Global Rice News

Rice Exporters in Pakistan Experience a Boost in Earnings

In recent news, it has been revealed that there has been a significant increase of 31 percent in dollar earnings from rice exports. This unexpected growth during the Jul – Oct 2023 period has surprised many, as the early months of the fiscal year are usually slower due to the delayed arrival of new crops. This recent surge in exports has led to speculations about whether the rice industry is on track to achieve a record-breaking performance year.

However, it is important to consider the context. October 2022 was an unusually slow month for exports due to the devastating floods that occurred in the preceding month. Rice exporters had to halt operations and reassess pricing and stock due to the widespread crop damage caused by the floods. Therefore, the 78 percent increase in the quantity of rice exported in October 2023 is largely attributed to the abnormally low base period.

While optimists argue that the export of nearly half a million metric tons of rice in October is a record for that month, when compared to the four-month period of Jul – Oct, the increase in exported quantity is only 7.5 percent. In fact, the quantity of rice exported in the first four months of the fiscal year is only the third highest in the past decade and is just 11 percent higher than the average over the same period.

Although the export performance in the first four months may not be outstanding, there is still hope for the remaining eight months. Exporters can expect higher profit margins due to the record prices of rice. However, the volume of rice exports does not show promising trends. The export volume of basmati rice, for example, is one-third lower than the peak volume witnessed during the Covid year. If this continues, basmati exports may not surpass 0.8 million metric tons for the whole year, which is significantly less than the exports seen in the late 2000s.

This is particularly concerning because the current season is expected to yield a record 4.3 million metric tons of basmati rice out of the total estimated rice production of 9 million metric tons. The rise in basmati production has been driven by export demands, as high prices have made it less affordable for domestic consumers, leading to a decrease in local demand. If this surplus does not make its way to the export market, it begs the question of whether the economy truly benefits from significantly higher prices.

Furthermore, it is worth noting that the global rice market is expected to stabilize by the next marketing year, 2024-25, unless there are major climate events in the top producing regions like India or China. The top five producing regions are currently focusing on increasing cultivation to ensure domestic food security, which will reduce the stress on the international market.

If Pakistani exporters fail to capitalize on the current price opportunity in the export market, it raises concerns about the future of Pakistan’s rice exports in the global rice trade. It is crucial for exporters to strategize and take advantage of the current market conditions to establish a stronger presence in the international rice market.

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