with the
rice industry of Pakistan but it does to help the farmers on timely basis. However more is
expected of them with respect to the trading policies and subsidies as it would help the
industry develop further.

53

INTERVIEW ANALYSIS
Perspective of Large Corporations (Interview with Mr. Naveed Asim, Business
Development Manager, Engro)
Engro is one of the major players in the rice industry. After our interview with Mr. Naveed Asim,
Buisness Development Manager we got to know that there are only few big market players in
the rice industry thats why Engro seeing no competition expanded into this category.
Furthermore we also realized through the interview that there is a need of big market players in
the rice industry to fill the gap of demand and supply and for decreasing the length of supply
chain. As a fertilizer company, it was a wise decision by Engro to enter into rice industry
because it was related to their current business in many ways.
According to Mr. Naveed the government of Pakistan provides no support as to trading of rice.
Subsidies are applicable on farmers but not the private firms.
A potential problem that a big company will face is foreseen by the problems Engro is facing.
Despite the fact that Eximp is in its 3rd year of production it still feels that there is much left to
be learnt. Other than that, changing the already prevalent culture in the market is another
hindrance they face. Eradication of credit system and paying upfront is not largely acceptable
by farmers. As the rice industry is a nascent market, therefore the efficiency is low. Lastly, living
up to the expected quality expectations for the entire trading and production line is also issue
which major industrialists can face.
Due to high regulation and access to facilities, Engro has the capability to raise funds. Also due
to its brand name and farmers can easily rely on large firms. Besides quality and reputation,
which are the major variables checked for a success, the number of certificates achieved
internationally and the structure of a company also matters. Though Export policies are not a
hindrance for large corporations like Engro but having no tax exemptions in the startup years
becomes a major problem for such corporations.
Like Engro, other corporation can also have contracts with farmers directly and pay them at
spot so that they do not need to take debt for their next sowing period. Like Engro big
corporations have the capacity and funds to ensure seed quality which will increase the yield
and profit of the whole chain.
Big Corporations expect government to subsidize machinery for the farmers or they can help
those firms advise the farmers on rice production. Government can also help with finding more
available land for increased production of rice. It can subsidize help by providing Zinc Sulphate
which would lead to reduced cost for the farmers.
54

Currently India is a bigger and better market, in terms of production and consumption.
However, they have poorer quality of Basmati in a majority of areas. India has managed to
produce new rice quality called 1121 which is of better quality, and it is preferred throughout
the Asian market to the extent that people are willing to pay extra for it. We lack the
mechanized modes of production and R&D that they have. Bog corporations with the help of
government can easily beat India but that will take time and a lot of investment.

Perspective of Government (Interview with Mr. Ashfaq Soomro of Agricultural

Department)
The privatization of rice has taken place all over Pakistan in areas like Kalacha Kaku however
Rice Industry in Sindh is not privatized. It is still in the control of the government.
There is a huge gap between Sindh and Punjab upon the availability of resources and
technology. Punjab enjoys more facilities than Sindh according to Mr. Ashfaq employee of
Agricultural department.
According to Mr. Ashfaq, in government records there are various varieties and rates. It
included Coarse Variety. Coarse variety has 2 major groups:
a. Basmati
b. Non-Basmati.
Mr. Ashfaq has briefly described the rice qualities the government itself produces and the time
period and requirements of these qualities. For Basmati, the temperature requirements are 35
degrees Celsius. The issue faced for them is that temperature rises up to 42degrees, which is
harmful for the newly sown crops.
For Non-Basmati, transplanting begins on the 15th of July. It is done in three stages.
i. Early transplanting
ii. Medium Transplanting
iii. Late transplanting
For early transplanting, the Government varieties present are:
a. IR 8
b. IR 6.
c. Sada Hayat
d. Kanwal 95

