By Mohmmad Ashraf

With the abolition of Quality Related Market Prices (QRMP) for rice export the Quality Review Committee (QRC) has become inactive. Though, nothing in the speech suggested the abolition of Quality Related Benchmark System (QRBS), there is a general impression in the trade that QRC, the committee formulated to implement the QRBS, has ceased to exist. The REAP demand for creation of a Rice Board and its recent acceptance by the Commerce Minister, in principle, has further strengthened this impression.

Quality Related Benchmark System was introduced in 1999. On June 22, 1998, the federal commerce minister, in his trade policy speech announced that "a system for inspection of all rice shipments by EPB will be devised in consultation with Rice Exporters Association of Pakistan (REAP) to ensure quality of exports". In order to achieve this objective, the QRBS was devised by Ministry of Commerce in consultation with REAP and was implemented through Public notices issued by the Export Promotion Bureau for the formulation of QRC on 17th March 1999, 5th April 1999 and 21st April 1999.

The salient features of the QRBS were as under:

(1) Membership of the Rice Exporters Association of Pakistan (REAP) was made mandatory for every rice exporter. The main objective of this condition was to organise the rice trade on a platform so that the policy making related to national rice trade, which the Quality Review Committee had to undertake, would be carried out by the true representatives of all the exporters.

(2) A contract for every shipment of rice from Pakistan had to be registered with the Export Promotion Bureau. This provision was aimed at documentation of the rice exports and implementation of quality assurance mechanism envisaged by the QRBS. The exporter had to declare the details of his contract with his buyer, which included the rice variety, quantity, packaging, broken content, price, destination and terms of payment. A of significant omission in this declaration was the buyer's name. In order to protect the exporters' trade secrets, he was allowed not to divulge the name of his buyer.

(3) QRC Inspection Cells were established for pre-shipment inspection of all the consignments. It was the most striking feature of the QRBS, as the QRC Inspection Cell was assigned the responsibility of ensuring that every consignment fulfilled the contractual obligation between buyer and seller (as declared in the contract registered with EPB). Indeed, no container of rice could leave the borders of Pakistan unless it was inspected for quality conformity, either by the QRC Inspection Cell or by RECP/TCP (only the Brown Rice Export to EU under Abatement Scheme). QRC Inspection Cells were to operate under the control of QRC.

(4) Two QRC, one each in South and North Zone, comprising Export Promotion Bureau and Rice Exporters Association of Pakistan were established. The QRC North Zone was responsible for monitoring export of rice grown in Punjab (mainly Basmati Rice) and the QRC South Zone was to be responsible for the rice grown in Sindh / Baluchistan / NWFP (non-Basmati Rice).

(5) Both the Committees would periodically announce Quality Related Market Prices (QRMP). The QRMP was a benchmark price and no contract could be registered below it. It was aimed at stabilising the export prices of rice, discouraging the unhealthy competition i.e. underselling. It was also to ensure that the seller committed a feasible price with his buyer; it was a price, at which it was feasible for him to supply the contracted quality and was not tempted to compromise the quality of rice, committed with the buyer. The prices were announced by the QRC on the recommendation of Rice Exporters Association of Pakistan and were to be essentially quality-related and based on the market mechanism.

(6) The rice exports were allowed only against advance payment or Letter of Credit (L/C) or Cash against Documents (CAD). The Documents against Acceptance (D/A) was expressly disallowed as term of payment, in order to safeguard the exporter against weak terms of payment vis-a-vis buyer. This clause was revised in 2001 to allow rice exports on D/A basis also.

Since its inception in April 1999, QRC operated effectively, with remarkable accomplishment to its credit. The Quality Related Benchmark System, envisaged by QRC, evolved itself and has now come of age.

Firstly, the image of Pakistani rice, in general, and Basmati rice, in particular, considerably improved in the international market. The compulsory pre-shipment inspection was done so effectively that the number of complaints from the buyers regarding violation of contractual obligations by the Pakistani suppliers/exporters came to a virtual zero level. The system of pre-shipment inspection was such a marvelous success that the buyers started demanding the similar pre-shipment inspection of rice originating from other countries and India was forced to introduce a similar system in order to compete with Pakistan's quality image. Indeed, the image of 'blenders' and 'mixers' of inferior rice in superior rice varieties shifted from Pakistan to India. The singular factor responsible for this phenomenal improvement in the quality image of Pakistani rice in the international market has been the compulsory pre-shipment inspection system of QRC.

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