Global Rice News

According to the State Bank of Pakistan (SBP), maize exports have become one of the largest commodities exported in the current fiscal year 2023-24, excluding textiles and rice. In fact, foreign exchange receipts from corn exports have surpassed traditional export categories such as surgical instruments and leather goods. Corn exports rank just below copper and ethanol in terms of earnings.

Pakistan’s monthly trade statistics reveal that corn exports have become the second largest food export after rice during the first half of the fiscal year. This has overtaken earnings from other non-rice food export categories such as fruits, vegetables, aquatic products, and livestock meat. In 2023, corn exports exceeded $300 million for the first time in history, a significant increase from less than $1 million in 2018.

The rapid rise of corn exports is both a cause for celebration and embarrassment. While celebrations are in order for the unexpected growth of corn exports, it is also embarrassing that non-textile exports are performing so poorly that even a $300 million increase is considered noteworthy.

Despite criticism of Pakistan’s agricultural sector, FY24 will mark the first year since FY21 where the country earns an additional $1.5 billion from cereal exports (rice and maize). This will offset the annual billion-dollar bill for wheat imports. Moreover, if current trends continue, export earnings from rice, corn, and sugarcane derivatives may exceed the import bill for wheat and cotton. This observation challenges those who criticize the shift from wheat and cotton to rice, cane, and corn due to their lack of profitability.

The success of rice and corn exports can partially be attributed to opportunistic circumstances. Rice exports are benefiting from record-high prices resulting from India’s export ban last year. Similarly, corn exports have increased due to a ban on soybean imports, which decreased the demand for corn in the poultry and feed industries. However, these anomalous situations may diminish export earnings for rice and corn if the trade restrictions are lifted.

Unlike other rentier industries, the corn value chain did not complain about the collapse in demand from the feed industry, even though it was a consequence of government policies. Corn processors naturally found themselves competitive in the international market when local demand declined. They did not require any concessional finance or export facilitation schemes. Additionally, unlike other industries that face challenges with meeting international standards or containing contaminants like aflatoxins, corn producers encountered no such obstacles. There is a strong demand for Pakistani grains in countries such as Malaysia, Vietnam, and Sri Lanka.

Most commentators attribute Pakistan’s struggle to grow exports in non-traditional categories to expensive energy, an overvalued currency, and the interventionist preferences of the state. However, the issue extends beyond these factors. The failure of dairy, poultry, livestock meat, and local investment banking to break into the export market can be attributed to corporate laziness and reliance on abnormal returns from the domestic market.

As the corporate earnings season unfolds, it is important to pay attention to companies that celebrate record profits while the overall economy stagnates. A corporate sector that is reliant on the domestic market also contributes to poor export performance. It is crucial not to excuse one party while vilifying the other.

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