55

In the early 1960s, the rice farmers faced a wide plant-hopper problem. Sada Hayat was
created to counter and resist to that problem. Kanwal 95 is used in the low lying areas. It is best
for the low lying areas because it stands in the water easily, and does not incur the problem of
water logging.
Non-Basmati varieties are, requiring medium transplanting:
a. DR 92
b. DR 82
For these, transplanting happens till the 22nd of July.
For late transplanting, there are 2 categories:
1. Shaarkar, which is transplanted on 31st July
2. DR 83, transplanted in August.
As for Basmati, the coarse variety for late transplantation is Latif C which is transplanted in the
1st week of August.
According to Mr. Ashfaq, The Rice Industry of Pakistan is such that no DIRECT subsidies are
provided. In cases of natural calamities however, indirect subsidies in the form of cash
compensations because of natural calamities are given to the farmers for them to be able to
stabilize their businesses. Other than that, urea can also be given out or fertilizers and seeds,
too. This is usually done by the engineering department of the Government of Sindh. For
example, in the past, PKR 2000/ 40KG subsidy has been known to be given.
The government has been known to give indirect subsidies such as nominal prices for tractors
and harvesters. In the interview he mentioned that Government is usually involved in the
development and growth of the rice industry, rather than subsidizing it. For this, there are three
categories:
a. Breeder Seed
b. Pre Basic Seed (which is not given to growers)
c. Certified Seed (rent for which is PKR 2000 for every 40kg)
Government representatives also check the land a farmer holds and the quality of irrigation and
fertilization done on it, and then it gives out the seeds as per the need. This is done before
flowering but is done for Government occupied land only.
The major problem for the government is that different MNAs and MPAs have their own fields
of rice in Pakistan. Therefore, political pressures are faced in the sense that when their fields
dont achieve the sales amount that was the target, calls are made for the farmers to help the
56

MNAs and MPAs meet their sales targets. This results in the farmers being asked to hold back
their stock.
Another problem Pakistan also faces is the water issue which causes a major hindrance in rice
production. There are 2 zones of rice production in Pakistan.
1. Lower Sindh: Thatta, Badin, Mirpurkhaas, Hyderabad, Tando M. Khan
2. Main Coarse: (Khairpur Natang Shah and Mayer) Dadu, Larkana, Shikarpur, Tandpur,
Kashpur.
Transplantation of the rice seeds starts on 15 July. Wheat is sowed in December in the very
same fields because of lack of irrigated land. This results in land with hard soil in July. Therefore,
proper conditioning of land needs to be done before rice seeds can be sown.
In addition to that a few other problems are that some of the varieties of rice are produced in
under cultivated areas of Pakistan. Such varieties are Basmati 515 and Basmati 2000. Fertilizers
to improve the growth and production of rice is also not available, which is an additional issue.
There is also a lack of pesticide usage and awareness. Furthermore education regarding the
best techniques for farming is quite low. Farmers also face the issue of miller monopoly
because of which, the rice growers get the seeds or fertilizers required in the black market or at
extremely expensive rates. There is no check and balance by the government sector on the
private sectors activities or on hoarding activities. On the governments part, there is
mismanagement, maladministration and corruption in the system, affecting the rice industry
negatively. The governments resources are also wasted by employing too many people where
only a few are required.
Pakistan exports the Coarse Variety of rice. Three methods used to develop them include:
1. Introduction
2. Selection
3. Hybridization
The advantage according to him that the private companies have over the government is that
private companies import High Breed seeds from China (through various dealers) whereas the
government produces their own seeds. High breed seeds are extremely expensive. The private
firms lack the quality and machinery required to germinate and harvest the seeds. Moreover,
they can never be too sure of the quality of seeds brought from China as diseases can be
brought in too. That is the advantage that the government holds here, as they produce their
own seeds so they know what raw materials were needed for it and hence, the quality of those
seeds can be relied upon. If the High breed seeds are used for early sowing, then germination
does not take place and hence, flowering and seed formation are affected. Therefore, these are
57

