SBP asked not to penalise SME rice exportersOctober 6, 2015
KARACHI: The Union of Small and Medium enterprises being deeply concerned about the SME rice exporters has urged the State Bank of Pakistan (SBP) to consider the non performance due to various reasons and not to penalise the SME rice exporters who have failed to export the rice due to inevitable circumstances.
President UNISAME Zulfikar Thaver on behalf of the badly affected SME rice exporters requested extension of time to enable the rice exporters to secure fresh orders or pursue orders suspended by the buyers due to depressed prices in the international markets.
Thaver said we are not advocating the cases of big rice exporters who have borrowed subsidized finance under export refinance scheme (ERF) and have purchased properties with the ERF funds. He pointed out that the big exporters can afford to pay the penalties as they earn handsome profits on their investments in real estate.
Some big exporters who invested in the Stock Exchange have lost big amounts but it is their fault as it is a violation of the rules of ERF to borrow cheap finance against export performance promise and invest the money elsewhere.
It is pertinent to note that some big exporters have borrowed ERF and have genuinely purchased rice for exports and their money is blocked due to cancelled orders due to global slowdown. UNISAME has urged the SBP to consider such genuine cases of the big exporters as well.
The union has explained the reasons of poor performance and has stated that the cost of production is very high in Pakistan as compared to our competitors where farm inputs are subsidized secondly due to global slowdown and reduction in prices due to lack of buying from overseas customers the customers adopted cautious attitude and delayed buying.
Most of the overseas buyers have been placing very small orders just to fill the exhausted varieties on hand to mouth basis. Most of the big importers in gulf and middle east lessened their inventories fearing huge fall in prices. There are reports of traders absconding in the famous rice market in Dubai, UAE and it is apprehended that the rice market may not stabilize for several months.
Besides the new crop is fast coming in and the coarse rice varieties which are being harvested are subjected to prices far below the farmers cost. The finer varieties will suffer more due to substantial stocks of last year and additional influx of the new crop expected in December. The SME farmers, millers, processors and exporters are in deep turmoil.
He felicitated the newly elected chairman Ch. Shafique and senior vice chairman Noman Ahmed Shaikh of the Rice Exporters Association of Pakistan (REAP) and requested them to join hands with the Trade Development Authority of Pakistan ( TDAP) and do brain storming to figure out ways and means to save the rice industry. The new managing committee of REAP needs to work hard to resolve issues of Geographical Indications, promotion of exports, brand development, upgrading, standardization and improving supply chain. Thousands of rice units have closed down to avoid losses. The closure itself is a big setback and several employees have been laid off.