pakistan rice exports: potential risks of dependence
Published on: June 28, 2024.
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Pakistan’s Rice Exports Soar, But for How Long?
Pakistan’s rice export industry has experienced a record-breaking year in terms of earnings, reaching $3.5 billion for the Jul-Jun period. Although it fell short of the lofty $4 billion goal, the $1 billion increase from the previous year is the highest ever recorded. This 81 percent year-on-year increase has propelled rice exports to become the second largest category of Pakistan’s goods exports, surpassed only by knitwear.
In fact, Pakistani rice now holds an 11 percent share of the global rice trade, marking the highest market share for any goods export category at the HS-2 level. Currently, Pakistan is the world’s fourth largest rice exporter, ranking behind India, Thailand, and Viet Nam. However, there is optimism that Pakistan could potentially surpass these countries in the future to become the second largest exporter.
While the outlook for Pakistan’s rice exports seems promising, there are challenges to overcome. Overcoming short-term obstacles like the lifting of the Indian ban and unfavorable local market conditions is just the beginning. The real opportunity lies in the fact that traditional rice exporters like India, Thailand, and Viet Nam are experiencing declining exportable surpluses due to population growth, rising incomes, extreme weather events, and adverse climatic conditions. This creates a lucrative opening for Pakistan to fill the void.
One crucial advantage Pakistan has is that rice is not the primary staple grain for its own population. Unlike countries with a heavy reliance on rice consumption, Pakistan’s local demand for rice is relatively low. This means that the country has historically produced more rice for export than for domestic consumption. The unique climatic conditions in the Indus Basin, which are not suitable for rice cultivation, contribute to this phenomenon.
Another factor that plays a significant role in Pakistan’s rice advantage is the reliance on canal-fed irrigation for rice cultivation. Experts in the water sector argue that if Pakistani rice growers had to pay market rates for canal water consumption, rice cultivation would no longer be viable. This means that the $4 billion annual rice export opportunity heavily relies on water subsidies, adding additional risks to the export industry.
While Pakistan’s rice exports have experienced remarkable success recently, it is important not to become complacent. The industry’s dependence on water subsidies and the uncertain availability of canal water in the future make it a risky venture. Pakistani rice exporters should be cautious and look for ways to sustainably expand their market share without compromising the country’s water resources.
In conclusion, Pakistan’s rice exports have reached new heights, but there are challenges on the horizon. The industry must navigate issues like water scarcity and the dominance of traditional exporters to secure its position in the global market. With careful planning and sustainable practices, Pakistan’s rice could continue to flourish in the years to come.
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