very fragile seeds. These problems arent faced by the seeds produced by the government so
this is an advantage.
Pakistan exports coarse rice and Basmati rice (grown in Punjab) to international markets like
Indonesia and Thailand. The varieties include Basmati Shahi 15 and Super Basmati. Long grain,
produced in Punjab is also exported because of better quality.
Agricultural Department feels that it is the responsibility of the government to educate the
farmers on topics such as seeds and fertilizers. A field advisor is placed in every region of Sindh
to help and guide them and to regularly check on the farmers. Private sector is also known to
hold seminars because at the end of the day, farmers benefit the government and the private
sector. The field advisors are part of a monitoring system, working under the education
department directorates in Hyderabad. The education officers send reports about regular
checks on the farmers. For proof, reports of growers with phone numbers, and land survey
numbers are taken. It is a 360 degree feedback style. Suggestions are also given in by farmers.
In the end, a pro forma is made.

Perspective of Small Mill Owners (Interview with Mr. Moti Lal, Owner of M.M
rice and oil mills)
According to Mr. Moti Lal competition between mills is based purely on the price they offer to
exporters and the purchase price they offer to farmers. He further says that different varieties
of IRRI are the specialty of Sindh and basmati of Punjab. According to him small mill owners
have more than 80% capitalization of the markets. He also mentioned that due to excessive
demand small mill owners dont have to compete much.
He says that small rice mills are labor intensive and the major cost they incur is of labor. Due to
increase in electricity and gas shortages, labor charges are increasing as the labor is paid on an
hourly basis so shortages mean that more time in spent on the mill. These shortages are also
increasing the overall cost of the husking process so it is predictable that the price of rice will
increase in the near future and thus lower investment by locals who are the major investors.
Though there is little FDI in the rice sector, prices are still dependent on the global demand as
Pakistan exports more than 60% of the rice it grows each year. But as rice demand is highly
diversified, it faces little loss if any world crisis occurs.
He says that though most of the rice mills are registered, still they pay little or low taxes due to
lack of any active regulatory authority for small mills. Thus they can easily avoid paying taxes.
Moreover, prices are not determined by the government. Only paddy prices are determined
but there is very low implementation of paddy prices due to absences of regulatory checks.
58

Though leaving prices to market forces may seem to be beneficial for the rice industry but in
Pakistan there are many factors which impact prices badly so it becomes a disadvantage for
small mill owners.
The cost of opening a small mill is approximately 3 crore which is relatively less. Such a mill can
process 32000 to 40000 kg rice daily but again in this setup same old machinery is used which
lacks efficiency and yield so technological innovation is very much necessary for efficiency and
higher yield. Thus Mr. Moti Lal feels that the government should support technology
advancement and ease the fund raising system for small mill owners so that they can generate
more profits for the whole chain.
The major problem with raising funds is that mill owners have to pay 14% interest rate which is
very high due to no subsidies for investment while exporters have to pay only 8% due to
subsidies provided by the government. Labors get more pays than floor labor stipends set by
the government.
Branded rice has not taken a share of the traditional rice mills in the market; the demand is still
increasing at the same pace. There is a lot of demand from local as well as international
markets for rice so supply of rice is increasing day by day.
Currently Deregulation, no subsidies on new machinery and electricity and gas shortage are the
major problems of the industry and mill owners expect the government to immediately solve
these issues otherwise it can cause great harm to the rice sector.

59

RECOMMENDATIONS
Pakistan has a great potential of successfully exploiting its rice growing capacity by efficient
utilization of its scarce fertile land and thus earn increasing foreign exchange which is
immensely important for the country. Currently Pakistani rice manufacturers are looking upon
the target of achieving exports worth 1 billion dollar. These targets can be realized if we direct
our efforts towards increasing per acre yield and improving the quality of exportable rice.

Ensure superior quality standards

The quality of rice we export is a product of all the production techniques involved and these
practices from harvesting to milling must employ superior quality standards to build up the
confidence of rice importers in the quality of Pakistani rice therefore to improve the quality and
sale of improved quality of rice, the Government should make structural and administrative
changes in monitoring the purity of exportable rice. These changes can also involve analysis of
rice of different varieties by the Rice Exporters Association of Pakistan (REACP) to ensure
homogeneity in quality.

