Is Pakistan’s Rice Exports Set to Break Records? A Promising Trend
Published on: December 6, 2023.
Filed under:
Pakistani Rice Gaining Favor in International Markets
In a significant shift, Pakistani rice, particularly the Basmati variety, is now preferred over Indian rice by international consumer markets. The Rice Exporters Association of Pakistan (REAP) made this revelation during a media briefing in Islamabad. The demand for Pakistani rice is attributed to quality issues surrounding Indian rice in global markets, particularly in Europe. This shift presents a promising opportunity for the rice sector, with expectations that rice exports will surpass the record $3 billion this year.
Why Is Pakistani Rice Preferred?
REAP members highlighted that Pakistani rice is preferred due to its pest-free nature and high quality. The ban on rice exports imposed by the Indian government has also contributed to the surge in demand for Pakistani rice. India, being the largest exporter of rice, has restricted exports except for aromatic and high-end Basmati rice. As a result, Pakistan has the opportunity to fill the gap in the market and increase its export volume.
During the ban, prices of Pakistani non-basmati rice increased by over 20% or at least $100 per ton. With the upcoming rice harvest in Pakistan, growers have raised prices for the new crop due to the uncertain global situation. This has led to optimism that rice exports will reach record levels this year.
Challenges and Opportunities
While the surge in rice exports is beneficial for the sector, it poses challenges for the local market. A potential downside could be a price hike in the domestic market, leading to food inflation. Ensuring food security for the domestic market while capitalizing on export opportunities is a delicate balance that policymakers need to consider.
REAP officials emphasized the need for value addition in the rice industry and the development of by-products to generate more revenue. They also highlighted the importance of government support in negotiating high tariffs in various countries. With adequate support from the government, it is estimated that rice exports could reach $4 billion in the next few years.
The Dilemma of Food Security vs. Exports
The surge in non-basmati rice exports could potentially create a rice shortage in the local market, impacting prices of other food commodities such as wheat, soybeans, corn, and maize. While exporters celebrate profitability, the government faces the challenge of controlling food inflation. The annual food inflation in November 2023 was recorded at 29.23%, with rice prices experiencing a significant increase of over 58% in urban areas and above 60% in rural areas.
Pakistan has the opportunity to capitalize on the Indian market temporarily, as India is currently facing high food inflation due to the Russia-Ukraine conflict. However, the long-term consequences and immediate impact on food security and inflation must be carefully considered by policymakers.
Ultimately, the caretaker government faces a difficult decision between allowing the free market to dictate trade and risking food insecurity, or intervening to protect foreign exchange reserves. The careful balancing act between export opportunities and domestic food security is crucial for Pakistan’s economy and the well-being of its citizens.
Source: Profit Pakistan Today
