Why Madhya Pradesh’s basmati battle seems political
The expansion of GI definition of basmati rice-grown areas, by including MP, is likely to adversely impact India’s rice exports and could hit farmers’ incomes.
What is GI tag?A GI tag is a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin. In order to function as the GI, a sign must identify a product as having originated in a given place.90 tags for agricultural goodsAs per the geographical indication registry website, the GI tag has been given to 320 products, out of which 90 are agricultural goods till date. Fourteen GI tags belong to different types of Indian rice, which include Navara rice (Kerala), Kala Namak rice (UP) and Gobind Bhog rice (West Bengal). Like Darjeeling tea, there are examples of basmati named after location (s) where it is grown like Taraori basmati and Dehraduni basmati. The states that are endowed with some specific quality products may claim the GI tag on the basis of their regional specificity without interfering in the established trade interests of others.
According to Arora, whose Rs 3,500-crore sales company sells basmati rice under the Daawat brand, the soil and environmental conditions in MP are best suited for growing the high-yielding Pusa Basmati-1 variety.Even as the Geographical Indications (GI) Registry has rejected the claim of Madhya Pradesh to be included as a traditional basmati-growing area, rice millers in the state are challenging the order. Central to their argument is that the quality of rice, from an improved variety, Pusa Basmati-1, is superior when cultivated in MP, as opposed to Haryana, Punjab or West Uttar Pradesh (UP). “MP accounts for 50 per cent of India’s area under Pusa Basmati-1 and 70 per cent of the export of this rice variety to the western world (US and Europe). That itself is proof of the quality of basmati being grown by farmers in MP. Since GI certification is meant primarily to protect the quality of a product, it is unfair to deny recognition to MP as a basmati-growing state,” says Ashwani Arora, managing director & CEO of LT Foods Ltd. The MP government had demanded that 13 of its districts — Morena, Bhind, Sheopur, Gwalior, Datia, Shivpuri, Guna, Vidisha, Raisen, Sehore, Hoshangabad, Narsinghpur and Jabalpur — be given the GI tag for basmati paddy, along with the areas of Jammu & Kashmir, Himachal Pradesh, Uttarakhand, Punjab, Haryana and Western UP in the Indo-Gangetic plain below the foothills of the Himalayas. The GI Registry under the Office of the Controller General of Patents, Designs and Trade Marks, however, rejected MP’s contention in its order dated March 15.
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Certain issues continue to impede growth of basmati rice, including the absence of a geographical indication law and a lack of penetration of enough brands of basmati in export marketsIn February, REAP held International Buyers’ Recognition Award in the United Arab Emirates. The event has helped in boosting sales of basmati rice there, exporters say. According to a recent Dawn report, our GI law has been pending for 17 years owing to differences between various lobby groups. Apart from basmati, the passage of such a law will also help increase exports of other products, including Sargodha’s kinno. Why geographical indication According to the World Trade Organisation’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), a GI certificate establishes the territory of origin of a particular product. “Once the basmati rice variety, for example, is certified under the GI law, it will officially become known as Pakistani basmati. And that will help us lodge complaints with the world trade body if that particular variety’s name is misused by another nation,” explains a leading Karachi-based rice exporter. Recently, some Indian exporters reportedly moved to export a large quantity of Pakistani-origin rice to Indonesia under an Indian brand name. REAP officials brought this to the notice of the government, but nothing could be done to block the exports in the absence of proper GI laws. Game-changer Larger shipments of basmati varieties that are mostly exported under brand names, in retail and semi-wholesale packaging and their foreign buyers include superstores, fetch higher per-unit price than non-basmati varieties. Currently, the share of basmati varieties in our total volumes of rice shipments is low. According to stats compiled by the Trade Development Authority of Pakistan, basmati shipments during the first half of this fiscal year amounted to 11.2pc of total rice shipments of all kinds. For several years, this share has remained below 15pc, officials of TDAP confirm. Once export volumes of basmati go up, the country can expect a faster and bigger increase in export earnings of rice. So, boosting basmati exports can be a game-changer for Pakistani rice exports. Forex earnings of rice are expected to touch $2bn mark this fiscal year. During the first eight months, $1.224bn already came in, according to REAP. Exports of basmati constitute roughly 22pc of total rice export earnings — double its share in rice export volumes. Key issues Certain issues continue to impede growth of basmati rice, including the absence of a GI law, lack of penetration of enough brands of basmati in export markets, an unscrupulous practice prevailing among traders who agree to sell basmati varieties to Indian traders on the condition that the