Increase productivity of scarce fertile land

Since 1947, the area under rice production in Pakistan has increased by 3 times however
statistics reveal that for this increase in area productivity increased by 6 times and hence we
can conclude that there is still much left to be done to increase yield per acre of rice and this
can be done by improving agronomic practices coupled with enhanced use of fertilizers,
pesticides and other plant protection measures.

Reclamation of Saline Alkaline Soils

In a semi-arid region like Pakistan, where evaporation of subsoil water brings salts to the soil
surface which poses a great threat to rice yield there is an urgent need to rescue the soil. And
this can be done by employing specialized reclamation measures and encouraging soil
amendments by usage of gypsum and sulphuric acid.

Shortage of Irrigation Water

Adequate rice yields can only be obtained if water supply is assured throughout the rice
cultivating season. Our Irrigation system and canal supplies depend on rains and therefore
farmers need to wait for monsoon rains to sow rice nurseries and prepare their land. These
monsoon rains are highly unpredictable in terms of amount, time and distribution. Delay in
sowing nurseries badly affects the yield per acre therefore alternate supply of irrigation water
like tube wells are immensely important. Quality of water must also be taken in regard as the
60

Soil Fertility Wing of the Agri Department Punjab recently made a survey of the tube wells to
analyze the quality of water. The report showed that the water of 1/3 of the tube wells are
quite unfit for irrigation, 1/3 have partially fit water meaning it can be used by mixing with
canal water, and only the remaining 1/3 have water fit for irrigation. These results show us that
about 2/3 tube wells are continuously adding salts to soils. This is an eye opener for all rice
farmers and there is an urgent need to emphasize on good quality of water in tube wells

Development of New Rice Varieties

Currently Pakistan is growing long grain basmati varieties with an average grain length of
6.5mm and the extra long grain basmati varieties with an average grain length of 7.0 mm, the
dominant varieties being basmati-385 and Super Basmati. Super Basmati rice generates higher
revenue in the local and export markets and is competing with the extra-long grain rice
exported by other countries. There is a strong and established demand of both rice groups in
local and foreign markets therefore it is recommended that we innovate and develop better
varieties in both the rice groups. Hence we should increase our efforts to develop rice variety
and seed which will get us a better price in the international markets and is profitable for local
manufacturers as well.

Milling
The export quality of rice with superior quality standards cannot be obtained with the old
outdated Sheller types. Efforts should be directed to modernize these shellers. Modern mills
and specialized equipment should be installed to produce high quality rice for export. The
Government can help by abolishing the custom duties etc. This will definitely expedite the
installation of modern mills. These millers must also install the capacity to produce parboiled
rice as there is increasing demand of parboiled rice worldwide.

Biotechnology
Like all other developed nations we must seek help from biotechnology to increase crop yield. It
is highly recommended to incorporate mutant and resistant genes against major insect and
pest attacks on rice fields. Also research needs to be on development of cold tolerant rice
varieties.

Promotion of our rice in potential foreign markets

Pakistani rice has high growing demand in foreign markets like Iran, Afghanistan, Saudi Arabia,
Qatar and Kenya so keeping in mind the potential revenue generated from above markets we
must focus on enhancing our promotional activities in these markets and this can be done by

61

sending delegates in major rice importing countries and holding exhibitions to promote our
export quality rice.

Capturing the domestic market

Mainstream rice producers in Pakistan are export-oriented, as they obtain far better revenues
from abroad. Only a few companies have brought branded rice to the domestic market in a
sustained manner like Matco Rice Processing sells basmati under the brand of Falak; we have
Guard basmati, by Guard Rice; and the Mughal basmati brand from Garibsons. However
none of the above companies have actually focused on building a stronger brand Image based
on the quality of the product. If the companies are able to develop stronger brand recognition
through heavy advertising and promotional activities then they can have higher sales in
domestic market as well leading to higher revenue and greater profitability.

