Are rice exports failing to impress?
Published on: October 30, 2023.
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Rice Exports from Pakistan Show Decline in Q1, Jul-Sep
Despite expectations of record-breaking performance in fiscal year 2023-24, the first quarter (Q1) of Jul-Sep has seen a disappointing decline in rice exports from Pakistan. According to the monthly trade report released by the Pakistan Bureau of Statistics, rice exports during Q1-FY24 have fallen by 18% compared to the same period last year. This decline comes after a 25% decrease in exports during the previous season due to severe flood damage to the rice crop. The devastation caused between two to four million metric tons of losses and resulted in a 21% decline in national rice production. The low base of last year combined with weak demand and lower prices have contributed to the decline in export volume.
The average unit price of exports during Q1-FY24 has only increased by 10% compared to Q1-FY23, which is not significant enough to justify the decrease in volume. In fact, this is the lowest volume of exports in five years. However, it is important to note that historically, the bulk of rice export volume is seen in the second half of the fiscal year. The completion of the harvest cycle and the processing of the new crop for export buying houses takes time, typically extending into October-November. Therefore, the poor performance in Q1 should be considered in the context of last season’s inventory still being offloaded.
While the decline in export volume is expected during this period, the concern lies in the unit prices achieved by Pakistani exporters. The World Bank’s commodity price tracker shows that rice prices globally have increased significantly, ranging from 36% to 54% during Jul-Sep 2023 compared to the same period last year. However, the average unit prices scored by Pakistani exporters have only increased by 10%. This represents a missed opportunity for local players who could have capitalized on the higher global prices. The price increase for non-basmati varieties in world markets stands between $130 to $190 per metric ton, whereas Pakistani exporters have only managed a 3% increase, equivalent to $15 per metric ton.
It is crucial to monitor this trend closely as the fiscal year progresses and new crops are introduced to the export market. The substantial difference in prices between global rice and Pakistani coarse (non-basmati) rice raises concerns, particularly if the trend continues. There is a possibility of under-invoicing, which would be detrimental to the local rice industry.
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