Pakistan’s rice exports staged a comeback during Q1-FY22, rising against low base from Covid quarter during same period last year. Exports of all varieties have shown marked improvement, with basmati rice exports recording a particularly impressive performance, marching ahead by one-third in volume terms. But beyond the obvious low base impact, rice exports are struggling to get off the rollercoaster ride they stepped on three years ago, failing to inspire confidence. Exports remains significantly lower than Q1-FY20, when impact of currency devaluation made commodity export temporarily very attractive. Since then, volumes have struggled to maintain momentum, with annualized basmati volume well-under million tons target, whereas non-basmati varieties are also trailing under peak performance.
Although rice exporters have pointed fingers at the oceanic container shortage, much more seems to be at play that explains below-par performance. Exporters are struggling to fetch attractive pricing in the global commodity market, as rice prices have turned out to be the only laggard in the ongoing global commodity price spiral. International prices of most rice varieties are trailing well below their pre-pandemic levels, and refusing to change gears from downward trajectory. Domestically produced rice varieties are also no exception to this global trend, which is an outcome of a glut in rice supply from East Asian countries.
It must come as little surprise to readers that Pakistan is a price taker in the international rice trade, especially due its tiny share in non-basmati varieties production. Since non-basmati varieties are mainly produced for export markets, export volume has demonstrated resilience (as suppliers struggle to sell in local market). But pricing has certainly taken a hit, in line with international trend. In case of basmati, global demand remains steadfast at roughly 5 million tons per annum, of which 0.6 to 0.8 million tons originates from Pakistan. Exporters from India meet more than 80 percent of the global demand, and thus enjoy unchallenged pricing power. Find more.