Disbursement of credit
It is desirable that a proper system of disbursement of private sector credit for Rice exporters is
developed as it encourages investment in capital and research which leads to enhanced
competitiveness.

62

Conclusion
In essence, it can be concluded that rice is an essential cash crop and constitutes as one of
Pakistans major export items. The rice grown in Pakistan caters to domestic as well as
international demand, with exports having a higher weightage. Rice is a strong player in terms
of backing the economic viability of Pakistan. Since 11% of our agricultural land is catered to
rice production, it is not very hard to believe that it is the second biggest source of foreign
exchange for Pakistan, and second staple food after wheat. Production of Rice is grown by 10%
in last five years. Moreover, rice also accounts to 1.6% of our GDP, and is well suited to meet
the growing demand from across the world.
The highest proportion of foreign demand comes from Europe where rice consumption is
significantly higher. As far as foreign investment is considered, its potential is very high in this
sector. However, a major pitfall in rice production is that due to shortage of natural gas, rice
exports of parboiling rice may not be accomplished. This is highly unfortunate as these export
orders could increase 15% foreign earnings in value addition.
India is a strong competitor of Pakistan in the international market. The threat is due to the fact
that they produce high quality Basmati and prices are low.
The rice exporters are facing massive issues; one of the major problems pertains to tariffs and
export policies. According to a prominent player in the private sector, the government does not
play an active role when it comes to exports. In 2010 REAP did come up with a new regulation
but there have not been any major contributions. The government has set a tax rate of 8% on
exporters whereas other rice producers have to pay 14% on their earnings. The subsidies
provided to this industry are also indirect in nature.
According to the government they are usually involved in the development and growth of the
rice industry, rather than subsidizing it. It is believed that Pakistan has a great potential of
exploiting its rice growing capacity by efficient utilization of its scarce fertile Land. This will
enable the country to reap higher foreign exchange, which is an important need of the time.
Presently, the rice producers in Pakistan are emphasizing upon achieving exports up to 1 billion
dollar. This target is achievable if there is an effort in improving the per acre yield, along with
enhancing the quality of rice that serves as our source of foreign income.

63

INTERVIEWS
TRANSCRIBED INTERVIEW - ASHFAQ SOOMRO - AGRICULTURE DEPTT. GOVT OF
SINDH
Gulshan Lal Od - Rice Researcher, Larkana was also telephone interviewed for the purpose of
technical questions.
Ashfaq Soomro - Additional Secretary, Agriculture Deptt was interviewed.
Q: Why did the privatization of the rice industry take place?
A: The privatization of the rice has taken place all over Pakistan in areas like Kalacha Kaku
however Rice Industry in Sindh is not privatized. It is still in the control of the government.
Q: what is their current raw material mix and how is it influenced by technological
advancements over time?
A: In Punjab, up-to-date technology is used. Variety of fertilizers are used and produced.
1. Nursery Find: It has various varieties and rates. It included Coarse Variety. It is transplanted
from 15th of May to 15th of June and from this date to 15th July, the variety is planted.
Coarse variety has 2 major groups:
a. Basmati
b. Non Basmati.
For Basmati, the temperature requirements are 35 degrees Celsius. The issue faced for them is
that temperature rises up to 42degrees, which is harmful for the newly sown crops.
For Non Basmati, transplanting begins on the 15th of July. It is done in three stages.
i. Early transplanting
ii. Medium Transplanting
iii. Late transplanting
For early transplanting, the Government varieties present are:
a. IR 8
b. IR 6.
c. Sada Hayat
d. Kanwal 95
In the early 1960s, the rice farmers faced a wide plant-hopper problem. Sada Hayat was
created to counter and resist to that problem.

