As Iran is considering lifting ban on rice export from Pakistan, imposed for the last one year, the exporters believe the decision will remain ineffective until proper currency transfer arrangements between the two countries are made.

Only effective and reliable formal banking channel of currency transfer and Good Manufacturing Practices (GMP) Certificates by Iran government for Pakistani exporters can revive rice export from Pakistan,” said the Rice Exporters Association of Pakistan chairman Shafique Ch.

He said export of premium Pakistani basmati rice to Iran had dropped significantly. The exports to Iran had declined from about 0.45 million tons to around 0.12 million tons annually due to non-availability of currency swap agreement. He said Iranian traders had shifted to India due to availability of official channels of currency exchange.

Exporters expressed dismay over the vague policy in doing trade with neighbouring Iran, as traders were facing loss of billions due to the failure of relevant government functionaries. The basic factor behind this unwelcoming development is the failure of authorities concerned in finalising currency swap and currency transfer channels.”

The Indians are getting a benefit from preferential exchange rate due to availability of official channel against Pakistani exporters, who have to transact at market rates, hence making our price uncompetitive.

Shafique Ch also expressed disappointment over the role of local banks that were no more accepting letters of credit for exporting goods to Iran. He said that Indian exporters do not face such issues with Iran and had favourable trade ties at the state level.

Iran is the one of the largest rice market of the world worth around $3.2 million, as it imports around 1.4 million tons of rice from across the world. According to the Iranian ministry, the demand for rice in Iran has doubled during last five years and import of rice grew more than 35 percent. Hence, there exists a huge opportunity for the exporters of Pakistani rice.

Pakistan is the fourth largest exporter of rice in the world with exports of more than $2 billion. Before imposition of ban on rice import by Iran, Pakistan was the largest exporter of rice to Iran which it has lost to India. Currently, almost 90 percent of rice is coming from India although import from Pakistan is more economical.

Shafique Ch said that India captured this market as no sanctions were imposed on it by the US under the head of food versus oil programme. Under the programme, India could export food grains and medical supplies to Iran in exchange of oil purchase. However, Pakistan’s trade was routing through Bank of New York, which was suspended by the US. Hence, Pakistan was deprived of its niche rice market of Iran which resulted in crashing of local rice price and paddy growers incurred huge losses in their crops.

Rice Exporters Association of Pakistan Chairman asked the government to resolve the issues impeding rice trade with Iran. The TDAP and Pakistan embassy in Iran can coordinate with Iranain government for early issuance of GMP licences to Pakistani rice exporters from Iran which is essential for rice export to Iran.

The REAP also believes that Iran and Pakistan should have a preferential trade agreement (PTA) with preferably a zero import duty regime on both sides. The free trade agreement would help dampen the undocumented trade between both the countries," he added.