packaging would not bear signs of origin and the continuation of basmati exports also in bulk that fetch lower per-unit price. Officials of REAP seem to have rolled up their sleeves and trying to address all these and similar issues with the help of government agencies concerned and our foreign trade offices. But growing domestic demand for basmati rice in our fast-expanding food industry and among upper middle-class and upper class households and slower than desired increase in local output also have a direct bearing on exports. Production of basmati varieties, after falling below 2m tonnes in 2012-13, has shown a gradual rise to hit an estimated 2.5m tonnes in 2015-16, according to a senior official of the Ministry of National Food Security and Research. “Even at this level the basmati output is slightly more than one-third of our total rice production (of 7m tonnes). Whereas, it’s important to push basmati production further, its share in exports even at the current level of output can be enhanced,” he insists. But citing reasons of growing domestic demand, exporters say that unless the country is able to boost output of basmati at an annual rate close to 10pc for some years from now, export earnings growth will remain low. Per-unit value But what if the production of basmati does not grow fast enough to create enough exportable surplus after meeting increasing local demand? Exporters must then find room for enhancing per-unit price of basmati exports. During the first half of this fiscal year, the average export value of basmati varieties rose about 9pc to $1,012 per tonne from $930 per tonne a year ago. However, this happened amid a general recovery in prices in the global rice market and average price of non-basmati rice also showed about 11pc increase, from $364 per tonne in the first half of 2016-17 to about $404 per tonne this year, according to TDAP officials. One way of boosting the per-unit value of basmati could be to enhance high-end sales to famous chains of superstores. “That requires strong and well-established branding, strict compliance to all applicable rules of business, more attractive and custom-made, environment-friendly packaging,” says an official of Matco Foods, a well-known rice company that recently got listed on the Pakistan Stock Exchange. Currently, Pakistan’s basmati rice market is too heavily concentrated in the Gulf Cooperation Council region. Exporters acknowledge the need for expanding the market base and many of them agree that with a little support of the government they can market large amounts of basmati rice to Afghanistan, Iran and some Central Asian and North African nations. “We lost the Iranian market to Indians when Iran was under US sanctions. Indians made barter trade a reality while we just kept talking about it,” laments an official of HAS Rice, another leading rice exporting company.
ISLAMABAD: International brands continue selling Pakistan-origin goods due to non-finalisation of Geographical Indication (GI) Law that aims to protect commercial heritage of the country’s products including Basmati rice and Ajrak.
The law is pending for the last 17 years due to differences between large lobbies leading to failure of market place regulation.
However, the Federal Cabinet in its meeting held early this week has authorised the Commerce Division to initiate legislation on the GI Law.
A senior officer in the Commerce Division told Dawn that Prime Minister Shahid Khaqqan Abbasi had directed the officials to speed up the process to finalise the draft law.
The GI Law can protect various products including Hunza apricots, Charsadda/Peshawari chappal, Multani halwa, Sindhi Ajrak, Sargodha’s kinno, Kasuri methi, Sindhri mango, Dir knives, Swat wild mushrooms, Nili-Ravi buffalo, Chaman grapes, Pashmina shawls, etc.
The delay in the legislation is costing heavily to the exchequer because of the unintended theft of intellectual prosperity in GI’s belonging to Pakistan.
For example, Morocan Ajrak skirts were sold by international retailer H&M earlier this year. Dolce & Gabbana introduced food processors bearing the funky Pakistani truck art while Paul Smith launched Peshawari chappal.
A draft law was already written in consultation with all stakeholders but was placed on the back burner for the past one year.
The Commerce Division has been working on the GI Law since 2000. The draft has been vetted many times by the authorities concerned, but no action has been taken so far.
As per the proposed law, the term of registration of an authorised user of a geographical indication will be for a period of 10 years from the date of filing of application for registration. This exclusive right over the use of GI will be extendable for another 10 years.
GI is an intellectual property right (IPR) which gives the right to a person over the creation of their minds for a certain period of time.
Member countries of the World Trade Organisation (WTO) need to give protection to GIs under Article 22-24 of the Trade-Related Aspects of Intellectual Property Rights (TRIPs) agreement.
Unless Pakistan provides GI protection, it cannot obtain the same for its own goods in other countries that have the GI Law.
The GI Law covers a wide variety of products that include industrial, agricultural, horticultural and others. In the absence of the GI Law, Pakistan cannot claim exclusive GI of Basmati rice.
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