64

Kanwal 95 is used in the low lying areas. It is best for the low lying areas because it stands in the
water easily, and does not incur the problem of water logging.
Non Basmati varieties are, requiring medium transplanting:
a. DR 92
b. DR 82
For these, transplanting happens till the 22nd of July.
For late transplanting, there are 2 categories:
1. Shaarkar, which is transplanted on 31st July
2. DR 83, transplanted in August.
As for Basmati, the coarse variety for late transplantation is Latif C which is transplanted in the
1st week of August.
Q; Any subsidies provided to the Rice Industry:
A: The Rice Industry of Pakistan is such that no DIRECT subsidies are provided. In cases of
natural calamities however, Indirect subsidies in the form of cash compensations because of
natural calamities are given to the farmers for them to be able to stabilize their businesses.
Other than that, urea can also be given out or fertilizers and seeds, too. This is usually done by
the engineering department of the Government of Sindh. For example, in the past, PKR 2000/
40KG subsidy has been known to be given.
The government has been known to give indirect subsidies such as tractors and harvesters.
Government is usually involved in the development and growth of the rice industry, rather than
subsidizing it. For this, there are three categories,
a. Breeder Seed
b. Pre Basic Seed (which is not given to growers)
c. Certified Seed (rent for which is PKR 2000 for every 40kg)
Government representatives check the plot a farmer holds and the quality of Irrigation and
fertilization done on it, and then it gives out the seeds as per the need and the pollination
condition. This is done before flowering.
Q: Threats faced by the Rice Industry (Government):
A: The different MNAs and MPAs have their own fields of rice in Pakistan. Therefore, political
pressures are faced in the sense that when their fields dont achieve the sales amount that was
the target, calls are made for the farmers to help the MNAs and MPAs meet their sales
targets. This includes the farmers being asked to hold back their stock.
65

Pakistan also faces water issue which causes a major hindrance in rice production.
There are 2 zones of rice production in Pakistan.
1. Lower Sindh: Thatta, Badin, Mirpurkhaas, Hyderabad, Tando M. Khan
2. Main coarse: (Khairpur Natang Shah and Mayer) Dadu, Larkana, Shikarpur, Tandpur,
Kashpur.
Transplantation of the rice seeds starts on 15 July. Wheat is sowed in December in the very
same fields because of lack of irrigated land. This results in land with hard soil in July. Therefore,
proper conditioning of land needs to be done before rice seeds can be sown. This causes delay,
which is a huge problem.
In addition to that, some of the varieties of rice are produced in under cultivated areas of
Pakistan. Such varieties are Basmati 515 and Basmati 2000.
Fertilizers to improve the growth and production of rice are also not available, which is an
additional issue. There is also of lack of pesticide usage and awareness, and education
regarding the best techniques for farming is quite low.
Farmers also face the issue of miller monopoly because of which, the rice growers get the seeds
or fertilizers required in black market or at extremely expensive rates.
There is no check and balance by the government sector on the private sectors activities or on
hoarding activities. On the governments part, there is mismanagement, maladministration and
corruption in the system, affecting the rice industry negatively.
Governments resources are also wasted by employing too many people somewhere where
only a few were required.

Pakistan exports the Coarse Variety of rice. Three methods used to develop them include:
1. Introduction
2. Selection
3. Hybridization
Private companies import High Breed seeds from China (through various dealers) whereas the
government produces their own seeds. High breed seeds are extremely expensive. The private
66

