Global Rice News

Pakistan’s rice exports have achieved a stunning milestone in the first seven months of FY24, surpassing the total earnings for the entire fiscal year 2022-23. With a doubling of rice export earnings from July to January 2024 compared to the same period last year, it is highly likely that the annual rice earnings for the current fiscal year will exceed $3 billion, breaking historical records.

The significant surge in rice exports this year has played a major role in driving the overall earnings of the goods export segment to a record $17.8 billion during the 7MFY24, surpassing the previous peak of goods exports in 7MFY22. It is worth noting that FY22 was the last year of strong economic growth for Pakistan, with goods exports reaching $32 billion before declining to $28 billion in FY23.

However, while rice exports contribute greatly to the overall export performance, it is unlikely that they alone will be able to compensate for the decline in earnings from the textile industry. The current trend in textile exports during the 7MFY24 suggests that the industry may struggle to maintain the same level of export earnings as the previous year. Therefore, the additional earnings of $1-1.5 billion from rice exporters can only partially make up for the approximately $3 billion decline in revenue from the leading export group compared to FY22. This significant drop in export earnings from the textile and garments industry has resulted in a 13 percent contraction in national exports.

Nevertheless, the remarkable performance of the rice industry amidst challenging economic conditions is commendable. Unlike the favorable business environment that supported the exponential growth of the textile industry in FY22, rice exports have thrived despite record-high borrowing rates, frequent energy tariff hikes, and decreasing global commodity prices, including rice.

However, it is important to note that the impressive performance of the rice industry may not be sustainable in the long run. The earlier expectation that India would lift its ban on rice exports during the current fiscal year to control domestic inflation may not materialize until after the general elections and a potential re-election of the BJP government. If and when the export ban is lifted, global rice prices, especially those of South Asian origin, are likely to decline rapidly.

This scenario could create challenges for Pakistan’s rice industry if India delays lifting the ban and decides to monitor the situation until the next harvest season in November 2024. This could lead to Pakistani rice farmers increasing their production in anticipation of another successful year of exports, only to encounter lower prices in the export market. Additionally, if the domestic economic situation remains fragile, with high financing rates and subdued domestic demand, the financial performance of the local rice industry may differ significantly from the current year.

As we bid farewell to the top performers of FY24, we wish them the best of luck for the coming year!