industries lack the quality and machinery required to germinate and harvest the seeds.
Moreover, they can never be too sure of the quality of seeds brought from China as diseases
can be brought in too. That is the advantage government holds here, as the produce their own
seeds so they know what raw materials were needed for it and hence, the quality of those
seeds can be relied upon. If the High breed seeds are used for early sowing, then germination
does not take place and hence, flowering doesn't and seed formation doesnt either. Therefore,
these are very fragile seeds. This problems isnt faced my seeds produced by the government so
this is an advantage.
Q: Exports in the International Market:
A: Pakistan exports coarse rice and Basmati rice (grown in Punjab) to International markets like
Indonesia and Thailand. The varieties include Basmati Shahi 15 and Super Basmati. Long grain,
produced in Punjab is also exported because of better quality.
Q; isnt it the governments responsibility to educate the farmers so that they know the best
techniques of farming?
A: it is the responsibility of the agriculture department of the government to educate the
farmers on topics such as seeds and fertilizers. A field advisor is placed in every region of Sindh
to help and guide them and to regularly check on the farmers. Private sector is also known to
hold seminars because at the end of the day, farmers benefit the government and the private
sector. The field advisors are part of a monitoring system, working under the education
department directorates in Hyderabad. The education officers send reports corroborating to
the regular checks on the farmers. For proof, reports of growers with phone numbers, and land
survey numbers are taken. It is a 360 degree feedback style. Suggestions are also given in by
farmers, relating to help required by the government. In the end, a pro forma is made.

67

INTERVIEW WITH MUHAMMAD KHAN OF MOTILAL M.M RICE AND OIL MILL
Competition based on price. IRRI is the specialty of Sindh and basmati of Punjab
More than 80% there are small mills of rice industry. Labor intensive industry, major cost of rice
mills are labor.
Export dependent industry prices are determined by global demand
Electricity and gas shortage are two main issues which are increasing labor charges and overall
cost of the husking process so can increase rice prices in near future
Less direct foreign investment in this sector
Though most of the rice mills either husking or polishing are registered but having no advantage
of doing this and they pay little or low taxes, only exporters are subject to taxes.
Due to energy shortage especially in rural areas where most of the mills are situated, people
are lowering investments in this sector
Prices are not determined by government only paddy prices are determined but there is very
low implementation of paddy prices due to absences of regulatory checks.
To open a small husking mill, one needs 3 crore only which can process 32000 to 40000 kg rice
daily.
Technology used in the process of making paddy into rice is very old due to high import costs of
new technology from Japan and China.
Mill owners have to pay 14% interest rate which is very high due to no subsidies for investment
while exporters have to pay only 8% due to subsidies provided by government.
Labors get more pays than floor labor stipends set by government.
Branded rice is not taking share of the traditional rice mills in the market; the demand is still
increasing at the same pace. There is a lot of demand from local as well as international market
for rice so supply of rice is also increasing day by day due to increasing world population.
Rs. 1 cost of processing per 1 kg and 31 kg rice are obtained from 40 kg of paddy.
Out of 31 kg, 25 kg are IRRI, 2.5 kg are polished and 2.5 kg are broken but ratio changes from
one structure to another structure of mill. Currently Deregulation, No subsidies on new
machinery and electricity and gas shortage are the major problems of the industry.

68

INTERVIEW ENGRO EXIMPS

For Eximp PVT LTD, Engro Corporation, we interviewed the Business Development Manager:
Naveed Asim.
Q: Why did Engro decide to expand into the Rice Industry?
A: Engro expanded into the rice industry because we found a gap in the market that no other
producer was able to cover. No other producer was found handling the production, export and
trading of rice professionally. There were numerous small players; no big players were present
who would ensure the production of good quality rice. Other than that, it is always the aim of a
company to expand as it manages to survive and make profit from establishment. Engro has
always been an integral part of the agriculture industry of Pakistan and hence, we decided to
expand as per the companys expansion policy. Eximp looks at trade of fertilizers, sugar which
are developed in-house. So, we also expanded to develop our own trading skills by expanding
into trade of more commodities, hence rice was the answer.
Q: Any support received from the government:
A: Government of Pakistan provides no support as to trading of rice. Subsidies are applicable on
farmers, only for various reasons such as those provided by different political parties for vote
procurement.
Q: Problems faced by the Eximp after introduction in the rice Industry:
A: Currently, Eximp is in its 3rd year of production therefore, we are still learning the ways and
methods which is a major setback for us. Other than that, changing the already prevalent
culture in the market is another hindrance we face. We brought with our selves the mode of
not working on credit, rather paying cash up front. This has still not been adopted by farmers.
We also lack the technical ability as we are still new in the market, so we are still not aware of
all the ways that can be the most efficient. Lastly, living up to the expected quality expectations
for our whole trading and production time is also issue we face.
Q: Why should we choose Engro Eximp over other competitors?
A: Engro, on the whole and Eximp has the financial capability to buy stocks of rice, almost
always. So Eximp prides itself in saying that it is the highest purchaser of stock, therefore,
farmers can rely on us. Secondly, we have a credible and established name and reputation in
the market which gives us leverage over the others. With the other producers, you will face
manufacturing and quality concerns. Eximp is a proud holder of 10 international certifications.
We are also an ethical company so we can be trusted more, over our competitors. And Engro is
not a Seth run organization, so we do work to the best of our abilities as we have a reputation
69

to protect.
Q: Effect of the Export policy on Eximp?
A: Eximp does not receive any help from the government sector; hence we also dont receive
any tax exemptions. Export policies have never been a hindrance for Eximp because at the end
of the day, trade is mostly what you do yourself.
Q: Does Engro plan to further progress in the rice industry?
A: Eximp plans to have contracts with rural farmers so that we are informed when they harvest
rice. All that farmers would need to do is load the paddy on the truck and after that, Engro will
take care of everything and also, make payment on the spot.
Also, to a few farmers, Engro also gives advice and fertilizers in order to help them.
Q: How does Engro Eximp plan to increase its market share?
A: Engro deals with Basmati rice but there is high trade for non basmati rice too. The yield of
Super Basmati is extremely high, so we plan to work rigorously. Moreover, when the yield
lessens, all those part of the rice chain lose out, so it is important to develop the seed quality.
Q: How would Engro prefer the government to help Eximp and rice production?
A: The government can subsidize machinery for the farmers or they can help those firms
advising the farmers on rice production. Government can also help with finding more available
land for increased production of rice. It can subsidize help by providing Zinc Sulphate which
would lead to reduced cost for the farmers.
Q: India has lower quality rice than Pakistan. However, they still manage to beat Engro in
trading. Why is that so?
A: India is a bigger and better market, in terms of production and consumption. However, they
have poorer quality of Basmati in majority of areas. Indians prefer a different taste too,
compared to us. India has managed to produce new rice quality called 1121 which is of better
quality, and it is preferred throughout the Asian market to the extent that the people are
willing to pay extra for it. The mechanized modes of production and RnD that they have, we
lack. We plan to beat their share in the near future as we establish ourselves better in the
market.

70

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62. http://www.thefreelibrary.com/Rice+Production.-a062197093
63. http://basmatirice-india.com/basmatirice-intro.htm
64. http://www.agrihunt.com/major-crops/166-rice-production-in-pakistan.html
65. http://www.indiamart.com/bnsks-pvtltd/

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66. http://gulfbusiness.tradeholding.com/default.cgi/action/viewcompanies/sellersexporters-manufacturers/basmati+rice/starting/B/
67. http://home.windstream.net/bsundquist1/og5.html
68. http://eprints.hec.gov.pk/2818/
69. http://huskinsulation.com/rice-hulls.html
70. http://wiki.answers.com/Q/What_is_National_Competitive_Advantage_Theory_of_Inte
rnational_Trade
71. http://www.businessmate.org/Article.php?ArtikelId=49
72. http://www.coursehero.com/file/6335088/chapter-1-pozzolanas-in-concrete/
73. http://eprints.hec.gov.pk/2818/1/129S.htm
74. http://baking-management.com/healthy_baking/bran_delivers_beneficial_0908/
75. http://relivingmbadays.wordpress.com/2012/10/08/porters-diamond-model/
76. http://www.ukessays.com/essays/business-strategy/trade-relationships-portersdiamond.php
77. http://www.brecorder.com/money-a-banking/198/1238777/
78. http://karachi.newspakistan.pk/2012/09/30/branded-rice%E2%80%93still-a-nascentindustry/

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